High Risk Payment Processing: What You Need to Know
High risk industries are often the most profitable ones, but at the same time, they’re often wrongfully labeled by banking institutions. There are numerous industry factors that can cause a business to be deemed high risk.
From chargebacks and potential licenses to cardholder disputes and regulations, anything can contribute to this label. Many business owners trade by the highest standards, having no issues at all, yet the label puts every business in certain industries in the exact same boat.
If you only dealt locally and requested cash, it wouldn't have been a problem. However, in a world where fewer and fewer people carry cash, it would be quite uncomfortable for customers to find an ATM nearby to shop.
On the other hand, dealing online or being able to take card payments is clearly the way to go — and that’s when the high risk label kicks in to cause trouble. Luckily, there are some reputable high risk payment processing vendors out there, but let’s see how to pick the best one.
Guidelines to Designate a Business as High Risk
Some businesses or industries are automatically deemed as high risk. Most traditional banks won’t even want to hear your business model or see your numbers. Unless you’re a corporate giant with impressive revenue, they won’t look at you. And yes, money does buy credibility.
There are more factors that can affect decisions when different bodies review industries and businesses to determine their risks. Indeed, some industries are already labeled, so it’s too late for them, but others may join the lists.
Types of Risk
Determining the type of risk will help a traditional banking institution determine whether or not a certain business or industry is high risk. Risk is assessed in different ways. There are automated tools that check out chargebacks or disputes, but also manual reviews to inspect the potential risks.
Sometimes, high risk businesses can be labeled in low risk industries as well. It’s not unusual to come from a low risk industry and be targeted by disputes or issues that could increase the potential risks for banking institutions.
In some cases, additional documents could be required to assess the risk. In the worst possible cases, on-site visits are also considered, only to gain more information about the operations.
The more in-depth an inspection or risk assessment is, the less risk these institutions will take. It's not all about the risk but also about legal liabilities or even damage to the reputation.
Different institutions assess risk in different ways. For example:
- Nature of your products or services: Payment service providers check ethical considerations, regulations, and laws.
- Financial risks: Credit score and financial stability matter.
- Public perception: Reviews, complaints, and negative publicity are considered.
- AML compliance: Providers check if your business complies with anti-money laundering laws.
- Transaction patterns: Most providers will monitor transactions for unusual activities.
Business Model
The business model can also determine your risk level.
- Too many chargebacks, disputes, or fraud issues are red flags.
- Subscriptions, recurring billing, and free trials are triggers.
- Automatic charges often lead to disputes or chargebacks.
- Fraud potential increases with recurring payments and free trials.
Even if a bank does a quick look, some industries are generally considered high risk.
Reasons a Business Might Be Seen as High Risk
Some industries include:
- Adult entertainment
- CBD
- Crypto
- Guns
- Gambling
- Online dating
- Supplements
- Pharmaceuticals
- Subscription products
- Travel agencies
- Telemarketing
But why?
Intangible Products
Digital products are often exposed to electronic commerce chargebacks. It's easy to claim you didn’t receive something. Fraud is also easier.
Tip: A high risk merchant account at highriskpay.com could be helpful here.
New Products
New and untested products can be risky. Lack of product testing may lead to class action lawsuits. Banks often avoid this hassle.
Highly Regulated Industries
Products with side effects, age restrictions, or explicit content (like tobacco or gambling) require extensive licensing and are considered high risk.
Questionable Customers
Some businesses deal with financially inconsistent clients, like bail bonds or credit repair services. This attracts scrutiny from banks.
International Operations
International businesses:
- Deal with multiple currencies
- Need international payment gateways
- Are harder to monitor
This increases perceived risk.
Natural Health
Natural health products are rarely regulated or approved, especially in Western countries. This lack of oversight causes issues with payment processors.
MLM Model
Multi-Level Marketing is often linked to pyramid schemes. While some succeed, many don't, leading to disputes and frustration.
Out of Control Debt
Debt signals financial instability:
- Harder to pay fees
- Lower credit score
- Higher chance of default
That’s risky for payment processors — hence the need for a high risk account.
Card Standards – How Visa & Mastercard Decide
You’re wrong if you think traditional banking institutions and payment processors are the only structures avoiding high risk businesses or industries. These standards tend to target more and more financial institutions.
For example, card networks like Visa and MasterCard also have their own standards in order to determine companies deemed as high risk. Each brand has a series of particularities in the process, and these can affect how you deal with card payments.
Visa
Visa has a program known as the Visa Global Brand Protection Program. It’s basically a set of different regulations and compliance rules that define the potential risk associated with a company.
Visa simply doesn't want your business to damage its brand reputation. Apart from reputation risk, brand damage could also become an issue in a high risk industry.
