High-Risk Industries for Payment Processing: complete list 2020

High-Risk Industries for Payment Processing: complete list 2020

High-risk industries list is constantly changing. Many startups often don’t even realize that they are a high-risk merchant until they start to look for Online payment processing solutions for their business.

high risk industries list 2020

When it comes to businesses that operates in high risk industries, there are significantly more regulations to follow and it is often difficult for those merchants to provide payment solutions and obtain approval from credit card processors.

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What It Means to Be a High-Risk Merchant

Some businesses are riskier ventures as far as many financial institutions are concerned. When you are looking for payment service provider (PSP) or merchant account provider, you very often come across the term High-risk industries.

There is no single formula used widespread to determine if a business should be designated as high risk. A bank’s underwriting guidelines determine whether a merchant is a high risk. Therefore, each financial institution or processor calculates risk differently. High-risk payment processing has a lot of gray areas, and the operative term “high-risk” does not always carry the same meaning. It is possible to find a payment processor that labels you “high-risk” and another that does not look at you as such. Typically, high-risk industries are those with a high chargeback rates or those that are tightly regulated, such as gambling, tobacco sales, CBD, firearms, adult entertainment, telemarketing, and travel services among the others.

Entrepreneurs may earn this classification due to their average transaction size, industry type, geographical location, typical chargeback rate, fulfillment timeframes, or if they are framed to accept subscription-style payments.

High-risk merchants are particularly vulnerable to online credit card fraud, and many merchant providers believe that businesses in high-risk industries are too difficult and risky to work with.

Image by vicky gharat from Pixabay

Common misconceptions about high-risk merchant label

Many new entrepreneurs think that business owner’s personal credit score defines the risk. The truth is that personal credit score of a business owner does not dictate the risk level of a merchant account. Although payment processors may be interested in the creditworthiness of key people in the organization, they care about the industry’s history of fraud more.

High-risk merchant label is not forever. Agreements and policies regarding an industry’s risk designation change over time.Even if your business is falling into high-risk industries list today, nothing is set in stone. Opinions change, and it is possible to strengthen opinion that your company is more of an asset than a liability to the very entity that processes your credit card transactions.

Agreements with a merchant services provider will always be unfavorable. That is not entirely true! While merchants from high risk industries can generally expect to pay higher fees, they shouldn’t feel like they have to agree to poor terms in their contracts. In fact, these merchants can often negotiate for greater sales allowances, the ability to process greater foreign sales, allowances, the ability to process foreign currencies, and other advantages.

High risk industries list

Some industries fall into the high-risk category indisputably, while others are carefully investigated for revealing risk factors. Below are a few common industry types that are found to always require a high-risk payment gateway. Although these high-risk industries might be just as valid and have the financial records to prove their viability and profitability, they are still very likely to experience rejection from common merchant account providers.

eCommerce with Future Deliverables

Many e-commerce sites operate on the basis of future deliverables. The term deliverables is traditionally used to describe the quantifiable goods or services that must be delivered at a later date post receiving payment. Deliverables can be tangible or intangible in nature.

  • Accounting & Tax Prep
  • Airlines and Booking
  • Background Checks
  • Bail Bonds
  • Business Consulting
  • Business Opportunities
  • Continuity & Subscriptions
  • Credit Monitoring
  • Credit Repair
  • Debt Consolidation
  • Digital Downloads
  • Document Prep
  • Extended Warranty (Protection Services)
  • Independent financial advisers
  • Marketing
  • Non-Profit
  • Online dating services
  • SaaS Companies
  • SEO & SEM Services
  • Skin and Hair Care
  • Subscription box companies
  • Tech Support
  • Web Design Services

Industries with Reputational Risk

When a bank could come under fire by its shareholders or the ordinary people for being attached to a merchant that operates in certain business industries that might be seen as unfavorable, this is commonly known as reputational risk. Reputational risks rank among the top 10 global business risks.

  • Adult Entertainment
  • Auction Websites
  • Bad Credit
  • Cannabis and related products
  • CBD oil retailers
  • Cigarettes & Tobacco
  • Counterfeit goods/replicas
  • Cyber Lockers, Cloud Storage and File Sharing services
  • Debt Collections
  • Drop Shipping
  • Escort agencies / massage parlors / sexual services
  • Fantasy Sports
  • Gentleman’s Clubs
  • Guns & Firearms
  • Hight-Ticket Coaching
  • Hunting & Outdoor Equipment
  • IPTV and streaming services
  • Jammers or devices that are designed to block, jam or interfere with cellular and personal communication devise/signals
  • Liquor & Hard Alcohol
  • Male Enhancement
  • Multi-Level Marketing (MLM)
  • Nutraceuticals
  • Nutraceuticals and Supplements
  • Online Gaming
  • Pawn Shops
  • Pharmacies (Retail)
  • Products designed to circumvent copyright protection techniques (e.g. ‘mod-chips’)
  • Pseudo pharmaceuticals & Nutraceuticals
  • Seeds for cannabis plants, ‘Grow shop’ products etc.
  • Services associated with pseudo-science (e.g., clairvoyance, horoscopes, fortune telling, etc.)
  • Social media “click farms”
  • Tasers & Stun Guns
  • Ticket Brokers
  • Timeshare and timeshare maintenance
  • Vape & E-Cigarettes

