What is payment processing at high risk?


It may be challenging for some companies to set up payment processing, even though all firms have the same rights to take debit and credit card payments from their clients. 

Why are some businesses subject to greater constraints and prohibitions than others? The solution is really fairly easy. 

The lower the willingness of payment businesses to work with you will be, the greater the amount of risk in your sector.

According to financial terminology, a high-risk firm is one that has a lot of chargebacks, or cancelled payments and reimbursements. 

Not everyone wants to engage with high-risk businesses since banks and payment service providers take on all of the risk associated with processing transactions. 

Therefore, if your company fits this description, you should search for a payment service provider that is equipped to handle high-risk payment processing.

Prior to getting a merchant account, setting up high-risk payment processing is often connected with more extensive verification of your online business activities and higher service costs. 

In fact, the organisation in charge of handling your transactions does not want to take any chances or risk damaging its name. Running a high-risk company does not, however, exclude you from accepting and processing credit card payments from your clients. 

You may get assistance from a lot of third-party payment service providers and processors. Let’s find out which kind of businesses might be thought of as high risk first, so you don’t worry.

Factors that increase the risk in your business

Banks and other financial institutions typically use two elements to determine whether a firm is in a low- or high-risk category: your sector and how you do business. 

The first argument relates to retailers who market dangerous goods like firearms, prescription medications, CBD vapes, etc. Credit history, overall profitability, yearly processing volume, billing model, amount of chargebacks, currency, location, and time spent in the market are just a few of the many individual elements that make up the second component. 

It might be difficult to forecast how your firm will develop and operate, for instance, if you are a startup with no experience processing credit cards. This is another solid cause for denial.

Even if certain characteristics may appear arbitrary, they are all crucial for businesses contemplating working with traders. For instance, a business with a poor credit history and several chargebacks cannot be trusted. 

A PSP’s reputation might be damaged by a relationship with such a business. Additionally, there are nations where there is a greater danger of chargebacks (almost all countries except the United States, European Union, Canada, Japan, Australia and Korea from South). 

Thus, even if your company operates in a low-risk sector but nevertheless has more than 1% chargebacks,

Each processor has certain requirements for collaboration and preferences for the industries it is willing to operate with. But chargebacks and fraud are not permitted anywhere. High-risk payment processing requires more time and effort to set up than standard processing because of this.

High Risk Business Types

E-commerce is risky and unpredictable in many ways. However, other businesses have a greater rate of chargebacks and are even more prone to financial disasters. 

The following list of specialised sectors includes those where obtaining a merchant account may be challenging:

  • Paris
  • Gambling
  • Met
  • Internet gaming
  • Trades
  • Forex
  • Tourism
  • Supplements and nutraceuticals
  • Booze and tobacco
  • E-cigarettes & CBD vapes
  • Telemarketing
  • Adult amusement
  • Paid-for applications
  • Software solutions

Therefore, every online company that offers these items for sale must adhere to strict guidelines established by payment processors. 

The potential to get a merchant account with no effort is substantially increased by the company’s stability and strong reputation, regardless of the industry. 

However, if your company fits into one of the aforementioned categories, be ready for a more thorough audit and careful examinations of your credit history, chargeback rate, and other crucial indicators.

A High Risk Merchant Account: What Is It?

Any e-commerce company nowadays must be able to take card payments, and merchant accounts make this feasible. 

Opening it, however, presents challenges if your company is high-risk. Most banks and financial organisations do not want to be associated with problems like fraud, chargebacks, or losses. 

Even if your company is doing well, certain psps may categorise you and the items you provide as operating in a high-risk sector and decline to offer processing services. However, if a processor hasn’t accepted you, don’t give up. Most likely, all you need is a high-risk merchant account.

A high risk merchant account providers in USA has higher processing costs and restrictions than a standard merchant account, which is the fundamental distinction between the two. 

This may be explained by the need of a payment service provider to cover potential financial losses of high-risk businesses without drawing attention to itself by suspiciously large transaction volumes. 

However, somewhat higher costs are often justified since, in addition to having the merchant account itself, you can also take use of a variety of features and services that will serve as wonderful business helpers. Dedicated customer service, fraud monitoring, etc. Are a few of them.

Instructions for Opening a High Risk Merchant Account

As we can see, setting up a high-risk merchant account is challenging, yet without one, no company can receive payments from clients. 

Every firm requires a trading account (MID) and a gateway, a processing system made for online transactions, in order to sell goods under your brand internationally and accept online or credit card payments. 

The easiest method to get them is to work with a business that provides processing services to “risky” companies as well.

It is an undeniable reality that no business can consistently guarantee steady and lucrative operations. However, a sizable number of businesses are prepared to provide the MID, the gateway, and other technologies required for all kinds of businesses to accept and process transactions without issues. 

The path to profitable sales becomes clear as soon as your application for a high-risk merchant account is accepted. All you have to do is carefully choose the answer that works best for you.

Finding a High-Risk Payment Processor: How to Do It

Reliability and security should benefit each other in the partnership between a high-risk merchant and a PSP. We advise that you take into account the following factors when selecting a high-risk payment processor:

  • Experience and reputation of the supplier
  • The capability to remotely negotiate contract terms, including connectivity and launch requirements
  • Costs and charges
  • Customizing the checkout page to fit your website’s overall style
  • Support for a variety of currencies and payment options
  • Taking care of chargebacks
  • The capacity to monitor and control transactions
  • High degree of security for card data
  • 24/7 client assistance

Even if you fall into a high-risk category, you may still take use of a top-notch payment processing solution. In order to link various psps and take as many payment methods and currencies as you want, Corefy offers all sorts of enterprises a safe and effective one-stop payment orchestration platform. 

Additionally, we are completely PCI DSS L1 certified, ensuring the highest level of protection for your customers’ and your sensitive data. Find out what we can offer you by getting in touch with us!