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Everything to Know About High-Risk Payment Solutions for eCommerce Businesses

A world, plane, and shopping cart animation in white on top of images of boxes

eCommerce isn’t inherently high-risk. 

However, distributing goods or services within an industry that’s known for higher chargeback rates, hard-to-navigate regulatory environments, and being prone to fraud (unfortunately) makes you a high-risk merchant.

What do we know, though? Oh, we’re just high-risk merchant experts who have worked with eCommerce businesses for years.

That’s why we created this guide just for you. We’ve explored:

  • The elements that make running or selling on an eCommerce platform riskier
  • Why you need tailored high-risk payment services
  • How to choose the right processor for your business
  • How to apply for these services

You’ll also find some processing tips for eCommerce business owners.

Why Some eCommerce Merchants Are Considered High-Risk (And Others Aren’t)

This honestly usually happens unexpectedly. One day you’re chugging along, earning cash by selling items online, and before you know it, you’re categorized as high-risk.

This can be especially surprising, upsetting, and annoying if you’re not running an eCommerce business that’s part of a ‘traditionally’ high-risk industry.

Typical high-risk trades that do often get classified as such include:

  • Adult

  • CBD/Cannabis

  • Gambling

  • Cryptocurrencies

  • Tobacco/Vape/E-cigarette

However, as mentioned, you don’t have to be running an online vape shop or adult toy store to be high-risk. Sometimes, simply operating an online business can classify you as a riskier establishment.

The answer why?

Facilitating online transactions, which are still deemed inherently riskier (especially if they’re multi-currency and international), inevitably increases the potential for cyber threats

What usually defines an eCommerce business as high-risk is similar to what defines any business as high-risk—ticket size, product type, logistical aspects like your fulfillment centers, and similar factors. Additionally, one issues we see with eCommerce businesses that get classified as high-risk is that they have, for whatever reason, are high refund or chargeback rates.

Dennis Pedersen FastoPayments

Why You (Absolutely) Need an eCommerce High-Risk Merchant Account

Working with a solution provider who knows the ins and outs of high-risk trades, what goes into seamless transactions, and the daily struggles of those can help you navigate high-risk industries and aid successful operations. 

For eCommerce companies specifically, a dedicated solution can improve approval odds by ensuring your business is compliant with varying regulations. It’ll also ensure you’re adhering to the rules set out by card schemes, which is important to the long-term success of your business.

In addition, the specialized support of a proficient provider can help you navigate regulatory issues, assist with dispute resolutions, and troubleshoot effectively.

In addition, a payment service provider that supports multiple currencies and payment methods can help you widen your reach and cater to customers worldwide, which is often the key element to success as an eCommerce merchant. 

Tips for Choosing the Best eCommerce High-Risk Merchant Services

Choosing the merchant service provider that’ll benefit you the most, at the end of the day, comes down to your business’s individual needs. Additionally, the specific product types or actual services your business offers could affect this process.

For instance, a CBD store and an online vape shop might seem similar on the surface. However, despite the two being somewhat alike, they both require a different approach. See what our founder, Dennis Pedersen, has to say about this:

There are certain industries in the eCommerce space where it really comes down to where, what, and how you're selling. If you're selling nutraceuticals, for example, you might be considered low-risk, but if you have a CBD-based eCommerce business with questionable products that are highly-regulated, you might get classified as high-risk.

Dennis Pedersen FastoPayments

Regardless, here’s a breakdown of some of the main elements any high-risk eCommerce merchant should be looking for when picking a processor.

Payment Methods

The payment options a payment service provider can equip you with can make or break a business in a high-risk industry.

That’s because your reach will be determined by the payment methods you offer and the audience you’re catering to, after all.

Ultimately, if you’re looking to cater to a larger clientele or grow your customer base across borders, being able to offer various payment options can help quite a bit (eventually, it’ll be necessary, so plan ahead for that).

PCI Compliance

As an online business, there’s no way around having to comply with regulations, especially PCI standards. 

While the regulations are stringent and difficult to adhere to, they’re less stressful if you’re working with an expert in the matter. 

That’s why having an experienced payment provider who knows the ropes can make the life of a high-risk eCommerce merchant much easier.

Bundled Payment Gateway

The payment services available on the market today are endless. Which, in theory, sounds great, right? Sure. 

However, with the sheer volume of service providers available to high-risk eCommerce businesses, it’s hard to distinguish the quality ones from the, ahem, lower quality ones.

Acquiring different services from different providers is also hard to maintain and just a hassle, quite frankly.

That’s why we suggest picking a processor who can provide the whole package in one place. Trust us, it’ll pay off in the long run.

Fraud Prevention

Nowadays, fraud prevention is perhaps one of the most important aspects of managing a business’s financial operations.

