What Makes You a High-Risk Business?

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Your eCommerce business needs to take card payments online in order to be successful. To accept payments online, you need to obtain a merchant account either through your bank or through a merchant account provider.

When you apply for merchant processing, the banks or payment service providers may classify you as a high risk merchant.  What are the factors that can cause your business to be considered high risk?

Understanding what these factors are can help you work your way around them. And collaborate with a bank or merchant account provider who is open to offering you favorable terms and conditions to support your business.

Industry Classification

Many banks and merchant account providers protect their interests by having a list of industries that historically have a greater risk of chargebacks & fraud.  If you conduct business in any of these sectors, you may be classified as high risk even if you present a good processing history along with your application.

You can also expect to pay a higher than standard processing fee to cover the risk.  Some of the criteria and types of industries that account providers might identify as high-risk businesses can include, but certainly are not limited to:

  • Travel (unpredictable weather conditions and the possibility of customers making cancellations)
  • Adult industry (customers might deny that they have visited the sites)
  • Neutraceuticals and vitamins
  • Telemarketing and tech support industries
  • Subscription billing and recurring payments business models
  • Financial services
  • High ticket sales
  • Digital content
  • Software 
  • Fast growing industries that require high volume processing capacity
  • Industries that are highly regulated
  • Casinos and online gambling sites

Terminated Accounts List

If you have had your merchant processing account terminated for any reason, banks and processors canplace you on a blacklist called a Terminated Accounts List or Match List. Since all account providers have access to this list, being put on it puts you in the high-risk business category. Thus, you might find it challenging to get approval for a new merchant account. The typical reasons why the providers might choose to turn down your request are:

  • Committing fraud
  • Laundering money practices
  • Too many chargebacks
  • Non-compliance with the terms of the contract.

Possibilities of Chargebacks

Chargebacks occur when the buyer disputes a transaction with their card issuing bank.  Chargeback requests are usually made when:

  • Customers deny that they entered into a recurring bill contract.
  • You ship a product each month, and the customers deny that they placed the order.
  • You don’t have a refund policy and customers, when not satisfied with the product or services, want to return them or request a refund.
  • Customers have no way of contacting you like over the phone or email.
  • You don’t respond to customer queries and complaints.
  • You process more credit cards than the limit agreed upon with the account provider.
  • The customers are not aware or overlook the contract terms that payment will be charged to their credit card.
  • The customer might claim that the customizable product she ordered is different from the one she eventually received.
  • You request for full payment for transactions before the customer receives the products, or you complete the service.

Credit Card Not Present Issues

If you allow your customers to pay online without actually swiping the credit card, you could be considered a high-risk business. That’s because any transactions conducted by using stolen cards cannot be identified without an alert that the card is lost.

To safeguard your company from the possibility of fraudulent transactions, accept only 3D Secure Transactions. Get tools like Mastercard Securecode, Verify by Visa, and other similar systems to protect you.

Keep in mind, though, that the more steps you add at checkout, the more shopping cart abandonment you will experience.

Low Credit Score and Existing Tax Liens

Merchant account providers will check your personal credit score before approving your application.  If you have any unpaid business or personal tax liens, you might want to pay them off before applying for a merchant account. 

Other Issues

Aside from the issues mentioned above, several other factors could place your business on the high-risk list. They are:

  • You could be delivering products overseas to countries other than your own
  • You could receive payments in currencies other than the currency that the bank or account provider deals in.
  • Long interval between the receipt of payments and delivery of goods or services.
  • The time for which you have been open for business (account providers may be wary of supporting startups since they are unsure of the continued viability of the business)
  • You deal in products that have a high cost and value or expensive items like jewelry, watches, antiques, rare coins, art, and so on.
  • Larger than normal volume of transactions (if you process amounts that are greater than those typically expected from your industry, you can raise red flags that place you in the high-risk business bracket)


Even if you are classified as a high-risk business, you can still find many companies willing to provide processing for you.  High risk processors have systems in place that can help mitigate the processing risk both for you and the processor.   Over time, you can build a solid processing history and have your business transferred to the low-risk category.

How are you handling your high risk processing?

Tina Brandon is SVP for PaynetSecure.net.  With over 20 years in high risk processing, she has helped thousands of high risk merchants successfully establish payment processing accounts.  Contact Tina on Skype at tibrandon. Or email her at tibrandon@paynentesecure.net.




MOTO is an acronym for Mail Order and Telephone Order. The term applies to merchants that accept orders by phone, mail & fax.

It’s easy to feel all alone if you run a MOTO business. MOTO merchants have been facing headwinds for much of the past decade.

But the business model is not doomed. Rather, the industry is evolving to better serve the needs of customers across the country.

If you run a MOTO business, you’re not alone. Research suggests that there are more than 48,000 businesses in this industry that brought in $129 billion last year in revenues. More than 200,000 people are employed by MOTO merchants.

The reason the industry feels deserted is because it’s highly fragmented and that’s a good thing for businesses that are willing to invest and evolve their services. There’s a rare opportunity to capture a lot of market share by evolving the business model and reaching out to customers through multi-channel marketing such as phone & mail order sales.  

When you accept order by phone & mail, you boost your business compared to simply accepting online payments

Better Payment Solutions

The need of the hour is a better platform for payments.

MOTO customers often want personal services and the peace of mind that comes from speaking to a representative prior to buying. In fact, customers are willing to pay more for better, more personal service.

It’s a known fact that a portion of customers abandon their purchase at the checkout because the forms are convoluted or cumbersome. 

Some customers have concerns about entering credit card details online, while other simply prefer paying through fax or mail.

This is a substantial portion of the retail market and is currently served by small, local businesses that lack resources to secure payments. Paying over the phone or through fax is a form of ‘card-not-present’ transaction, which needs added layers of security.

Fortunately, payment processors offer special accounts to MOTO businesses that solve these issues. These accounts allow you to access a virtual terminal that can accept payments over the phone or through the mail.

All transactions are routed through acquiring banks and all the details are encrypted for data protection. Acquiring banks process the payments and help you minimize the risks involved.

Processing MOTO Payments

The virtual terminal provided is a fully encrypted since acquiring banks consider these transactions high-risk regardless of the industry. This virtual terminal is easy to operate and you can train your staff to use it while processing payments for customers over the phone or through the mail.

The following guidelines will help you and your staff handle MOTO transactions safely:

  • Assess whether the address provided is the same as the address registered for the card. If the details do not match, check with the customer.
  • Get the CVV code printed on the back. This code is distinguished from all the other card details and can only be provided by a customer who has the card physically present.
  • Internal data protection is essential, and employees must only be given access to data they absolutely require for their job. Give trained and authorized employees access to the virtual terminal, but make sure they change their passwords often.
  • Request a digital electronic signature for high ticket items. Ask for permission to record telephone verification confirmation for such orders.
  • Set features on the terminal to accept payment at the lowest processing rates available.

All these measures help you improve the level of service and security you provide for your customers. They are also deemed necessary by acquiring banks who will deal with the transaction.  


MOTO merchants can easily take advantage of safe and secure virtual terminal payment processing. Specialized payment gateways help your business leapfrog the competition. Build trust & boost sales by offering phone, mail and fax payments through a secure and efficient channel.

How are you handling your MOTO orders?  

Contact info@paynetsecure.net today