What is a high-risk business?

A high-risk business is any business that credit card processors feel represents a higher-than-average risk of financial failure.

What makes a business high-risk?

Certain industries are automatically designated high-risk based on the historical performance of the entire vertical. Individual merchants can also be placed in this category based on multiple factors, such as a previously terminated merchant account, a bad or minimal credit card processing history, or a high <a href="https://chargebacks911.com/chargeback-rate/">chargeback rate</a>.

Is there such a thing as a âlow-riskâ business?

Sort of. A âlow-riskâ status is more or less the default setting; this refers to any business that is not considered high-risk.

Which industry has the highest risk?

Itâs difficult to determine. However, some <a href="https://chargebacks911.com/mcc-code-merchant-category-code/">MCCs (merchant category codes)</a> that pose elevated risks include gaming, prepaid debit cards, pharmaceuticals, tobacco/E-cigarettes/cannabis products, and ticketing and events.

What can I do to avoid the high-risk designation?

If youâre not in a high-risk business category, the best way to avoid that label is to keep your chargeback ratio low by preventing as many chargebacks as possible.

What are high-risk business activities?

High-risk business activities refer to ventures that financial institutions and payment providers perceive as having a higher likelihood of chargebacks, legal challenges, or financial instability. These industries might include adult entertainment, online gambling, and cryptocurrency trading. Their perceived risk leads to stricter regulations, higher processing fees, and challenges in securing financial services.

What is a high-risk product?

A high-risk product is one that presents a significant chance of legal liability, financial loss, or safety concerns to sellers or consumers. These products might include items with a high probability of causing injury or those prone to regulatory scrutiny. As a result, they often face stringent regulations, insurance requirements, and potential legal challenges.