7 Industries That Require a High-Risk Credit Card Processor

Apr 28, 2022

Due to the nature of their respective verticals, high-risk merchants have often turned away from traditional payment processing. 

Why? High-risk businesses are more prone to chargebacks and fraud. Although the risk is inherent in every business, high-risk businesses are attacked at higher rates than low-risk businesses.

What Other Activities Subject Businesses To The High-Risk Category?

There are a number of reasons why the high-risk category can befall a business, which violates underwriting guidelines and prevent account approval. Here are the most common:

  • The industry has a higher occurrence of chargebacks and fraud
  • Processing Card-Not-Present (CNP) transactions
  • Products or services are sold using recurring billing
  • Bank sees your business as a reputational risk
  • Business is part of a highly regulated industry

The Solution

A reputable high-risk payment processor will play a pivotal role in integrating you with banks on demand. They will also include vital solutions to protect your business such as risk management tools. Regulations within these varied industries can change rapidly and without much warning. Your high-risk payment processor will be able to quickly and efficiently help you navigate these tricky waters, keeping your business profitable and out of legal trouble. 

Top 7 Industries That Require High-Risk Payment Processing

Here is the list of the top 7 industries that will need help from a high-risk payment processor. 

1. Adult Entertainment

Despite being such a lucrative business that only keeps growing, especially with its online offerings, adult entertainment is an industry that most banks consider a reputational risk. 

The fact that it also has a high volume of transactions also violates the guidelines set forth by the underwriters. 

2. Subscription Goods/Services

The subscription-based business model allows the consumer to enable the merchant to automatically withdraw funds from their bank account each month. When merchants fail to provide their customers with regular payment alerts, this leads to a high number of chargebacks, a red flag for banks. 

3. Kratom

Kratom, a botanical substance that has stimulative and sedating properties, has been growing in use and popularity. According to user testimonials, It is known to relieve body pain, symptoms of depression, and stress.

There has been little research done to prove these claims. Some customers have had little to no success in alleviating any health issues and therefore, these sales turn into chargebacks. 

4. Gaming

The gaming industry has exploded in the last few years. The biggest red flag for banks is that many of these online gaming companies are based offshore. These are also the types of businesses that have been caught engaging in fraud and money laundering activities. 

5. Airline

The high volume of ticket sales makes airlines more vulnerable to chargebacks. Having to deal with a wide variety of currencies also makes banks and credit card processors drawbacks. 

6. E-Cigs/Tobacco/Vape

Although this business continues to draw in high revenue, the tobacco industry is marred by heavy regulations, age restrictions, and taxes. Tobacco merchants also have a long history of “higher than average credit card reversals.”

The most evident of all is the reputational risk of working with an industry with the proven health risks of tobacco use to the public. 

7. Nutraceuticals

Nutraceutical companies normally use recurring billing, which mostly leads to chargebacks. Plus the advertising and marketing tactics used by these companies seem to promise success, raising consumers’ expectations. Inevitably, these products fail to deliver what is advertised and consumers are disappointed, which leads to chargebacks.

The Takeaway

Payment processors are interested in businesses that will not be overrun with fraud and chargebacks. Unfortunately, high-risk businesses simply won’t make the cut.

But all is not lost. With the number of high-risk businesses launching and growing, more high-risk payment providers have been established to meet these needs. Do your research to determine which provider will best meet your business needs.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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