If your business faces frequent chargebacks, operates in a regulated industry, or struggles with sudden account freezes, traditional payment processors like Stripe or PayPal may not be the right fit.
High-risk payment processors specialize in serving industries with elevated fraud risks, legal scrutiny, or unpredictable revenue streams, offering tailored solutions for stability.
In this guide, we’ll break down the differences between traditional and high-risk providers, explain how to identify your business’s risk category, and help you choose a processor that ensures seamless transactions.
High-Risk vs. Traditional Payment Processors: What’s the Difference?
Payment processors evaluate risk based on:
Chargeback likelihood
Industry regulations
Transaction volume and average ticket size
Geographic operations (cross-border sales often raise red flags)
Traditional processors prioritize low-risk industries like retail or SaaS, where chargebacks are rare and regulations are straightforward. High-risk providers, however, underwrite businesses with complex needs, offering flexibility for industries others avoid.
Common Issues with Traditional Payment Processors
Sudden account freezes for exceeding undisclosed risk thresholds.
Limited fraud prevention tools, leaving businesses vulnerable.
Strict chargeback limits (e.g., Stripe’s 1% threshold).
Dennis Pedersen, CEO of Fasto says: “Many high-risk businesses don’t realize they need a specialized payment processor until their funds are locked for months. That’s why working with experts matters.”
What Makes a Business High-Risk?
Several industries consistently require high-risk payment processors, including CBD and cannabis products that face federal restrictions in many regions, online gambling businesses with elevated fraud rates, and adult entertainment companies that present reputational risks to processors.
Chargebacks, Fraud, and Other Risk Factors
Beyond industry classification, certain operational patterns can place any business in the high-risk category.
These include maintaining high chargeback ratios exceeding 1% of transactions, operating in legal gray areas such as cryptocurrency, processing high-ticket transactions for luxury goods, and conducting global sales that involve currency fluctuations and cross-border disputes.
High-Risk Payment Processors: Pros & Cons
High-risk processors provide greater stability through higher chargeback thresholds, typically allowing up to 3-5% compared to traditional processors’ stricter limits.
They offer dedicated fraud prevention tools including AI monitoring and 3D Secure authentication. These processors also feature robust multi-currency support for international sales and maintain reserve accounts that help buffer against sudden disputes.
Fees, Contracts, and Approval Process Differences
High-risk processors generally charge higher processing rates ranging from 3-6%, compared to traditional processors’ standard 2.9% + $0.30 per transaction.
Their contracts typically require longer commitments of 2-3 years and include early termination fees. While they require more extensive documentation such as business licenses and bank statements, specialized providers like FastoPayments can complete the approval process within 48 hours.
“You need a provider that actually understands your industry. Too many businesses get stuck because they pick the wrong processor and don’t realize it until it’s too late.” – Dennis says.
💡 Interested in learning more about what’s included in a typical high-risk merchant account? View our complete breakdown of FastoPayments’s high-risk merchant accounts.
8 Common Payment Processing Challenges and Solutions
Payment processing issues can significantly impact business operations, particularly for high-risk merchants. Here are the key challenges and practical solutions:
Chargeback Problems
High chargebacks trigger fees, damage reputation, and risk account closure. Beyond direct costs, they consume staff time and lead to increased processing rates. Implement 3D Secure, use real-time chargeback alerts, and provide excellent customer support to prevent disputes.
Account Freezes
Unexpected holds disrupt cash flow when triggered by suspicious activities or transaction spikes. Maintain open communication with your payment provider and proactively address potential red flags.
Hidden Fees
Unclear pricing structures impact profitability and complicate cost forecasting. Partner with processors offering transparent pricing and review contracts carefully for hidden terms.
Limited Payment Options
High-risk merchants often face restricted payment acceptance options. Choose providers specializing in high-risk industries that offer diverse payment methods including cards, ACH transfers, e-wallets, and cryptocurrency.
Poor Customer Support
Inadequate support turns minor issues into major disruptions. Select providers with 24/7 access to knowledgeable representatives and quick response times.
Security Concerns
Fraud threatens financial health and customer trust. Invest in advanced prevention tools, secure payment gateways, and PCI DSS compliance while implementing additional authentication methods.
Slow Approvals
Lengthy approval processes delay business operations. Choose processors with industry-specific expertise and efficient onboarding processes.
Age Verification Challenges
Industries like gambling, cannabis, and adult content must implement robust age verification systems while balancing legal requirements and user experience to minimize cart abandonment.
How to Choose the Right Payment Processor for Your Business
Key Questions to Ask Before Signing Up
Before selecting a payment processor, ask about their specific underwriting process for your industry and how they handle chargeback disputes.
Inquire about potential hidden fees including setup costs, monthly charges, and chargeback penalties. Also determine whether they offer fraud prevention integrations that can protect your business.
FastoPayments – A Reliable High-Risk Payment Solution
At FastoPayments, we provide tailored approvals for high-risk industries with transparent pricing and no surprise fees.
Our system includes advanced security features like machine learning fraud detection and chargeback prevention tools. We also offer global reach, allowing your business to accept payments in more than 30 currencies.
“We don’t just approve businesses—we make sure they stay approved. That’s the difference.” – Dennis, FastoPayments.
Choose Your Payment Processor Wisely
If traditional processors have rejected your business or imposed restrictive terms, a high-risk payment provider like FastoPayments can offer the flexibility and security you need. Evaluate your chargeback history, industry regulations, and growth goals to make an informed choice.
