Business solutions

What is a High-Risk Business?

20 min read
What is a high-risk business?

In the multifaceted world of commerce, businesses operate in myriad industries, each with unique challenges and risk factors. Some enterprises, however, fall under the “high-risk businesses” classification. This term refers to businesses that face increased financial, regulatory, or operational risks due to their nature or industry. 

Being labeled a “high-risk enterprise” can sound daunting, but it's not a death sentence. Your risk level to credit card processors determines your classification, and it has nothing to do with your potential for success. On the other hand, if handled properly, high-risk businesses have the potential to generate significant returns for banks, payment platforms, and merchants alike.

What is a high-risk business?

Being classified as “high-risk” means that payment processors anticipate more disputes within your industry. Let's examine some of the factors that could result in your business being identified as high-risk.

  • Elevated chargeback rates can result from customer disputes, fraud, or dissatisfaction with products or services.
  • Regulator scrutiny due to the nature of high-risk industries' products or services.
  • Higher potential for fraud, requiring robust fraud prevention and detection measures.
  • Unpredictable income streams due to the volatile nature of specific industries. It will make financial planning and stability more challenging.

Based on the above, there are many difficulties that high-risk enterprises face:

  • Difficulty in securing reliable and affordable payment processing services. Many traditional financial institutions may need to be more open to working with businesses perceived as high-risk.
  • Stricter regulatory compliance, a significant challenge for high-risk businesses, often requires additional resources and expertise.
  • Higher operational costs of implementing stringent security measures, fraud protection tools, and compliance efforts.
  • Limited access to financing because traditional lenders may be cautious about extending loans or lines of credit to high-risk businesses.

What businesses are considered high-risk businesses?

A high-risk business is typically characterized by factors that elevate uncertainty and potential financial liability. These businesses often operate in industries with higher incidences of fraud, chargebacks, or regulatory scrutiny, such as:

  • Online casino and gambling

Businesses involved in gambling and betting are often deemed high-risk due to the potential for fraud, chargebacks, and the regulatory complexities associated with the industry. The primary reason for this is that most governments need to endorse this business approach, and many countries at the state level are struggling with Ludomania and earnings at the bets. A financial institution desires to center on its primary business, involving only those vendors who will yield them the maximum profit while posing the least risk.

  • Cryptocurrency and Forex Trading

The volatile nature of cryptocurrency markets and the potential for financial fraud contribute to the high-risk categorization of businesses involved in cryptocurrency trading and forex. The instability of the cryptocurrency field creates difficulties for people who have invested in it and leads to financial losses. In addition to being inherently unstable, cybercriminals widely use cryptocurrency, which presents another major issue.

  • Adult entertainment

The adult entertainment industry encounters several challenges concerning societal norms, age verification, and regulatory scrutiny, contributing to its high-risk classification. It is difficult to predict which videos adult stores will air. For banks and payment providers, this poses a significant risk because they do not want to facilitate payment processing for any company that promotes prohibited activities and goes against the law or public morality.

  • Travel and booking

The travel and hospitality sector is considered high-risk due to the prevalence of chargebacks, cancellations, and the unpredictable nature of the industry.

Other high-risk businesses can also include:

  • рharmaceuticals and nutraceuticals;
  • event ticket brokers;
  • real estate investing;
  • tobacco and e-cigarettes;
  • firearms and ammunition sales;
  • debt collection agencies;
  • telemarketing sales.

How to choose a good payment gateway provider for high-risk business?

How to choose a good payment gateway provider for high-risk business?

In the dynamic world of e-commerce, selecting the right payment gateway is crucial, especially for high-risk businesses. High-risk industries, such as adult entertainment, online gaming, and pharmaceuticals, face more significant challenges in securing payment processing services. A robust payment gateway facilitates smooth transactions and ensures the security and integrity of sensitive financial information. 

There are many important factors to consider when choosing a payment gateway provider for high-risk business.

  • Industry experience

Look for a payment gateway provider with a proven track record and experience handling transactions for high-risk businesses. Understanding your industry's unique challenges and compliance requirements is vital for a seamless payment processing experience.

  • Security measures

If your business isn't certified to the Payment Card Industry Data Security Standard (PCI DSS), make sure your payment gateway provider follows industry data encryption standards, complies with PCI DSS, and employs fraud prevention measures. A secure payment gateway builds trust with your customers and protects sensitive information.

  • Global reach and currency support

Consider a payment gateway that supports a wide range of currencies and has a global reach. It is crucial for high-risk businesses that operate internationally. The ability to process transactions in various currencies enhances your business's flexibility and allows you to cater to a diverse customer base.

  • Chargeback management

High-risk businesses are often more susceptible to chargebacks, negatively impacting your bottom line. Choose a payment gateway provider with practical chargeback management tools and dispute resolution mechanisms. Such an approach can help minimize financial losses and maintain a positive merchant reputation.

  • Transparent fee structure

Understanding the fee structure is crucial to avoiding unexpected costs. High-risk businesses may incur higher processing fees, but a transparent fee structure will help you plan and manage your finances effectively. Compare fees, including setup costs, transaction fees, and any additional charges, before making a decision.

  • Regulatory compliance

Ensure the payment gateway provider complies with relevant industry regulations and legal requirements. High-risk businesses often operate in heavily regulated environments, and partnering with a provider that understands and adheres to these regulations is crucial for long-term success.

