A modern business owner must be able to accept and process credit cards. This capability enables you to do business online, accept credit card payments at your stores and shops, and provide you with additional payment processing choices. It provides an extra layer of convenience for clients and helps you stay competitive in the local market and on a broader scale. Merchant accounts with credit card processing are the way to go if you want to develop and grow your business.
Acquiring banks use the phrase “high risk” to describe sectors or organizations with a higher risk of financial loss than regular risk accounts. Therefore, in this article, you will learn about the 10 Industries that need a high-risk merchant account.
The most prevalent reason for a high-risk industry classification is that it has statistically higher chargebacks than normal risk accounts. Or, as a result of products, services, or target markets, it is prone to a more significant amount of fraudulent transactions.
Chargebacks have a negative impact on many enterprises all around the world. With chargeback rates rising by as much as 47% per two years, something must be done to safeguard businesses from the financial consequences of chargebacks.
10 Industries that need a high-risk merchant account
1. BizOp (Business Opportunities)
In general, a business opportunity is a program or course developed by an individual to assist others in earning money while earning money themselves by charging membership or charge for online services. Typically, the individual works from home and has access to a large number of clients who are looking to develop and improve their new business. With these business opportunity platforms, chargebacks are quite high. The majority of chargebacks occur because the client is unsatisfied with the services provided. Unfortunately, there is a history of business opportunity firms being untrustworthy and suspicious, and these untrustworthy enterprises wreak havoc on the rest of the industry.
2. Retail Pharmacies Industry
In 2021, the Pharmacies & Drug Stores business has a market size of 338.2 billion dollars, as measured by revenue. The majority of internet merchants that buy and sell medications have pharmacies in other countries. It’s one of the main reasons why internet pharmacies are regarded as high-risk enterprises. Accepting high-risk businesses like pharmacies is tough for credit card processing companies. Nonetheless, this is one of the most profitable businesses available today on the internet.
3. Tobacco/Vape/e-Cig Industry
In 2020, the e-cigarette and vape industry in the United States was estimated to be worth USD 6.09 billion. From 2021 to 2028, it is anticipated to increase at a compound annual growth rate (CAGR) of 27.3 percent. The increased knowledge of safer tobacco alternatives might be contributed to the market’s development. A slew of FDA laws lay out a comprehensive set of guidelines for vape and cigarette sales. Retailers must also adhere to any applicable local and state regulations.
Due to legal and age limitations on vape sales, retailers in this industry are considered at risk. Accessories for the devices (such as atomizers and batteries) are also deemed as high-risk, in addition to vape juice and pens.
Even if the company is legal, a weapons retailer comes with a lot of dangers. Accepting credit card payments, for example, might be a major challenge. There are additional bank concerns to consider. Maintaining a dependable merchant account necessitates work. The firearms business has already experienced many periods of stagnation due to the following factors: Government rules influence retail sales by restricting sales to a specific age range. For negative reasons, the media has focused on you.
5. Liquor/Hard Alcohol
Alcohol sales, like tobacco sales, are heavily regulated by the government and subject to strict age restrictions. Various rules regulate the selling of alcohol and Card Not Present (CNP) alcohol purchases in different states. Understanding the various regulations for each state may help the sales process go much more smoothly and decrease the risk of responsibility for the merchant.
6. Adult Entertainment industry
Adult entertainment businesses offer a variety of goods and services to their clients, including streaming movies, photos, escort services, and novelty items. Despite the fact that adult entertainment merchants run profitable companies and follow stringent laws and regulations, many banks continue to reject their applications for merchant accounts.
Due to the government’s lack of health regulation, finding merchant accounts for nutraceuticals might be difficult. While the sector is booming, the businesses are deemed high-risk because of the possibility of legal action in such an unregulated environment.
According to a 2016 economic impact analysis financed by the Council for Responsible Nutrition, more than two-thirds of American people take dietary supplements each year, many of them doing so to fill up nutritional deficiencies. Revenues are at an all-time high because consumption is at an all-time high. Dietary supplements generated $121.6 billion to the US economy, 754,645 jobs were created, and $38.4 billion was paid in salaries.
8. Auction Websites
In the United States alone, the e-commerce and online auction industries are worth 619.6 billion dollars. Online auctions are a fantastic way to locate bargains, sell your belongings, purchase business equipment, and even plan your next family trip. Real estate, automobiles, airplanes, jewelry, electronics, clothes, and even NASA Shuttle/Hubble equipment are among the other auction goods. By establishing strong credit scores and consistent revenue, online auction firms can still acquire a payment processor.
9. MLM (Multi-Level Marketing)
Regardless of the product or service provided, MLM credit card processing is considered high risk. Hundreds of thousands of distributors work for MLM firms all around the world. Well-run firms with good products are part of the MLM industrial paradigm, and they have a long history of helping their distributors succeed.
10. Luxury Product Industry
For high-risk companies, high-ticket merchant accounts are the ideal answer to payment processing issues. Finding the proper payment processing account for legal businesses in high-risk business-to-consumer industries may be difficult. The solution is one of our high-risk merchant accounts.
Each industry offers helpful hints for reducing the dangers connected with their online payment system. High-risk businesses aren’t only restricted to the most popular profitable but bad-reputation industries. Some firms are high-risk, but they aren’t in one of the industries listed below. This might be due to payment processing methods that cause financial institutions to be concerned.