payment cloud high risk credit card processing

Payment Cloud High Risk Credit Card Processing vs. Host Merchant Services

Payment Cloud is a payment processing company catering to numerous industries. The, company, like Host Merchant Services, particularly emphasizes its ability to process payments for high risk businesses. However, unlike HMS, PaymentCloud seems to cater to high risk exclusively, with their low risk options being too expensive and their terms too restrictive for regular merchants. PaymentCloud was established in 2015 and the Woodland Hills, California merchant service provider says it serves thousands of businesses. This is in contrast to HMS which has been serving merchants since at least 2010.

PaymentCloud works as an intermediary between acquiring banks, payment processors, and payment gateway companies to help merchants accept omnichannel payments, including all major card networks, eChecks, ACH, cryptocurrencies, and mobile wallets. Businesses can set up virtual terminals, shopping carts, payment gateways, and both EMV and NFC-enabled point of sale terminals. PaymentCloud also has a mobile point of sale app called Paysley, which it acquired in 2020. Host Merchant Services has a similar omnichannel payment offering, with solutions from Valor Paytech, PAX, SwipeSimple, NMI, and many more technologies. In addition, Host Merchant Services has offerings that seem to be well suited to low risk AND high risk businesses. Not sure where your business falls on the risk spectrum? HMS can deliver the perfect solution and won’t force fit you into a high risk account that might not be suitable.

PaymentCloud’s merchant account services also let businesses set up a “zero-fee credit card processing.” This plan is touted to not charge the merchant any interchange fee for processing credit card payments. Such a program is often referred to as Cash Discounting or a Surcharge in industry jargon. With cash discount merchant services programs, the merchant charges a percentage service fee on all transactions, usually 3-4%, and then offers to waive this fee for cash payments. This allows the merchant to offset the cost of processing credit card transactions. It should be noted that Host Merchant Services also offers flat rate, Interchange plus, and cash discount merchant services fee structures.

In this comparison of PaymentCloud and Host Merchant Services, we explore who owns the companies, how much PaymentCloud and HMS charge for their services, and whether there are any hidden or additional fees associated with these services. This is not intended to be a review of PaymentCloud, but a comparison of their services with Host Merchant Services.

Who owns Payment Cloud?

PaymentCloud was founded in 2015 by Shawn Silver. Multiple sources list only his name as the founding member of the company. Shawn has a background in high risk merchant solutions while he was a VP of High Risk Services at iPayment, before founding PaymentCloud.

In June 2022 PaymentCloud announced that it had gone through a funding round. The company raised $35 million in the form of $10 million in equity and a $25 million credit facility from Electronic Merchant Services. Since the funding round included an equity stake, Electronic Merchant Services is a part-owner of PaymentCloud. It is unclear what are the specific details of the percent of equity ownership in that equity raise. Whether the credit facility has an equity conversion clause was also not disclosed.

A year before that, PaymentCloud secured a $10 million credit facility from Espresso Capital in June 2021. Although a credit facility would not constitute ownership, the announcement did not disclose if the debt financing had an equity conversion clause. As a result, it’s hard to know if there can be any future changes to ownership as a result of this funding round.

Finally, in October 2020, PaymentCloud acquired Paysley for an undisclosed amount. The announcement did not give any details on the deal structure of the acquisition; if it was for cash, equity, or a combination of both. As such, it is impossible to judge whether prior owners of Paysley may or may not have an ownership stake in the newly combined company.

HMS Ownership

In contract, Host Merchant Services is owned by Lou Honick (CEO) and Andrew Forrest (CTO). They have a long history in technology and merchant services. Lou Honick is also the founder of, a web hosting provider founded in 1997 and renowned for outstanding customer service. Not only is Lou Honick a pioneer in technology and payments, he has an established track record for building companies with an outstanding focus on customer service.

How Much Does PaymentCloud Charge vs. HMS

PaymentCloud and fees associated cannot easily be found online. PaymentCloud does not make any transparent disclosure of pricing on its website. The company serves a wide variety of merchants and is mainly known for offering merchant accounts to high risk businesses.

It’s important to understand that not all acquiring banks are willing to serve all types of high risk businesses. Those that are willing to work with such merchants will demand higher rates, commensurate with the risk associated with such businesses. These risks are determined by evaluating how long the merchant has been operational, the merchant’s payment processing history, specifically, transactions’ size and volumes, as well as the chargeback ratio. As a result, pricing for Payment Cloud clients can range widely.

