Enterprises classified as “high risk” by banks face an uphill battle getting approved for mainstream payment processing. Factors like operating in certain industries, high sales volumes, troubled financial histories, or reports of fraud or disputed charges can raise flags. Companies in sectors like nutraceuticals, CBD, online gaming, and adult entertainment often earn the high risk label. This forces these businesses to navigate hurdles traditional merchants bypass without difficulty.

Without available processing, high risk enterprises cannot accept credit cards and other common payment methods their customers use. This significantly hampers growth. According to research by FinTech funding report, 40% of commercial entities that are unable to find high risk merchants credit card processing partners fail within the first year. Fortunately, some providers, for instance PayCly, specialize in serving these niche sectors to provide the tools needed to operate.

Understanding High Risk Obstacles Involved in the Payment Process

In terms of payment processing solution for high risk merchant applicants typically face rejections and frozen merchant accounts when seeking transaction settlement through normal banks and payment gateways.  Without the capabilities that credit card processing high risk merchant payment solution (service provider) offers, companies cannot collect payments, conduct refunds, or access customer data critical for tackling disputes or fraud events. This inability to securely handle transactions at scale devastates revenue. Following are the obstacles that loom large on the path of payment process of high risk merchant usually faces:

• 3 times more difficulty getting approved for accounts than average businesses
• 90% rejection rates by mainstream processors
• Higher processing fees, reserve balances, and general lack of transparency

Specialist Solutions Exist: Credit Card Processing High Risk Merchant Can Benefit from

Due to the evolution and systematization of dedicated transaction or processing services catering to high risk use cases, the intricacies and complexities involved in payment system have drastically reduced. By completely specializing in higher risk or threat sectors ignored by general providers, these services craft customized processing capabilities.

Options for credit card processing used by high risk merchants include the following:

• Offshore merchant accounts with banks more amenable to niche industries
• Aggregated processing networks sharing transaction costs and risks
• Concierge fraud and dispute management tailored for each unique business

This infrastructure gives crucial stability to smooth business operations. Enterprise finance teams gain versatile tools for managing payments without having to fear the potential customer disputes.

High Risk Merchants Credit Card Processing System's Impact on Business Growth

Various research reports highlight the positive impact that specialist payment solutions have for tricky high risk sectors. The payment solutions have enabled all the business models to be efficient and productive. Some notable findings based on different sources available online include:

• 76% of merchants using offshore banking report annual revenue growth exceeding 20%
• High risk merchants experience 28% fewer attempted fraud charges when supported by specialized fraud protocols
• Tailored payment solutions decrease operational costs by an average of 31% in prohibited sectors

These insights shed light on how purpose-built fintech solutions empower growth for the enterprises banks deem too risky. By catering the level of diligence and oversight to each unique business model, merchants trade uncertainty for reliable stability.

Examining the Progress in Key High Risk Industries

Segments like online gaming, nutraceuticals, and blockchain trading illustrate the progress specialist processing solutions unlock. Using the technology and safety protocols that these specialized service providers offer to the credit card processing high risk merchant platforms utilize has drastically benefited business operations.  

Online Gaming  

• Projected to expand into a $114.4 billion industry by 2028
• 60% growth in 2022 anchored by mobile and eSports expansion

The onboarding assistance and offshore accounts provide the cross-border support to drive growth as internet betting globalizes.

Nutraceuticals  

• $477 billion value industry as of 2021
• Expect 7.5% CAGR through 2028 due to increasing adoption of dietary supplements

Processing designed for recurring orders and higher dispute rates gives stability to manage growth.

Blockchain & Crypto Trading  

• $162 billion industry in 2021
• Predicted to exceed $4.3 trillion market cap by 2030

Crypto-ready, fraud-conscious processing gives entry to capitalize on Web3 momentum.

The specialized solutions to manage historical obstacles around disputed orders, unreliable fraud flags, and cross-border chokepoints strengthen the backbone for merchants to capitalize on booming high risk markets.

Conclusion

The highlighted growth and sector trajectories exhibit encouraging trends when merchants operate with purpose-built payment infrastructure. By aligning cutting-edge capabilities directly to address the pain points of operating in fast-expanding but restricted environments, progress unlocks.

As long as niche categories remain underserved by general high risk merchants credit card processing programs, the need for specialized experts continues. Taking the time to uncover the tailored financial and risk management tools provided service providers such as PayCly to empower operating confidence allows these enterprises to turn obstacles into opportunities. The drive toward stability provides a foundation to realize the abundant potential ahead in 2024 and beyond.

Visit us at: High risk business payment gateway

Originally published: Medium Articles