The possibility of integrating the payment system using API

Integrating APIs (Application Programming Interfaces) allows seamless communication between different software systems, enabling the payment gateway to interact with external services and support a wide range of payment methods.

API integration has several advantages for businesses. Some of the key benefits include:

  • Diverse payment methods — integration with significant credit card networks (Visa, Masterсard), popular digital wallets like PayPal, Apple Pay, and Google Pay, and crypto payment gateways.
  • API integration for added functionalities such as fraud detection, identity verification, and customer authentication.
  • Integration with mobile software development kits (SDKs) to enable in-app payments for mobile applications.
  • Subscription billing will support recurring billing for subscription-based businesses.
  • Multicurrency supports and allows businesses to operate globally.
  • Security features — integration with two-factor authentication (2FA) and fraud detection APIs.

The role of acquiring in payment gateway operations

Acquiring refers to collecting funds from customers and transferring them to the merchant's account. It involves the acquiring bank, an intermediary between the merchant and the payment gateway. This bank is responsible for authorizing and settling the transactions initiated by customers.

Acquiring has the following key roles and functions:

  • Transaction authorization or declining payment transactions initiated by customers. When a customer makes a purchase, the acquiring bank checks for the availability of funds and assesses the risk associated with the transaction.
  • Merchant onboarding — evaluate the risk related to the merchant’s business, ensuring compliance with regulations and setting up the necessary agreements for processing transactions.
  • Managing and mitigating risks associated with online payment transactions — identifying and preventing fraudulent activities, monitoring chargeback levels, and implementing security measures to safeguard the integrity of the payment process.
  • Establishing relationships with major card networks such as Visa, Masterсard, and American Express. These relationships enable the processing of card transactions and ensure compliance with network rules and regulations.
  • Responsibility for settling transactions between merchants and customers. After receiving authorization, the acquiring bank ensures that funds are transferred from the customer's account to the merchant's account. 
  • Integration services with payment gateways to facilitate the smooth flow of transaction data. It ensures that payment gateways can securely transmit transaction information to acquiring banks for authorization and settlement.
  • Adhering to regulatory requirements and industry standards. They ensure merchants using the payment gateway comply with relevant regulations, including anti-money laundering (AML) and Know Your Customer (KYC) requirements.

The importance of protecting personal data and financial information

The importance of protecting personal data and financial information

Protecting personal information, such as social security numbers, addresses, and birthdates, is crucial in minimizing identity theft risk. Financial information, including credit card details, bank account numbers, and passwords, is also a prime target for cybercriminals. Unauthorized access to such information can result in financial losses, fraudulent transactions, and compromised bank accounts. 

Governments and regulatory bodies worldwide have recognized the importance of protecting personal data. Various data protection laws and regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) in the United States, mandate organizations to implement measures to safeguard personal information. Adhering to these regulations not only protects individuals but also ensures legal compliance for businesses.

The leading international data protection methods include:

  • An Anti-fraud system is designed to detect and prevent fraudulent activities, unauthorized access, or malicious transactions. It uses various techniques (pattern recognition, anomaly detection, behavior analysis, etc.) to detect and mitigate potential fraudulent behavior.
  • 3-D Secure (3DS) is an additional layer of authentication for online credit and debit card transactions. It adds an extra step during the payment process by requiring the cardholder to authenticate with a one-time password or biometric verification, reducing the risk of unauthorized transactions.
  • PCI DSS — is a set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment. This certificate indicates that the company has implemented strict security measures to protect cardholder data.

The importance of high-quality customer support for a payment gateway

While the technical aspects of a payment gateway are crucial, the significance of high-quality customer support should not be underestimated. Customer support does more than resolve disputes; it provides technical assistance and answers customer questions.

Many factors of the work of this department emphasize the importance of high-quality customer support for the payment gateway.

  • Ensuring smooth operations. In the event of technical glitches, transaction failures, or user inquiries, responsive customer support can swiftly address issues, minimizing downtime and maintaining a positive user experience.
  • Building trust and credibility. A payment gateway with reliable and responsive customer support instills confidence in users, assuring them that assistance is readily available in case of any concerns. 
  • Adapting to user feedback. By actively listening to user feedback, payment gateways can identify areas for improvement, implement necessary changes, and enhance their overall service quality.
  • The around-the-clock accessibility support system ensures that users receive assistance whenever needed, regardless of their time zone or the time of day, contributing to a positive customer experience.
  • Compliance with security standards. Customer support ensures that users know security measures, guides them on best practices, and promptly addresses any concerns, thereby maintaining compliance and enhancing the overall safety posture.


Understanding the concept of high-risk businesses is essential for entrepreneurs, stakeholders, and service providers operating in various industries. High-risk businesses face unique challenges from regulatory scrutiny, elevated chargeback rates, and increased susceptibility to fraud. However, navigating these challenges effectively can lead to sustained success and resilience in competitive markets.

Identifying which businesses fall under the high-risk category involves considering factors such as the nature of the industry, potential for fraud, regulatory compliance requirements, and chargeback rates. Industries such as online casinos, adult entertainment, and cryptocurrency trading are commonly classified as high-risk due to their inherent characteristics and regulatory complexities.

Selecting a reliable payment gateway provider is crucial for high-risk businesses to facilitate secure and efficient transactions. Factors such as robust security features, compliance with industry regulations, and a reliable service delivery track record should be prioritized when choosing a payment gateway provider.