If you’re a business owner in need of payment processing, you’re probably well aware that some banks and payment processors tend to stay clear of businesses in high-risk industries. But which industries are considered high-risk? 

Industries where there are often a high number of chargebacks, have a poor credit history, high ticket volume, and industries that see a large amount of fraud are often considered high-risk. For businesses classified as high-risk, securing payment processing with traditional financial institutions can be difficult or nearly impossible. 

At TailoredPay, we specialize in high-risk payment processing, enabling us to provide your high-risk business with the payment processing services it needs.

What is a High-Risk Business?

High-risk businesses typically fall under the following criteria:

• Your business processes a large volume of sales
• Multiple currencies are accepted
• Your business is located in or conducts business in countries that are considered high-risk
• Your business industry is considered high-risk as a result of fraudulent activity

High-Risk Business Types Include:

Chargebacks and Your Business

A chargeback occurs when a cardholder disputes a transaction on their account. Each time this happens, the bank that issued the credit card will investigate the matter on behalf of the cardholder. If the bank determines there was fraudulent activity, the funds are returned to the customer. It’s then the responsibility of the merchant to prove the transaction was legitimate. A chargeback fee is charged as soon as the cardholder initiates the dispute. To get a chargeback reversed, the merchant needs to show that the transaction was legitimate (however, the fee will still apply). 

Chargebacks play a significant role in determining whether an industry is high-risk since they can often be indicative of having high-fraud activity. As a result, merchant accounts can easily be closed if the risk department feels your business is receiving too many chargebacks.

Banks typically rely on chargeback thresholds to determine if the business is receiving too many chargebacks – these can either be based on the number of your transactions or overall revenue that your customers might chargeback before the merchant account is flagged. 

High-Risk Factors: What is a High-Risk Industry?

Your business might be considered high-risk if the following applies.

• Poor Credit: Just like in the personal finance space, businesses with bad credit (or no/limited credit history) might be classified as high-risk.
• Free Trials: If your business offers free trials that upgrade to paid subscriptions, it might be a high-risk business.
• Recurring Billing: Subscriptions and other forms of recurring billing are often labeled high-risk by traditional payment processors.
• High Rates of Fraud or Chargebacks in your Industry: As you might expect, if you go into an industry known for higher-than-average fraud or chargeback ratios, your business is likely to be labeled high-risk.

Merchant Account Fees in High-Risk Industries

It’s common for high-risk businesses to be charged higher fees for their merchant accounts than lower-risk merchants. When your business is deemed high-risk, it’s likely that many service providers will charge significantly higher transaction fees or even deny you service altogether.

But there’s good news – high-risk merchant account providers like TailoredPay help businesses keep their transaction costs down and avoid unnecessarily high merchant account fees. TailoredPay rates begin at 2.6% + $.15 per transaction. By partnering with a trusted merchant account provider, you can avoid unnecessary charges and surprise fees. 

Payment Processing Services for High-Risk Industry Businesses

TailoredPay offers secure payment processing solutions for businesses operating in high-risk industries. 

Merchant Accounts

A high-risk merchant account is a payment processing account for businesses that traditional payment processors classify as high-risk. Our merchant account offers reliable and affordable payment processing to help your business grow. Applying for a high-risk merchant account with TailoredPay is easy and convenient.

Payment Gateways

A payment gateway will enable you to securely accept credit and debit card payments, opening up plenty of new opportunities for your business. By integrating our fast payment gateway on your website, you’ll be able to take advantage of all that eCommerce has to offer while continuing to grow your business. 

Chargeback Mitigation 

Get notified as soon as a customer disputes a charge and have the option to issue a refund before it turns into a chargeback. You’ll automatically receive an email and have up to three days to respond. By issuing the customer a refund and dealing with their issue, you can halt the chargeback process and dramatically lower your chargeback ratio. 

How TailoredPay Can Help

As your high-risk merchant account provider, we help you secure payment processing so your business can grow and thrive.

Your Reliable Payment Processing Solution

At TailoredPay, we’re high-risk merchant account and payment processing experts that have our clients’ best interest in mind. Our carefully selected range of online and virtual payment gateways are ideal for high risk businesses of all shapes and sizes. 

Get in touch today, and find out how TailoredPay can help your business succeed. 

High-Risk Industry: Frequently Asked Questions

What is a low-risk business? 

Businesses fall within the low-risk merchant category when they have a positive credit history, they do not sell high-ticket items, the industry has a low rate of fraud or chargebacks, and they have minimal recurring billing or free trials. 

What is the difference between a high-risk business and low-risk business? 

Whether your business is considered high-risk or low-risk comes down to a few factors. These factors include industry type, credit history, ticket size, fraud activity, chargebacks, and billing model. 

How can I avoid having my business labeled as high-risk? 

If you’re already in a high-risk industry, there isn’t much you can do to avoid your business being labeled as high-risk. However, if your business is currently medium-risk or low-risk, one of the best ways to possibly avoid being labeled as high-risk is to keep your chargeback ratios to a minimum. High chargeback ratios are one of the bigger red flags for payment processors. 

How do I apply for a merchant account with TailoredPay? 

If your business is considered to be in a high-risk industry, TailoredPay offers payment solutions that can help. Our application process is quick and simple. The first step is to complete our online application.

What type of companies does TailoredPay support? 

At TailoredPay we work with businesses that are classified as high-risk, medium-risk, and low-risk. This includes start-ups. We work with businesses in the U.S. and offshore. 

Which supporting documents are required for a merchant account?

For those applying for a U.S. merchant account with TailoredPay, you will need to provide the following documents with your application: 

• Passport, Driver’s License, or Government-issued ID
• Voided check or bank letter
• 3 months of most recent credit card processing statements from your previous provider or existing provider (if applicable)
• 3 months of your most recent business bank statements. If your business is new, then 3 months of your most recent personal bank statements are required

How long will it take for my TailoredPay application to be approved? 

The average approval time for a U.S. merchant account is anywhere between 2 and 3 business days. It’s possible that the underwriter will request additional information which can extend the timeframe for new account approvals.