Businesses Dealing with High Priced Products or Services

The higher the costs that are paid to any specific industry, the greater the possibility of chargebacks there are. Basically, if you are a dealership or airline who falls on some harsh times, the absence of sales will signal poor financial performance to common payment processors.

  • Airline and travel booking industries
  • Automobile warranties
  • Coins and Collectibles
  • Electronics
  • Government Grants
  • High Volume
  • Jet Charter
  • Property Management
  • Travel

Other factors

Industry is only one determining factor of the high-risk label; another is how a merchant conducts business. Merchants can also be designated high risk if they engage in risky behaviors such as:

  • Accepting recurring payments
    • Conducting transactions in multiple currencies or countries with traditionally elevated levels of fraud
    • Having high monthly sales volumes or individual transactions
    • Having cyclical sales
    • Being in an industry with historically high chargeback ratios
    • Offering subscription-based products or services
    • Having not yet established a payment processing history

Businesses located in high risk countries

The global fight against money laundering has led many countries to develop strong anti-money laundering / anti-terrorist financing (anti-terrorist financing) measures. These measures are designed to establish programs that identify, track and prevent financial support to criminals, terrorists or fraudulent traffickers. As a result, countries that do not have a fully developed regime are considered to be at increased risk and may pose a potential threat to international efforts to combat AML / CTF.

  • Bosnia and Herzegovina (BA),
  • Burundi (BI)
  • Central African Republic (CF)
  • Côte d´Ivoire (CI)
  • Cuba (CU)
  • Democratic Republic of the Congo (CD)
  • Eritrea (ER)
  • Haiti (HT)
  • Iran (IR)
  • Lebanon (LB), Libya (LY)
  • Liberia (LR)
  • Myanmar (MM)
  • Nigeria (NG)
  • North Korea (KP)
  • Rwanda (RW)
  • Sierra Leone (SL)
  • Somalia (SO)
  • South Sudan (SS)
  • Sudan (SD)
  • Syria (SY)
  • Zimbabwe (ZW)
  • All other countries and jurisdictions under international sanctions.

Processing options for Merchants from high risk industries list

Once merchants have been categorized as high risk, they may find it challenging to open traditional merchant accounts. Some processors choose to prohibit some, all, or none of the high-risk industries. Many merchant account providers and payment service provider (PSP) have lists of prohibited businesses on their website.

Though a variety of companies in the high-risk category may struggle to find a conventional payment processor, alternative solutions do exist.

Merchant accounts for high risk industries

High risk merchants don’t qualify for traditional processing agreements but You will find payment processors (known as a high-risk merchant account providers)  with experience working alongside businesses in this category and are willing to accept liability for the increased risk associated with these businesses.

As you might imagine, “high risk” service comes with a higher price tag, caps on transactions (rolling reserve) and Increased oversight and scrutiny.

When choosing a processor for your high-risk business, start by identifying companies based in the same country as your business. You’ll have a much easier time dealing with disputes and other high-risk issues if you don’t have to overcome language barriers, time zones, and other international differences. If your business falls into these high-risk industries list, you might check out my article about Online payment processing solutions for WooCommerce store. There I have reviewed couple of Payment service providers (PSPs) and Merchant account providers which are suitable for high-risk industries.

Crypto payment getaways

Another option is to choose Crypto payment service provider and accept digital currencies. Crypto payment service providers will provide you with lower costs and they accept all businesses from high risk industries list. Companies such as CoinPayments might be immediate solution for your problems.


Once you’ve selected a processor, be sure to work with the company on chargeback management and communication. You see, high-risk businesses often deal with a larger volume of disputes than businesses in other industries, and it’s important to have procedures in place to address chargebacks.

Being a merchant with business from high risk industries list can make processing online transactions and conducting business more difficult, but with the right solutions in place, merchants can keep doing business as usual and protect themselves from credit card fraud.

P.S If you want to know more about other therms and definitions commonly used in payment industry, check out my Payments 101 list.

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