High risk processing – definition
Payment processing card associations define some online business types and industries as risky. There are actually few factors that can put your business into high-risk category, but the main reasons can refer to matters such as merchants’ ratio (both real and anticipated) of chargebacks, merchandise returns or your payment processing history. Taking that into the consideration not all the payment service providers accept high-risk clients.
So, what are the typical high-risk verticals or business models? Here are some of the industries: travel, dating, adult entertainment, advanced bookings, Forex, telemarketing, pharmacy, gambling, gaming and many more.
What is a high-risk payments processing?
You have to have a merchant account with an acquiring bank before accepting payments online. Merchant accounts can be simply divided into two categories: low-risk and high-risk. If you run a low-risk business, almost every bank will easily accept you and offer you its services.
The situation is not that simple if you are a high-risk merchant. Businesses labeled as high-risk are related to more unconventional processing agreements and a lot of payment service providers don’t want to process their electronic payments.
Business models from the high-risk category are threatened with elevated chargebacks possibility. That also leads to higher processing fees, which are closely related to the risk factor such models represent.
High-risk merchant is expected to pay chargeback fees. It is common practice for payment processors to apply a rolling reserve towards the merchant account, which can potentially be used by the acquiring bank to offset these chargebacks. Reserve puts additional layer of protection for the bank against some unexpected behaviors from the merchant’s side.
If you run a high-risk business, one of the best possible solution to consider is to establish a relationship with online payment gateway that specialize in such types of business. Such a provider will help you monitor suspicions transactions, identify potential threats and fight these chargebacks managing your risk on daily basis. With all the expertise and powerful tools these payment gateways are directed towards such business models and deliver clear benefits for online shops in the shape of a healthy account and longevity of the your business.
HighRisk not supported by SecurionPay
- Health and Wellness Products
- ISP and Hosting Services
- Credit Repair
- Money Transfer
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