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How to cope with payment challenges in a high-risk business
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How to cope with payment challenges in a high-risk business

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High-risk businesses often face a range of payment challenges during their formation and development. Sometimes even simple procedures, like opening a merchant account, may turn into a labyrinthine process for them. We’ll help to navigate the maze.

Let’s consider the main issues high-risk projects encounter and ways to deal with them.

What is a high-risk business?

Let’s cover the nuts and bolts first to understand the whole thing better.

A business is considered high-risk if it has a high probability of bankruptcy or encountering difficulties, like legal problems, customer dissatisfaction, and chargebacks or if it simply operates in a high-risk area.

Banks and other financial institutions may refuse to cooperate with such businesses not to lose the funds or reputation by being an accomplice in money laundering or any other schemes.

1. Opening a merchant account

Getting a merchant account is among the first steps of starting any business. This procedure takes quite a time, but its complexity grows leaps and bounds for high-risk businesses.

Still, getting proper assistance and instructions help you ease the task. In one of the previous articles, we’ve dwelled upon the details of opening a high–risk merchant account. This is a cheat sheet for those who own a high-risk business and want to start accepting payments online.

Having several merchant accounts will help to diversify the risks of losing funds.

2. Choosing a reliable payment gateway

Finding a reliable partner to process your payments is like taking a painkiller while having a migraine. It ceases your tortures, and you get back to your business. That is what a payment platform can do. So, following the criteria below you can significantly reduce your stress.

  • Coverage & payment methods. Make sure that the company you choose can accept payments from different countries. The variety of payment methods is an absolute advantage for a business, for it helps to cover a larger audience.
  • Pricing. Don’t be decoyed by minimal commissions. Quality service cannot be cheap, and prices for high-risk merchants are usually higher.
  • Integration options. Check if there is a method suitable for your needs. Usually, merchants can integrate a payment platform in several ways: API, server-to-server, or a hosted payment page.
  • Tech support. Users may encounter difficulties while making payments, so they may need help at any time. It may also influence the conversion. If your payment page does not work correctly, customers may face, for instance, double debiting. This may lead to a large number of chargebacks, which will negatively affect the business.
  • Additional features. These include competitive advantages, like multicurrency processing, smart routing and cascading, recurring payments, data security, etc.

3. Maintaining the rolling reserve

Acquiring banks or processing companies, who have no particular reasons to trust high-risk businesses but are not ready to refuse and lose them, request a rolling reserve. It means that a certain amount of funds on the merchant account is kept untouched for a specific period. Usually, this sum fluctuates from 5% to 10% of the monthly turnover. The term may be connected with the 120-day rule of issuing chargebacks.

It’s important to understand that a rolling reserve isn’t a fee or something negative. It’s just like a safety net that allows both businesses and banks to protect themselves from any issues connected with chargebacks.

4. Chargebacks & fraud

First of all, admit that businesses cannot be fully protected from chargebacks. Still, some steps help to reduce their likelihood significantly.

Remember that there are cases when chargebacks turn into a fraudulent scheme and unscrupulous customers try to return the money for no reason. So, if the claim looks suspicious and unreasonable, it is crucial to gather counterarguments promptly and reject the chargeback request. The seller usually has 45 days.

Also, be sure to organise a secure payment process. Card payment fraud is one of the main reasons for chargebacks, so proper security and compliance of your payment partners will do good in minimising chargebacks and fighting fraud.

The optimal variant to accept payments in a high-risk niche is to do it with the help of a reliable payment orchestration platform with all the necessary features and options for a business to work comfortably in any area.

We at Corefy ensure secure payment processing, convenient control of all procedures, support of multiple currencies, an exhaustive list of payment and payout methods for any type of business, including the high-risk ones. If you need any additional advice on the process of organising payment acceptance, do not hesitate to contact us.

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