Are You One of These 5 High-Risk Merchants That Need Payment Processing?

This Article was published on April 4, 2022 and updated on July 28, 2024.

Top 5 High Risk Business

If you’re running an online business, you probably have some sort of payment method in place. But perhaps, you’re also one of those many businesses that don’t realize they’re high-risk merchants until they encounter problems with their online payment transactions.

The thing is, you can’t afford to lose money or your entire business just because you’re naïve about payment processing.

If you belong to these five high-risk merchants, it’s time to start thinking about changing the way you process online transactions in your business:

Adult Entertainment

Let’s face it; adult entertainment websites are a favorite target of scammers. Since there’s a lot of discretion and privacy involved, it’s easy to get into a transaction with a scammer and end up getting a chargeback due to friendly fraud, which is essentially a chargeback filed by a customer for a seemingly legitimate transaction.

Buyers remorse is real and more often than not, a customer might regret a charge after the heat has worn off. It’s important that you have a high risk merchant processor that can help you navigate these common situations.

If you’re in the business, it’s best to apply for a high-risk merchant account for adult entertainment, that will allow you to protect your business from these fraudulent activities.

Nutraceuticals

Nutraceutical companies include businesses selling dietary supplements, medical foods, functional foods and “farmaceuticals” or a combination of farm and pharmaceutical products.

These types of businesses are considered high risk because they could have a high chargeback rate due to the fact that they have no approved medical claims and customers who are not satisfied with the results of the product can easily file a chargeback claim.

Finding a balance here is key and we believe that an honest, and balanced return policy is can be favorable. Chargeback mitigation is vital. However, we also believe that it is up to your credit card processor to fight the banks and ISOs on your behalf. Allowing customers to unduly require refunds is not good business.

So if you belong to this industry and you don’t have a payment processing system in place yet, this is the best time to apply for one.

Guns & Ammo Retailers

Being in the firearms industry makes you especially prone to losses due to fraudulent transactions because of the nature of your business.

The label of high risk was added in 2014 and it has very little to do with the customer based. In fact, most gun owners do not return merchandise or dispute charges. The truth is, firearms high risk merchant accounts are required because they represent a reputation risk to banking institutions.

This is why it’s very important to get a high-risk merchant account that will not only protect your business from losses but also make sure that your customers’ information are safe, especially since they are buying sensitive products from you.

Vapes & E-Cigarettes 

The vape and e-cig business is thriving these days, but so are the risks. In fact, we have written about the federal vape flavor ban, and about the untold reasons why banks consider vaping high risk.

The truth is, at a medical and federal level, lawmakers believe that the effects on social consequences of vaping is not yet fully understood. And because of that, banks refuse to standardize accounts for vaping businesses in case the industry is deemed illegal suddenly in the future.

If you’re running a vape and e-cig website, it’s very important to understand why you’re a high-risk merchant because of the nature of your business and the products that you’re selling, which is why you need to apply for a high-risk merchant account with a trusted payment gateway provider.

Subscription Boxes

Although it’s not as obvious as other high-risk merchant businesses, a subscription box business is still considered a high-risk merchant because of its recurring billing methods that are especially prone to chargebacks and other payment processing problems.

Of course, that should not prevent the business from earning from happy customers. We believe it’s vital to ensure that payment can be reliably processed and that all chargebacks are dealt with accordingly.

So if you don’t want to constantly worry about settling issues regarding your online transactions, it’s best to find a reliable merchant provider that will make everything easy so you can focus on the other aspects of your business.

 

Benefits of High-Risk Merchant Accounts

Switching to a high-risk merchant account can provide numerous benefits, including:

• Enhanced fraud protection and chargeback management tools.
• Access to better customer support tailored for high-risk industries.
• Increased acceptance rates for payments, ensuring your business can process transactions efficiently.

Choosing the Right High-Risk Merchant Provider

When selecting a high-risk merchant provider, consider the following:

• Reputation and Reviews: Look for providers with positive customer feedback and a strong reputation in the industry.
• Fee Structure: Compare fees, including setup costs, transaction fees, and monthly charges.
• Additional Services: Check if the provider offers extra services like chargeback prevention, fraud detection, and 24/7 support.

Real-Life Examples and Case Studies

Consider this case study: A nutraceutical company was struggling with high chargeback rates and frequent payment disputes. After switching to a high-risk merchant account, they saw a 30% reduction in chargebacks and a significant improvement in customer satisfaction.

Common Challenges and Solutions

High-risk merchants often face challenges such as:

• High Chargeback Rates: Implement a robust chargeback management system and maintain clear communication with customers.
• Legal and Compliance Issues: Stay updated on industry regulations and ensure your business practices align with legal requirements.
• Reputation Management: Proactively manage your online reputation through excellent customer service and transparent business practices.

FAQs

How long does it take to get approved for a high-risk merchant account?

Approval times can vary, but it typically takes between 3-7 business days.

Are the fees for high-risk merchant accounts higher than regular accounts?

Yes, high-risk merchant accounts generally have higher fees due to the increased risk involved.

Can any business apply for a high-risk merchant account?

High-risk merchant accounts are designed specifically for businesses in industries that are considered high-risk, such as adult entertainment, nutraceuticals, firearms, vaping, and subscription boxes.

Contact Information for Further Assistance

For more information on high-risk merchant accounts or to apply, contact [Your Company Name] at [Phone Number] or [Email Address]. Our team of experts is here to help you navigate the complexities of payment processing and find the best solutions for your business.