What is a High Risk Payment Gateway and why certain businesses need one?

The growth of businesses on the Internet, accepting online payments, is an important part of that progression. While many businesses are treated in the same way by banks and payment processors, some types of business may be subjected to a significantly greater level of scrutiny by banks and payment processors because of the increased risk for payment fraud, higher chargeback rates, or heightened regulatory complexities associated with the industry in which they operate. For these types of businesses, having access to a high risk payment gateway is an imperative solution to enable the secure and reliable processing of payments.

Defining the High Risk Payment Gateway

A high-risk payment gateway has been designed specifically to help facilitate the payment processing for businesses classified by various banks and financial institutions as high-risk. High-risk payment gateways allow online merchants to take payment via credit cards, as well as through other digital modes of payment accepted over the Internet, but with additional features to help increase the security, compliance, and fraud protection of the payment processing services they use.

There are many reasons why a business might be considered a high risk, including uncommon and/or high volume of transactions, unusual and/or high chargeback ratios, international sales and/or recurring billing models, or operating within an industry that is susceptible to fraudulent activity. Because of the many reasons why a business might be considered high risk by its bank or payment processor, high-risk businesses may often be rejected or unable to continue processing payments through a typical payment gateway, and relying on the high-risk gateway may be their only option.

High Risk Industries 

Some industries are riskier than others for financial and regulatory reasons. Examples of these industries include online gaming, entertainment, travel, nutraceuticals, subscription services, and cryptocurrency. The industries typically conduct cross-border transactions, have disputes with customers over refunds, or are subject to regulatory uncertainty. 

High Risk Startups and Businesses

Startups with no processing history, businesses with poor credit histories, or any merchant that has been placed on a monitoring program previously could be classified as high risk. These types of businesses may find that their funds are put on hold or that their accounts are shut down by traditional payment processors, without any notice. 

Features of a High Risk Payment Gateway 

High risk payment gateways have advanced tools to mitigate and manage risk. One of the most critical features of a high risk gateway is the prevention of fraud, which includes real-time transaction-monitoring, artificial intelligence-based fraud detection, and address verification. 

The next critical feature of a high risk gateway is chargeback mitigation. High risk gateways provide alerts, analytics, and dispute tools to assist businesses with a chargeback ratio, as well as to continue complying with the card networks' regulations. High risk gateways also provide multi-currency and international payment-processing capabilities, which allow merchants to expand their reach into global markets. 

Finally, high risk payment gateways support alternative payment methods, recurring billing, and provide merchants with higher approval rates, enabling both merchants and customers a much smoother transaction process.

Why Certain Businesses Need a High Risk Payment Gateway

High risk merchants face risks when they use a standard payment gateway. The account can be shut down at any time, causing the merchant to lose money and create distrust with customers.

A high risk payment gateway provides solutions to this scenario through a dedicated payment gateway with a stable development path for long-term processing.

Underwriting and processing services from acquiring banks support high risk industries and offer fewer barriers to approvals. Payment processing can grow in tandem with the merchant's growth; high-risk payment gateways offer custom limits and flexible underwriting, allowing businesses to expand without fear of closure.

Benefits Beyond Payment Processing

In addition to allowing payments, high risk gateways provide merchants with the tools to establish credibility and sustainability. By utilizing more effective risk management tools, merchants can reduce their fraud losses and strengthen their banking relationships through compliance. Over time, this will allow the merchant to transition to a lower risk classification.

Finally, high risk payment gateways provide dedicated support teams that understand industry-related challenges and can support the merchant in building a successful business. The level of experience offered by these providers is not typically provided by mainstream payment gateway providers.

Conclusion

A high risk payment processor serves as more than simply a means to transact; to many companies within challenging or regulated markets, it's often viewed as their lifeboat. With its ability to provide both secure processing and fraud protection, plus a trusted banking relationship for high risk merchants, experience with Trinity Consultings high risk processor allows those merchants to operate safely while also continuing to expand.

When a high risk business experiences issues with declined transactions or account bans, selecting a reliable high-risk-facing payment processor may allow that business to remain operational while simultaneously experiencing ongoing distress.