4 Business Models That Require High Risk Payment Processing:

Not all banks like to associate themselves with certain types of businesses. High-risk businesses usually run a greater risk of chargebacks or fraud payments. Businesses like these don’t work optimally with regular payment processors and need a high-risk payment processor. Similarly, industries like tobacco and firearms, and companies providing subscription-based services find it hard to locate a bank to underwrite their businesses. While there isn’t a central guideline defining which types of business are high risk. Each bank, payment processor, or payment service provider has its definition and criteria for designating a business as high-risk. These are the 4 Business models that require a high risk payment processing account. 

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  1. Adult entertainment industry: 

The adult industry is booming with new customers and growing steadily. Researchers approximate the industry is worth $97 billion globally and is highly profitable. However, the adult industry merchants often find it tough to find a reliable and perfect funds processor due to the taboos associated with the industry. The adult industry is very widespread, and many of its niches like escort services are questionable even when they are legal.

Another factor that makes the Adult industry a high-risk one is its customers. Customers of the adult industry are notorious for disputing charges. No financial institution likes to issue a refund and chargebacks. Adult business merchants also need to process a large volume of transactions, and due to non-existent credit history, most processors refrain from doing business with them. Due to these issues, any business under the umbrella of the adult industry is considered a high-risk one and needs an adult merchant account.

  1. Companies providing Subscription-based services: 

The subscription model is not limited to Netflix and Amazon only. Almost every industry has companies that provide services on a subscription basis. Subscription or other types of recurring payments ensures customer comfort, which helps retain customers. Subscription services are pretty popular these days and can even generate high revenue in the long run. Companies following a subscription-based business model have a higher chance of generating more revenue by gradually acquiring more customers. However, the business model is considered a high-risk one. It is because most of the subscription services face a high instance of chargebacks. Much of the high rate of chargebacks is because many people forget to cancel their subscriptions on time. Some of them even forget when they had made the purchase resulting in a chargeback request. Unavailability of the physical card during payment further solidifies the payment processors’ argument of fraud and chargebacks. Due to these factors, most payment processors don’t want to avail their processing services to subscription-based businesses, and these companies have no other choice than to opt for a merchant account. 

  1. Gambling and Casino business: 

Due to the advent of digital entertainment, gaming platforms are increasing rapidly. Gambling-type businesses like fantasy sports, app-based games are also gaining momentum these days. Casinos are among those industries which are most prone to money laundering. Online casinos using real money have further made the risk much higher, due to which authorities have created many rules and regulations for countering these illegal processes. Most gambling businesses operate in a legal gray area that varies from region to region. Due to this, many Casinos prefer to run offshore and work from there, making it harder for authorities to trace the funds. Online casinos using real money require a high-risk credit card processing power. However, businesses like these face heavy chargebacks due to the absence of a physical card during the transaction. Many customers, after losing money, dispute the transactions as fraudulent ones. As the digital gambling industry is relatively young, merchant service providers are still trying to understand how it works, thus making it high-risk. Due to these factors, companies in this industry opt for merchant service account. 

  1. Crypto market: 

The crypto sector is among the most volatile markets in the financial domain. The crypto market is growing exponentially, and experts believe that the industry will grow at 60.2% CAGR by 2025. Since the crypto market is new, they have many systems gaps that lead to money laundering. At present, the sector is not well regulated compared to other financial industries, due to which banks and credit card processors view these companies as high-risk ones. 

Governments worldwide are also trying heavily to control the flow of crypto within their borders, making the future of crypto uncertain in the long run. Although it is debatable, there is a risk of hacking that looms around the crypto exchange servers. Additionally, the high rate of chargebacks, potential fraud, and money laundering risks cause many financial institutions to stay away from the sector. Due to these reasons, the crypto market is treated as a high-risk one.

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Benefits of the high-risk merchant account: 

Although getting a high-risk merchant account is a tedious process, it has its benefits. Some of them are listed below: 

  • Global expansion: Compared to the traditional merchant accounts, a high-risk merchant account can do transactions worldwide irrespective of the currency. It gives a chance to merchants to globalize their business. 
  • No volume caps: A high-risk merchant account holder doesn’t have to worry about the monthly target volume. 
  • Chargeback worries can be avoided: If you have a rate of more than 1% chargeback in a traditional merchant account, your account can be terminated by the service provider. However, with a high-risk merchant account, you don’t have to worry about the chargeback. 


Every business has a different need; while traditional businesses can work fine with traditional merchant accounts, newer types of business can’t. Issuing a refund is one thing, and chargeback is another. While the seller initiates a refund, the customer initiates the chargeback and requires an intervention from the payment processors. Businesses doing most of their transactions through credit cards can’t risk doing their business with traditional financial institutions. In the beginning, these institutions may approve the request of opening a merchant account. Still, after watching the chargeback and other alerts, they may also terminate the account, which isn’t the case with high-risk merchant account processors.

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