While HMS does clearly and transparently disclose pricing for low risk merchants, their high risk pricing is similar to PaymentCloud in that there isn’t a “one size fits all” price to post on their website for high risk merchants. However it does make HMS a superior choice because some businesses may think they need a high risk account where Host Merchant Services may have a low risk solution. A great example of this is payment processing for online guns and firearms, which HMS treats as low risk business, but some other processors consider high risk.

High risk merchants are classified as such based on the industry they operate in. Some industries pose reputation risk to the sponsor bank, such as gambling sites, adult entertainment businesses, gun vendors, cannabis businesses, etc. As a result, those industries are often classified as high-risk, however it is important to note that these classifications change all the time.

How noncash transactions are conducted is also a determinant of risk; whether they are keyed in or generally processed as card not present (CNP), as is the case for eCommerce businesses, also sometimes considered high risk business. For such transactions, there is always the possibility of error in keying the card data, or the card information being used that is stolen, which can be difficult to determine unless additional security measures (at additional costs) are implemented. Again, this is a scenario where Host Merchant Services is an expert high risk payment processor, but also can provide low risk accounts for many online businesses like e-commerce, web hosting, drop shipping, and more.

Based on available information, it is unclear if Payment Cloud offers interchange Plus or tiered pricing. Interchange plus is simply the card networks’ published rates passed through to the merchant plus a markup for the merchant service provider. This is a more transparent pricing mechanism, and often the cheaper of the two. Many high risk businesses are processed as flat rate, tiered, or flat rate with surcharges, however Host Merchant Services is able to offer Interchange plus pricing to well qualified high risk companies.

Tiered pricing includes all the different interchange rates bucketed into three categories, usually qualified, mid-qualified, and non-qualified. Sometimes these mechanisms can be combined into strange and complicated pricing models like six tier or enhanced bill back, usually to the detriment of the merchant.

The problem with tiered pricing is that transactions that may only be charged a certain very low rate is bucketed into a specific tier. Even if that transaction category is included in the lowest priced tier, it is still almost always guaranteed that the rate is higher that it would be had it not been in a tiered pricing plan.

Finally, there is never really a credible way to compare tiered pricing plans between merchant service providers as there is no way of knowing what is included in a certain tier, from one processor to another.

Does Payment Cloud Charge a Monthly Fee?

It is likely that PaymentCloud charges a monthly fee, starting at $25 and increasing depending on the merchant type. There are no public disclosures of PaymentCloud pricing and any additional fees they charge. Any information on PaymentCloud monthly fees is based on anecdotal information posted in forums and online reviews from actual merchants.

It appears that PaymentCloud may lock in customers into a two-year agreement, which may also include a termination fee. Based on a Google review, there is a one-star rating from a merchant who shared that a PaymentCloud sales agent did not sufficiently disclose that the contract stipulated a 2 year term agreement.

PaymentCloud did respond to the complaint stating that the salesperson “told you the details are in the contract, which you can read.” The company went on to state that to placate the complaint, the merchant was presented with an option to work with another acquirer that did not require an early termination fee, “Upon hearing you were dissatisfied, our sales rep offered to send you to another processor where he could waive the termination fees.” This suggests that early termination fees and long-term contractual agreements exist at PaymentCloud. There is the possibility that they may be waived on a case-by-case basis with sufficient wrangling and tough negotiation, or if the merchants can be successfully referred to another processor.

It is important to remember that PaymentCloud is an reseller of services. By their own admission, the company isn’t a payment processor itself but instead a go-between for merchants, payment processors, payment gateway companies, and acquiring banks. It works with countless such parties throughout the country to ensure that the company can place hard to place high risk merchants with a merchant service provider.

Comparatively, Host Merchant Services is an ISO for many major payment processing platforms like TSYS and Fiserv, however for high risk it does work with many processors and gateway providers similar to PaymentCloud.

As a result of these dynamics and the multitude of different parties involved for PaymentCloud, it is impossible to say with any surety that PaymentCloud does not have any early termination fees, has no stipulations for long-term contracts, or whether the company charges additional fees of any kind. The simple answer: it depends, so read the fine print, and trust no one!

HMS Monthly Fee?

Host Merchant Services has a clearly stated monthly fee for low-risk merchants of $14.95 as of the time of this writing. While the monthly fee and contract terms may vary for high risk, these fees are clearly disclosed in advance. In most cases, even for high risk, HMS is able to offer contracts with no termination fee, however depending on the merchant, certain high risk providers may have such a fee which is clearly disclosed in advance (and HMS makes every effort to waive if possible).