Another Visa program is the Visa Integrity Risk Program (VIRP), which categorizes high risk companies into three tiers based on the level of risk. Each tier is defined by a series of factors and is focused exclusively on high risk merchants.
Visa also conducts control assessments on companies to determine risk levels.
MasterCard
MasterCard has its own version called the Business Risk Assessment and Mitigation (BRAM) program. While Visa focuses on reputation, MasterCard emphasizes compliance.
Non-compliant merchants are added to a public database called MATCH (Member Alert To Control High-Risk), warning other financial institutions.
Being on MATCH doesn’t immediately blacklist a business, but it raises red flags. Removal can happen automatically after five years, or sooner if errors are corrected and compliance is restored.
Tiers in High Risk Industries
Although Visa and MasterCard programs operate separately, they both affect how businesses are seen by payment processors.
Visa's VIRP program splits high risk businesses into three tiers:
- Tier 1: Extremely regulated, exposed to illicit activities that could harm others. Instant rejection is likely.
- Tier 2: Involves potential for economic harm or illegal behavior if proper controls aren't in place.
- Tier 3: Covers companies that may avoid compliance due to lacking internal controls — even if there's no evidence.
The MATCH list is similarly dangerous. For example, Stripe refuses to work with anyone listed, even if the business is outside a high risk industry.
Reasons to Appear on the MATCH List:
- Money laundering
- POS data misuse
- Account data compromise
- Fraud investigations or convictions
- Bankruptcy or insolvency
- Standard violation
- Merchant collusion
- Identity theft
- Illicit transactions
- Excessive chargebacks
How the Business Type Affects the Gateway Needs
Your business type directly impacts your payment gateway requirements. There’s no one-size-fits-all high risk processor — each has to be tailored.
You might need a specific CBD, adult, or online gaming highriskpay.com account individualized by your business volume.
It’s critical to assess your industry sector, not just your products. Risk is often determined by consumer behavior in that industry.
Example:
If you run a credit repair service, your clients are likely financially unstable — even if unintentionally. This is a red flag for traditional processors.
If you offer bail bonds, your customers may be legally involved, increasing your reputational and financial risks.
Even businesses selling knitted hats may face issues if selling through platforms like WooCommerce, which restrict high-risk products unless connected to a third-party payment provider.
Without one, you could be rejected outright.
Final Note
Many popular digital gateways don’t accept high risk businesses. A high risk credit card processing solution, such as highriskpay.com, might be your only option to accept payments online.
Understanding the Pricey Consequences of a High Risk Business
Chargebacks are some of the main reasons why certain business sectors or industries are considered high risk. This is the main culprit behind this wave of bans against so many companies and businesses.
A chargeback occurs when the cardholder gets in touch with the bank to dispute a transaction. Chargebacks can happen with both debit and credit cards.
If the bank decides the transaction was illegitimate, the money is forcefully removed from the merchant’s account.
This is understandable for legitimate errors. However, there are people who exploit chargebacks for free products or services.
Merchants must provide proof of legitimacy, and regardless of the outcome, fees still apply.
Common Legitimate Reasons for Chargebacks:
- Damaged or defective items
- Misleading descriptions
- Delivery issues
- Missing items
- Unfulfilled services
- Unauthorized or fraudulent transactions
- Friendly fraud (buyer’s remorse)
- Unrecognized charges
- Billing errors
- Difficult cancellation policies
- Confusing return rules
- Inability to contact the merchant
Originally, chargebacks were meant to protect consumers, but the system is now often abused — leaving merchants vulnerable.
How Chargebacks Affect Merchants
Chargebacks are a key reason why some industries require high risk payment processing. Even with evidence, the decision is often out of the merchant’s control. Banks tend to side with consumers.
Consequences of Chargebacks:
- $20–$100 fee per chargeback
- Loss of product/service
- Lost processing costs
- Potential fines
- Reduced revenue
- Time and resource drain
- Increased processing rates
- Risk of account termination
- Placement in MasterCard’s MATCH database
- Difficulty finding new processors
These problems can halt growth and operations for small businesses.
Thankfully, platforms like highriskpay.com offer fraud prevention tools and dispute assistance.
Becoming Familiar With Rolling Reserves
Chargebacks are rising. Most industries see chargeback rates around 1%, but it varies.
Rolling reserves are commonly required by high risk processors to offset risk.
These are reserve funds (5–20% of monthly volume) held by the processor to cover unexpected issues. Think of it as an emergency fund.
It helps with:
- Covering chargebacks
- Gaining trust with processors
- Stabilizing cash flow
Some vendors mandate it, while others may waive the requirement if you have low chargeback rates and high profits.
Even if optional, maintaining a rolling reserve is a smart, proactive strategy.
