High-risk merchants choose specific eDataPay and it’s Global payment processors because traditional banks and standard processors are often unwilling to work with them due to the increased perceived risk.¹ Here’s a breakdown of why:

Why a business might be classified as “high-risk”:

• Industry Type: Certain industries are inherently considered high-risk due to a higher likelihood of fraud, chargebacks, or regulatory scrutiny.  Examples include online gambling, adult entertainment, CBD/cannabis products, firearms, travel agencies, nutraceuticals, and credit repair services.

• Business History: New businesses without a proven track record, or those with a history of frequent chargebacks, high refund rates, or financial instability (e.g., poor credit), are often flagged as high-risk.

• Transaction Characteristics:

  • Card-not-present transactions: Online, mail, or telephone orders have a higher risk of fraud compared to in-person transactions.⁵

  • High average ticket amounts: Larger transactions carry more financial risk if a chargeback occurs.

  • High sales volume or erratic sales: Inconsistent or very high sales volumes can be seen as a risk indicator.

  • Subscription-based services: Recurring payments can lead to higher chargeback rates.

• Geographical Location: Businesses operating in certain countries or engaging in significant international sales may be deemed higher risk due to varying regulations and fraud rates.

• Regulatory Environment: Industries with evolving or strict regulations can pose greater risks for processors due to potential legal issues and compliance challenges.

Why high-risk merchants choose specialized processors:

• Acceptance: Specialized high-risk payment processors are willing to take on businesses that traditional banks and standard processors decline.

• Tailored Solutions: These processors understand the unique challenges of high-risk industries and offer solutions designed to mitigate those risks, such as advanced fraud detection tools, robust chargeback management, and compliance support.

• Risk Mitigation: While high-risk accounts often come with higher fees (setup, monthly, processing, and chargeback fees) and stricter terms (like rolling reserves where a percentage of transactions is held), they provide essential access to payment processing that allows these businesses to operate.

• Experience and Expertise: Processors specializing in high-risk businesses have experience navigating the complexities and can offer guidance on best practices for risk management.

In essence, specialized payment processors fill a critical need for businesses that would otherwise struggle to accept credit and debit card payments, by providing the necessary infrastructure and risk management despite the elevated risk.