How To Get A Payment Processor For High-Risk E-Commerce Website

March 3, 2023  /  
How To Get A Payment Processor For High-Risk E-Commerce Website

Introduction

If you have a business website in this competitive market, then it's cool!

Why?

Well, you are one step ahead of others in dealing with online traffic and driving a new consistency in business. However, you are still in danger because of the competition in the market. 

Apart from that, a high-risk e-commerce website can be a liability if it is unsafe. Cybercrime in the digital world costs the global economy $500 billion annually.

So, if you think your website has no or low risk, you have a wrong conception. When you have an e-commerce website, you are already at an increased risk of fraud.

Transactions are the sole proprietor of any business, both online and offline. In this 21st century, with the emergence of digitalization, online payments have been a phenomenon to retrieve the commercial industry. 

But online payments are not as easy as you do with your phone when it's about a merchant processor. The payment processor is the link between a bank and a merchant, which deals with the gateway of transactions.

There is a lot to explore in the digital world, but the worrying factor is that all experts are in it, which results in financial scams.

However, here we will focus more on the particular instances of online transactions for high-risk e-commerce websites and their relation with a proper payment gateway for safeguarding the whole process.

What Is A High-Risk E-Commerce Website?

In the business market, e-commerce websites generally fall into the high-risk market. If you know, you know that dealing with the business world through e-commerce websites is always hectic, which comes with opportunities.

So, new businesses from various industries are trying to deal with the audience through e-commerce websites, and the competition is skyrocketing. 

However, the increased risk of fraud and the potential for chargebacks are the main identification aspects of a high-risk e-commerce website. No matter how efficient your website is, your potential for operating in a high-risk industry makes you vulnerable to financial fraud and higher chargebacks.

Which Businesses Are Considered High-Risk?

Exploitability, technical impact, ease of detection, and prevalence of widespread attacks are the common parameters of risk businesses. However, there are several industries operating in the market that you can easily consider at high risk. 

Money laundering, reputation, and uncertainties perhaps make your business complex to the banks which they do not like at all. 

E-commerce websites are always at risk no matter which particular industry it is performing in. However, there are certain industries that, in particular, you can mark separately for being at high risk. 

  • Online gaming.
  • Debt collection.
  • Adult entertainment.

The online gaming industry is always at risk because they deal with high commercial disputes and legal restrictions. Apart from that, it is a very attractive market that convinces people to commit fraud.

This industry deals with illegal activities like money laundering, tax evasion, and drug trafficking. As a consequence, it becomes difficult for the entrepreneurs of such companies to open merchant accounts through banks. 

On the other hand, debt collectors deal with delinquent accounts to collect money through emails and phone calls. When the debtors fail to repay the money or promptly avoid the repaying process, it becomes hard for the banks to deal with such problems. 

Additionally, adult e-commerce websites are more at risk because the merchant does not know who their consumers are in particular, and also, the bank does not want to consider transactions for controversial content.

This is not the end, but there are other industries also working at high risk and facing the same problem of acquiring a proper payment processor.

For instance, the CBD industry also deals with such problems due to its controversial products and transactions.

Transaction Challenges Of High-Risk E-Commerce Websites

High-risk businesses face difficulty in managing their transactions due to several reasons. The risk factors are becoming a challenge for entrepreneurs to ensure a safe payment process. 

Well, what are the challenges?

Opening A Merchant Account Through Banks

If you are identified as a high risk business by the banks, it will be difficult for you to get through the process of betting on a merchant account. This is where there is a higher chance of getting rejected for the account. 

Apart from that, if you do not follow their condition or fail to add enough sales, they will block your account. So, it is a big challenge for the high risk e-commerce market to get a proper merchant account and transact with ease.

Maintenance Of Rolling Reserve

Rolling reserve is a process that cultivates a particular share of your transaction volume (up to 20%) and freezes it for a specific period. After a certain point of time, it will relieve the whole amount. 

When you are dealing in a high-risk market, you have to go through this rolling reserve process which sometimes becomes impossible to generate for small business owners.

High Processing Fees

Higher processing fees are always a matter of concern for high-risk businesses. They cannot avoid it because the payment providers ultimately ensure a higher processing fee for every transaction.

To make up for the added risk, they consider recouping added compliance and making it a high-price transaction every time. 

Higher Chargeback Rates

Statistically, the high risk industry has higher chargeback rates than others. The providers also consider a monthly threshold for accomplishing higher chargeback rates.

This is a matter of concern for all the high-risk e-commerce websites while they are constantly suffering from the high rate of chargebacks. 

Prone To Fraud Attacks

In the digital market, fraudsters are achievers. They target most e-commerce websites with various fraud schemes.

A technological solution is the only option you need to go for to prevent such fraud. But scams with transactions are constantly evolving in the market. 

When you are more aware of the market conditions, you will need to check through the instances of getting a convenient payment processor, which will save you from all these transaction challenges. 

This is where you need to find out payment processors separately from the banks. Depending on the banks might not work for your high-risk e-commerce website. Getting rejected can be your future, and thus a high risk merchant account is a necessary visionary for you.

How Can High-Risk Ecommerce Websites Find Payment Processors?

Reputation matters the most for any business. If you are working in a high-risk market, that does not mean you are going to provide a lower quality product or service to the consumers compared to a low-risk market. 

However, you need to ensure an extra effort to find out a proper payment process for your high-risk business compared to other businesses. Well, just because you are identified differently in the business market, that does not mean it is near impossible to gain a reputation with better transaction service. 

Let's focus on some efforts that you can take prominently.

Understand Your Risk Factors

When you are dealing with a high-risk e-commerce website, you already know how risky it is for you to deal with the market, but here you will need to go through the instances and risks of dealing with your payment partner. 

Ask them about their experience in dealing with the same high-risk industry and know their achievements before you avail them. 

Be Transparent

It's time to be transparent with your merchant payment processor and keep an open and true relationship with them.

So, avoid representing false information about your company; otherwise, your account might get deleted later. 

Be Prominent With Your Financial Statement

When you have a payment processor, know how they are handling your transactions. Go through the financial statement and be prominent with all efforts they provide on your website. 

Be clear with the terms and criteria in advance to get a proper merchant account processor. 

Ask About The Capabilities Of Customer Support

When you are combining your transaction solutions with a payment partner, it's better to know about their customer service and capabilities. 

Efficient and quick customer service can help you get out of a transaction dilemma and fraud. For instance, if your payment has got fraud and you connect to the payment processor to control the situation, they are checked instantly, then you might get rid of that issue. 

In fact, with proper customer support, you will be able to get rid of fraud in advance. 

Check Fees And Standards Of Security

Check the transaction processing fees and make sure that you have invested enough to get a proper service. 

Sometimes, overlooking hidden fees becomes cumbersome later for the websites. So, check all the fees and securities that you can avail through your payment processor this year. 

What To Expect From A Payment Processor?

One thing you can expect from payment processors is that you will get accepted easily with minimal steps, even being a high-risk e-commerce website. However, your experience will be different from the low-risk businesses. 

So, you can expect the following: 

  • Higher chargeback fees.
  • Extra interchange rates.
  • More processing fees of up to 1.5% than others.
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