Useful Practices to Reduce Chargebacks
Reducing chargebacks should be a top priority, whether you're high risk or not. It saves both time and money.
Platforms like highriskpay.com offer tools and support for dispute prevention and resolution.
Here are practical ways to lower chargebacks:
Card Fraud Prevention Tools
Use fraud detection features such as:
- Two-factor authentication
- Address verification (AVS)
- Personal data screening
These reduce unauthorized transactions and increase security.
Easy Returns
A hassle-free return policy can reduce disputes. Common chargebacks happen when customers can't return an item easily.
Offer:
- Clear return policies
- Flexible timeframes
- Prompt responses
Crystal Clear Policies
Ensure your:
- Shipping timelines are realistic
- Warranties detail what is and isn’t covered
- Return policies are accessible and transparent
Accurate Details
Make sure the business name that appears on customer statements is recognizable.
Example: If your store is Fancy Clothing, but your legal name is FPD Detailing, this mismatch can trigger chargebacks.
Also, keep your banking details updated across platforms.
Accurate Descriptions
Avoid misleading product names or descriptions. For instance:
Naming synthetic wigs Real As Hair Braids will mislead customers and invite disputes.
Be transparent to prevent misunderstandings.
Easy Customer Service
Offer multiple communication channels:
- Live chat
- Phone support
Slow or absent support leads customers to file chargebacks instead of resolving issues.
Other Best Practices
- Keep branding consistent to avoid confusion
- Stick to PCI DSS compliance with POS devices
- Accept EMV, contactless, or mobile payments for added security
Top 6 Best High Risk Payment Processing Providers
Browsing the best high risk payment processing vendors gives you a solid idea of what to expect. Remember, the cheapest option isn’t always the best, and the most feature-rich one may be overkill if you don’t need all its tools.
Start by assessing your business needs before submitting applications.
1. Total Processing
UK-based Total Processing serves both local and international businesses — including those labeled high risk.
They offer highly customized packages, focus on security and fraud prevention, and provide support for over 180 currencies and 200 payment methods.
Pros:
- Industry-specific pricing
- No long-term contracts
- Extensive payment options and currency support
- Strong security tools
Cons:
- Works as an intermediary for ISOs, possibly increasing fees
2. Worldpay
A trusted name, Worldpay works globally and is widely used in high risk sectors like pharmaceuticals, adult entertainment, telemarketing, and crypto.
It offers risk management tools, chargeback solutions, and regulatory compliance support.
Pros:
- Great reputation and wide use
- Fast transfers (within 24 hours)
- Strong customer support
- Extensive integrations
Cons:
- Lack of transparent pricing; you must apply to get a quote
3. CcNetPay
Operating out of Slovenia and the UK, CcNetPay is tailored to ignored industries like gambling, pharmaceuticals, and adult content.
European clients benefit from publicly listed rates, though custom pricing applies.
Pros:
- No hidden fees
- 24/7 customer support
- Flexible plans with clear pricing guidelines
- Strong integration options
Cons:
- Some tools like 3D Secure come at extra cost
4. High Risk Pay
High Risk Pay offers no setup or application fees, a 99% approval rate, and fast turnaround — often within 24 hours.
The platform works with bad credit, includes chargeback protection tools, and has over 25 years of industry experience.
Pros:
- No upfront or setup fees
- Tailored low-cost packages
- Strong fraud and dispute management
- High approval rate
Cons:
- Compliance requirements are stricter than average
5. Inovio
Inovio focuses on online businesses. It supports about 50 currencies, recurring billing, and comes with a virtual terminal and hosted checkout page options.
Best suited for software, rental, and subscription services.
Pros:
- Robust online integrations
- Supports global currencies
- Good for recurring billing
Cons:
- Lacks in-person payment support
- Custom quotes only — no transparent pricing
6. Soar Payments
Soar Payments supports over 50 high risk industries, including CBD, credit repair, and medical fields. It provides basic integration, recurring billing, and both online and in-person payment support.
However, it does not support ultra-high risk sectors like gambling, crypto, or adult entertainment.
Pros:
- No setup fees
- Recurring payments supported
- Both POS and online gateway options
Cons:
- Doesn’t serve ultra-high risk sectors
- Pricing is not disclosed
FAQs
What makes businesses high risk?
Businesses with high chargebacks, poor credit, unstable histories, or reputational risks are generally labeled high risk.
Why are certain industries considered high risk?
Industries dealing with intangibles, strict regulations, or uncertain products are deemed high risk — e.g., cannabis, credit repair, adult services.
What’s the difference between high risk and regular payment processors?
Mainly fees and approval thresholds. High risk vendors accept riskier businesses but charge more.
What’s the best high risk payment processor?
High Risk Pay offers competitive pricing, strong support, and high approval rates — making it ideal for many businesses.