(844) 769-4769 sales@paynetworx.com

Paynetworx High Risk Merchants

THERE’S NO eCommerce withoUT RISK

In the world of Acquiring one aspect is mandatory. Your particular business MCC code. That’s the Merchant Category Code – as defined by the Scheme Card Networks. In short, it is a four-digit code that describes your type of business. As you’d expect for all merchants there are good ones and bad ones – low risk and high risk in effect.

Different card networks use different codes but the general idea is to create a transparent, understandable platform for merchants that underpins the processing fee structure..

Business is full of risks. Sometimes you just have to take them.

Fail to prepare - Prepare to fail.

Many merchants find that traditional banks are not prepared to work with them if their accounts are considered ‘high risk’.

In fact these banks often have processes in place specifically to prohibit them from providing services to risky industries.

Other banks simply refuse to understand the ‘real’ reasons a business might have a high risk code imposed upon it.

High Risk Industries.

Some industries and sectors of business are always called out as high-risk. Frequently these include:

•  Pharmaceuticals  •  Gambling  •  Gaming  •  Adult  •  Insurance  •  Air travel  •  Financial Services  •  Telemarketing

This is by no means all of them so always consult a full list of high-risk industries before you begin your merchant account application journey. That way there is less likely to be nasty surprises futher down the road.

It’s worth as stating here and now that not all high-risk industries are a bad business. Many high-risk merchants are perfectly legitimate merchants who just happen to operate in a sector seen as high-risk.

There are acquirers that specialize in high risk and you will have to pay for that specialty, Paynetworx does not target high risk, but we evaluate all accounts on their own merit.

So let’s look deeper

Credit Risk

Industries with a time between payment and fulfilment are often flagged up as high-risk. Industries like travel, transport and home interiors where the cardholder pays often many months before the merchant delivers the order. If the merchant goes bust during the delay, Paynetworx becomes liable hence the increased risk.

Businesses with a high incidence of chargebacks are also seen as high-risk as the acquirer is liable for chargebacks should the merchant go to the wall.

Third party fulfilment businesses, property letting agents for example, come under the category of high risk – because the service is delivered by the owner or owner’s maintenance team


Regulatory Risk

Heavily regulated industries like pharmaceuticals and gambling are usually classified as high-risk as they are prone to high levels of regulation, making it difficult to predict the long-term viability of a business model (this increases the risk of the business failing) AND also means the payment processor may contravene the laws or regulation itself. That is a big risk.

Obviously breaking laws or regulations carries criminal consequences.  Businesses with high levels of cash takings are also usually classified as high-risk as they can be used for money laundering. Another big risk.

Reputational Risk

Acquirers historically developed from banks who generally have a pious & puritanical approach to managing their global reputations.

Merchant business that could perhaps bring (what they call) reputational damage to the institution are very unwelcome  and are classified immediately as high-risk. We take a more objective approach.
Of course many of these activities are perfectly legal — for example, adult and high-interest short-term money lending but do not pass muster with more ancient institutions.

So it is always worth talking to us – our view does not share that level of piousness. We’ll only say no if we need to.


Behavioural Risk

Mastercard’s MATCH (Member Alert to High-Risk Merchants) Database holds an extensive database of ‘risky’ businesses. Merchant account providers use MATCH to quickly screen out high-risk businesses. We do the same.

Businesses are entered onto the list if their merchant accounts have been terminated and this can happen for a number of different reasons. Some of the most common include: receiving a high number of chargebacks, money laundering, violating terms and conditions, convictions for fraud, bankruptcy or illegally obtaining assets.

If your business is on the MATCH list, it’s unlikely that you will be accepted by a mainstream merchant account provider. Our advice – don’t do anything to get on it!

Avoid Chargebacks

From the perspective of an acquirer, nothing is more worrying than the threat of a mass of chargebacks hanging over a company.

That’s because if the company fails, the acquirer becomes liable for all those disputed charges.

High risk is not the end of the road. Here’s how to help yourself…

Maintain impeccable accounts - good or bad

By now, you probably know your business is classified as high-risk. It is vital to make sure all other aspects of your business are beyond reproach.

That includes completing ALL your accounts in full, filing them correctly – on time – then making all of that accessible to the Acquirer/Processor. Include everything relevant, even if it’s not entirely positive, as omitted details might get your application delayed or rejected.

Terms & Conditions - make them water-tight. No exceptions.
With high-risk merchant businesses, you’ve got to reduce the amount of uncertainty. No Acquirer reacts well to uncertainty – and Paynetworx is the same. So focus keeping your trading terms and conditions up-to-date. Make sure you explicitly state what you offer and what you expect and what your customers can expect from you.

Removing ambiguity substantially reduces risk and makes you more attractive to Acquirers – like Paynetworx.

Get Third Party Fulfilment Protection...

Some merchants — for example, letting agents (we mentioned them earlier) — have to use third-party providers for fulfilment because it’s part of their business model. If you have to use third-party fulfilment, it’s essential your contract protects you — and us (or your Acquirer) adequately.

A simple way this is achieved is by withholding a % of your fee to cover future chargebacks. Very tidy.

Attitudes to risk will vary, but keep looking...

Acquirers (& payments processors) can have very different attitudes to risk and different ways to assess a company’s risk. So don’t just go to one company and assume their analysis is how everyone else will treat you.  While one provider may consider you high-risk, we may analyse your business and decide that you constitute a medium risk – or lower!

So be smart – get a number of different quotes to see how other Acquirers treat your business. Then talk to us – here at Paynetworx.


Think of us as your one-stop shop for all your payment services no matter what type of business you are in. We do it end-to-end.

(844) 769 4769


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