Because there are more cyber threats than ever before, it’s important to take precautionary measures wherever and however you can.

Hence, the fraud prevention tools a processor can offer shouldn’t be overlooked. Instead, you should double down on them when reviewing their services and offerings.

Customers today are also aware of potential threats, so if you can assure your clients of the security of their data and transactions, customer satisfaction will be almost guaranteed.

A scammer guy in front of a laptop smiling as he just took money from an account. Show some credit cards in the air around him

Customer Service

As regulations and laws tend to change unexpectedly in high-risk industries, having a knowledgeable team by your side can help you steer clear of financial losses and collateral damage.

Don’t think it’s that big of a deal? Non-compliance, for example, can lead to the termination of your merchant account and land you on the MATCH list. Yikes.

In addition, declined transactions and other payment problems are common in high-risk trades, where quick thinking and industry-specific knowledge are irreplaceable.

Pricing: Flat-Rate vs. Tiered

First and foremost, the pricing structures of such services should be transparent and reflect the quality of the service provided

When it comes to different types of pricing structures, there are flat-rate fees and tiered fees. 

In simple terms, flat rate fees are set before entering into a contract with a processor, agreed upon, and remain the same on all transactions. Typically, these rates are lower and set for a longer period of time.

The latter, however, indicates rates where the pricing is decided depending on your volumes and forecasts and is built up in tiers. This generally means that every time you hit the “cap,” the costs of your transactions get lowered.

Integrations

Finally, ensure the service provider’s tools are able to integrate seamlessly with your existing systems.

If not, you won’t really benefit from their services (or if you can, it’ll be complicated, costly, and often confusing to set it all up to where it does work).

Finally, the integration aspect of the service provider’s tools will, of course, determine whether the partnership will be successful. 

Basically, from our experience, poorly integrated tools will only bring about more problems for both sides.

An e-commerce shopping cart with a padlock, moving towards a secure, encrypted gateway, focusing on safe online shopping for high-risk goods.

How to Apply for High-risk Merchant Solutions as an eCommerce Business

The application process for obtaining merchant services for a high-risk business is tedious, we know, but processors need to be assured you’re able to handle your finances in various situations being in such an industry can bring about.

Plus, they need to ensure that your company is compliant with all sorts of regulations, of course, for legal reasons.

So, being prepared before applying for a merchant account or any other high-risk payment service will boost your chances and speed up the approval process.

Here’s a step-by-step guide for high-risk eCommerce companies applying for merchant services:

  1. Do your research: Make a pros and cons list of the processors you find would be a good fit for your business, and read actual customer reviews to get a better idea of what they could do for you.

  2. Gather your documentation: It’s wise to gather all the information and legal documents prior to applying to minimize the back-and-forth emailing.

  3. Submit your application: Take your time to complete the application, and don’t make careless mistakes. This will help you look more professional and well-organized, a good candidate and investment for a payment service provider.

  4. Wait patiently for your approval: After submitting your application, you can take a breath. This means you’ve passed the pre-check, were approved by the solution provider, and are waiting for the green light from your acquiring bank. 

High-Risk Online Payment Processing Tips for eCommerce Business Owners (From Our Experts)

Congratulations! You’ve now got a dedicated high-risk merchant account and possibly other merchant services. The anxious waiting period is over at last. All that’s left to do is maintain a healthy business and manage your account effectively

To do so, here are some tips and tricks our payment experts recommend:

  • Do everything on your part to minimize potential chargebacks. Implement clear refund policies, market your goods or services truthfully, write detailed descriptions, and use high-quality images. This way, you’re giving your customers a realistic expectation, which means fewer disputes and chargebacks in turn.

  • Maintain compliance on your side! Make sure that everything that’s in your hands is handled with care and security in mind. Legal issues will be less likely to occur, and you’ll have peace of mind as a high-risk business owner.

  • Pick the right processor. Don’t settle for a service provider that promises the world or guarantees extraordinarily low prices. Exaggerated claims are one of the first red flags that should be caught, and prices that are too good to be true probably are. 

Finally, here are some final words from our founder and resident high-risk payment processing expert:

One tip we always have for eCommerce merchants is that if they sell physical goods, the should make sure they aren't shipping from China, especially if they're in the US or EU. Acquirers usually don't want to work with companies doing that, as it leaves a massive gap in delivery time, sometimes as long as up to 6 weeks, and customers simply don't want to wait that long. Instead, find a local fulfillment center that can dispatch stuff in five days maximum.

Dennis Pedersen FastoPayments

Start Working with a Provider Who Understands Your High-Risk Needs

Ready to get your account?

For eCommerce merchant account and payment gateway solutions from a provider who understands the needs of your high-risk online business, get a free, no-obligation quote for a high-risk merchant account and payment gateway here.

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