If you’ve ever applied for a merchant account and been denied, or had your payment processing suddenly cut off, you might be wondering why your business is considered high risk. For many entrepreneurs, this label feels confusing and unfair. But understanding what it means, why it happens, and how to work around it can make all the difference when it comes to running your business smoothly.
What Does It Mean When a Business Is Considered High Risk?
When a business is considered high risk, it typically means that banks and traditional payment processors view it as having a greater chance of chargebacks, fraud, or compliance issues. This doesn’t mean your business is shady or illegitimate, it simply means it falls into a category that comes with a higher level of financial or regulatory risk.
This label can affect your ability to secure reliable payment processing. You may face higher fees, stricter contracts, withheld funds, or even outright denial from banks and mainstream processors.
Common Reasons a Business Is Considered High Risk
There are several factors that can lead to your business being labeled high risk:
- Industry Type: Some industries are automatically flagged as high risk because of historical chargeback rates or legal scrutiny. These include adult entertainment, bail bonds, CBD and vape products, travel, online gaming, subscription based services, and more.
- High Chargeback Rates: If your business model tends to result in customer disputes, such as recurring billing or high ticket transactions, processors may consider you high risk.
- Regulatory Complexity: Businesses that operate in heavily regulated spaces, like nutraceuticals or firearms, are considered riskier because of the compliance burden.
- Processing History: If you’ve had previous merchant accounts terminated, experienced fraud, or have limited processing history, that can also contribute to the label.
Industries Most Commonly Affected
Some of the top industries where a business is considered high risk include:
- Bail Bonds: Due to legal scrutiny and high chargeback potential.
- Adult Entertainment: Because of age verification requirements and reputational concerns.
- Travel and Ticketing: High value and long lead times between purchase and delivery increase chargeback risk.
- E-commerce Subscriptions: Recurring billing often leads to disputes or cancellations.
- CBD and Supplements: These are highly regulated, and laws vary between regions.
Each of these industries faces its own unique challenges, but they all struggle with securing and maintaining traditional payment processing.
Why Traditional Banks and Processors Say “No“
Mainstream financial institutions prefer low risk businesses that are easy to underwrite, predictable, and unlikely to attract legal or reputational issues. When a business is considered high risk, it creates more work, more monitoring, and more liability for these institutions. That’s why many banks simply refuse to onboard high risk merchants, or drop them with little notice when a problem arises.
Where to Turn for High Risk Payment Solutions
If your business is considered high risk, all is not lost. Specialized high risk payment processors are designed to work with businesses like yours. These providers understand the unique challenges your industry faces and offer tailored solutions to help you accept payments securely and reliably.
They offer features like chargeback prevention tools, flexible underwriting, and support for compliance across various industries. Most importantly, they provide the stability and support that traditional processors often lack.
Turning High Risk Into High Opportunity
At SanctusPay, we know what it’s like when your business is considered high risk, and we’re here to help. Our team specializes in creating reliable, secure, and fully compliant payment processing solutions for high risk merchants across a wide range of industries.
Contact SanctusPay today for all of your payment processing needs, and discover how simple and stress free high risk processing can be.
