Payment Solution For Your High-Risk Business


Is your business type considered as “high-risk”? Businesses that are prone to fraud and chargebacks are regarded as high-risk. Due to the high volume of cash transactions some businesses conduct daily, they are likely to have a high risk of fraud. Forex trading, travel accommodation, online gambling, adult-themed websites, and airplane charters are among the high-risk businesses.

Such business type experience refunds. For instance, cancellations in the travel industry will lead to customers filing for chargebacks. The business ends up refunding the customers and paying the chargeback fees. You see, the bank charges the affected business for processing chargebacks filed by customers.

Banks charge high-risk businesses higher fees for merchant services rendered to them. Your bank can place a rolling reserve on your business account if the firm has a history of refunds and chargebacks. The reserved amount will cover fraud or chargebacks in the future.

Why Your Business is Flagged as High-risk

The reputation of your business as well as its payment processing history is vital. Though the nature of your business labels it as high-risk, poor business practice can also put that tag on it. Banks assess certain factors to determine whether a business is high-risk or not.

Financial Strength 

If there is a possibility of your business experiencing fraud or chargebacks, banks will check your personal and business finances. The evaluation will help them determine the potential risks involved in rendering services to your business. Your business’ profitability, debt to equity, and other factors will help them determine the financial strength of your business.

Transaction Volume

Payment processors and banks use the processing volume your business execute to rate risk. Businesses that carry out millions of payment transactions are considered high-risk. Those with over 6 million payment transactions are at the highest risk. However, businesses with under 20,000 transactions are at the lowest risk.

Billing Model 

Banks use the transaction type that your business uses to determine the risk level. Payment processes that do not involve cards are riskier than those that make use of cards. Recurring bills or subscriptions are regarded as the billing model with the highest risk. You have to choose an ideal billing model for your business.

Industry Reputation 

The processing history of businesses in your industry will show the chargebacks, refunds, or frauds they experienced. The data will help banks to determine how much risk to expect if they render merchant services to your business.Besides the discussed factors, how you operate your business can label it as high-risk. Some practices that may put your business in the high-risk category.

  • Poor credit history.
  • Loss of previous merchant account due to excessive chargebacks
  • Little or no history of credit card processing

The risk associated with a business increases as it gets more chargebacks. Try to reduce the chargeback ratio to the minimum. Though you cannot change the risk designation of your business, you can manage the risks. Find ways to ease the drawbacks of the risks. Your payment processor can help you.

Besides, work with reputable and reliable merchant services. Paypound handles high-risk merchant payment transactions efficiently. Paypound reviews affirm that the payment processor offers the best processing solutions to high-risk business.