What is a High-Risk Business?
A business is considered high risk if it operates in an industry that banks categorize as high risk. These businesses may function in unique verticals like CBD or have payment models like subscription billing, which can lead to higher chargeback rates.
Factors That Make a Business High Risk
Several factors can qualify a business as high risk:
Being listed on the High Risk Industries List
High chargeback ratios in the sector
New business with no credit or poor credit
Above-average employee turnover rate
High amount of returns and refunds
Classification as a terminated merchant (TMF) due to excessive chargebacks
Dealing with multiple currencies
High dollar transactions for products or services
What To Do If Your Business Is Considered High Risk
Even if your business falls into the high-risk category, there are payment processing companies that can still facilitate transactions. To secure merchant services:
Ensure your company follows local, state, and federal laws and regulations
Once compliant, you may be eligible for instant account approval
To avoid being labeled as high risk:
- Minimize chargebacks as much as possible
- If you have a large volume of chargebacks, seek a legitimate high-risk merchant account
Industries Commonly Considered High Risk
While not exhaustive, this list includes many well-known high-risk industries:
- Ecommerce
- Adult
- CBD
- Credit Repair
- Airlines and Booking
- Business Consulting
- Continuity Billing
- Subscription Boxes
- Dating
- Coaching
- Firearms
- Marketing
- Vape
- Travel
- Pawn Shops
- Auto Warranties
What To Do If You Lose Your Credit Card Processor
If you've been dropped by a credit card processor like PayPal or Square:
Don't panic
Ensure your business operates within federal and state regulations
Look for a high-risk merchant account that specializes in your industry
As your business grows and consistently gains sales volume, you may gain leverage to negotiate processing fees.
Conclusion
Understanding your business's risk status is crucial for securing appropriate payment processing services. Even if categorized as high-risk, options are available. Ensure compliance with all relevant regulations and consider specialized high-risk merchant account providers for sustainable, low-cost payment gateway solutions.