Does Payment Cloud Have Good Reviews? vs. HMS?

PaymentCloud does not have a profile with the Better Business Bureau. So we explored reviews or complaints left on numerous other online forums, including Google Reviews, to which the company often responds and guides merchants to rectify issues. Generally, the company has really great reviews from merchants who opine at great length about the company’s customer support, about the company’s efforts to place high risk merchants with a merchant account provider, and the open lines of communication between merchants and their onboarding specialists. This is similar to Host Merchant Services, which has nearly all positive reviews from low risk and high risk merchants online.

It is important to reiterate that Payment Cloud primarily serves high risk merchants, and no one merchant with that classification is alike. Some acquirers may be willing to work with a gun merchant, but avoid the adult industry. Similarly, some acquirers may have qualms about working with cannabis or marijuana businesses. PaymentCloud is at this intersection and has relations with numerous payment processors and acquirers, so even the hardest to place merchants can be placed by the company.

While the majority of information regarding PaymentCloud seems favorable, the level of reviews and online information seems to be a notch below Host Merchant Services. There seems to be slightly more negative information out there regarding PaymentCloud, and while this may be a virtue of serving hard to place businesses exclusively, it is something to be mindful of. Host Merchant Services has glowing reviews for all business types and seems to be universally praised across review sites online.

Many high risk must deal with fund holds and reserves with their acquirer. High risk merchants are usually aware of this. This becomes obvious as one understands the dynamics of a payment being processed. Once a payment is initiated, the acquirer authenticates it with the issuer to ensure sufficient funds are available to cover the cost of the transaction. From the moment the issuer releases the payment until the chargeback period for a transaction lapse (six months), the acquirer has technically extended the merchant a line of credit. Reserves withheld from the merchant are the only recourse the acquirer has in the event of a successful chargeback to recover those costs. This is the risk an acquirer takes, and one that is even more pronounced with merchants classified as high risk.

There was one PaymentCloud complaint from a client which describes what seems to be a simple breakdown of communication. This was disconcerting at multiple levels because it attested to ineffective communication on a topic as common as reserves for PaymentCloud.

Also, when you’re in the business of connecting a merchant with the best processor, there is bound to be an overlap where a certain number of processors start competing for the same merchant. Some merchants have complained about being inundated with multiple merchant account requests and then some simultaneously initiate the service and start charging fees.

There are a few complaints here and there that do not reflect the overall image and brand that the company has crafted and managed for itself. However, the few complaints that we were able to uncover point to some dark side of operating norms at the company.

On the other hand, Host Merchant Services reviews seem to be overwhelmingly positive, and the few negative mentions seem to be about minor things like equipment malfunction or chargeback issues. In addition, Host Merchant Services seems to quickly and professionally intervene and respond in the very few cases where complaints were posted.

What Lawsuits Has Payment Cloud been involved in?

PaymentCloud was involved in a civil lawsuit in January 2020, in which another payment processor, Merchant One, alleged Payment Cloud breached their agreement for monthly residual income from the clients that Merchant One would refer to PaymentCloud.

The complaint was initially dismissed by the court on the grounds that Merchant One’s claim was a “shotgun pleading,” a claim classified as too broad and one that does not clearly link to the remedy sought. Merchant One quickly filed an amended complaint, which the judge allowed to proceed. The matter was subsequently settled out of court between the two parties.

Payment Cloud vs Host Merchant Services

PaymentCloud is a reasonable high risk merchant account provider, however Host Merchant Services is a superior option that serves both high risk and low risk merchants. Often, for high risk merchants, options can be limited. Both companies have a direct number for their support team should merchants have any issues and wish to reach out to speak to an actual person.

However, there are a few differences between the two firms. Host Merchant Services is accredited with the Better Business Bureau since 2011 and has an A+ rating by the organization. HMS also has only 1 complaint over the last three years on the Bureau’s website.

Furthermore, HMS is founded on principles of customer service and outstanding merchant support. PaymentCloud cannot match the ratings or track record offered by Host Merchant Services. While PaymentCloud is not a bad company, why chose a B-rated option when an A+ option is available?

Similarly, HMS  clients have no long-term commitments they are locked into for the service. HMS is a customer-centric organization in which the strategy isn’t to contractually force loyalty but to do it by offering the best level of service possible.

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