Top 15 High-Risk Merchant Industries

A business is considered as “High-Risk” based on several factors. When high-risk merchants are looking for merchant account they need to understand the factors that catagorise them into “high-risk”. It is not easy to find a merchant account for high-risk businesses. So it is best to choose a high-risk merchant account where the application and approval process is easy and smooth.

Let us have a look at top 15 high-risk industries that need high-risk payment processing. Each industry is unique in its own way and there are some tips to minimize risk during payment processing. This blog will help merchant understand the problems that a merchants comes across and how to overcome this so that merchant can be approved.

The businesses which are tagged as high-risk are often most profitable businesses yet they have a negative reputation which leads them to fall under high-risk category. Some examples of such industries are adult, nutraceuticals, firearms etc.

Why businesses fall under high-risk category?

Here are a list of examples why businesses fall under high-risk category and this can easily violate underwriting guidelines.

If the business falls under highly regulated industry

If the business processes card-not-present (CNP) transactions

Recurring billing for products and services

If the business has reputational risk

If the industry is prone to more fraud and chargeback

High ticket transaction processing

Bad credit history of the merchant

High-risk businesses need to find a trusted high-risk payment processing. A high-risk merchant account will be designed in such a way that the business nature will be kept in mind and this account comes with risk management features and fraud filters . It is really hard to find trustworthy payment processor and it’s really had to predict changes in regulations so you need to tie up with legitimate payment processor such as iPayTotal. This helps a business overcome several challenges they face in the high-risk industry.

How to find the Perfect High-Risk Payment Processor?

Before you get approval by a high-risk account provider you need to go through extra restrictions and regulations. There is a set of KYC (Know Your Customer) requirement by payment providers.

The strict KYC rules is to eliminate most of the issues that affect high-risk merchants such as chargeback, crackdowns etc. which usually leads to bad credit score, frozen account etc.

Top High-risk Merchant Industries:

Here is a list of top 15 high-risk industries and solutions and best practices to get approved for a merchant account:

1. Adult industry

Adult entertainment is considered as high-risk due to reputational risk. It is extremely difficult to find a merchant account from most of the traditional banks. It is a lucrative business and adult merchants usually have huge transactions.

Tip: Since it is difficult to get a traditional merchant account go for aggregated Payment

Services Provider(PSP) which offers more industry solutions. However this comes with a huge fee.

2. Firearms

People purchase guns for various reasons some purchase it for safety or protection, some for hunting and recreation and some even for target shooting etc.

There are several controversial gun laws in the US which banks are skeptical about. For online store firearm merchants it is good to go for gun-friendly payment processor. In this industry the biggest challenges are shipping restrictions.

Tip: If you are a startup and if you own any other business with a good credit score you definitely have good chance with few banks accepting firearms payment processing.

The last thing you need is payout freezing. That’s why you need to partner with payment processer such as IPayTotal for smooth payment processing.

3. Liquor

The major challenge for a liquor merchant is juggling in between customer satisfaction and sales at the same time adhere to laws and regulations. One more issue is the legal age to buy alcohol which varies around the world so the merchants cannot risk underage sales.

The nature of the business is unique with its own set of rules and restrictions and that’s why you need a payment processor who can handle legal prerequisites and provide hassle free payment processing solution suitable for this industry.

Tip: Before you apply for a merchant account have enough money for security deposit also known as rolling reserve which helps in establishing trust with the bank.

4. E-cigarette/ Tobacco/ Vape

Tobacco merchants are considered high-risk due to the heavy regulation with taxes, fraud, age restrictions, higher than average credit card reversals.

Even though tobacco smoking is there from centuries banks are hesitant about approving this industry.

If you are a tobacco merchant look for the following features when you look for a merchant account:

  • Bank with tolerance for high chargeback ratio
  • Not to overcharge you for the payment services
  • Minimum Rolling reserve
  • Understand each states rules and regulations for tobacco sales

5. Nutraceuticals

Nutraceutical merchants usually don’t find payment processors due to few factors the main reason is due to the huge chargebacks.

Due to recurring billing Nutraceutical  business is more prone to chargeback because the customers do not understand the terms when they sign up and late dispute the charge.

Trial period promos will not be clear to the customer. Nutraceutical merchants charge their customers even after trial period is complete which results in customer filing a chargeback.

Nutraceutical marketing is done in such a way that when the customers look at the products it gives them high hopes and then when the product doesn’t work the same way the customer uses the option ‘not as described’ for a chargeback.

Tip: Due to these reasons payment providers will ask the merchants for a higher security deposit. This is where IPayTotal can help Nutraceutical merchants with the entire application process and integration.

6. Auction websites:

Due to scammers running illegal operations auction website reputation is become bad. Even legit businesses struggle to find a merchant account because of this.

Tip: Auction merchants will be able to find a merchant account with good credit score and steady income.

7. Pharmacies

Online Pharmacy business falls under high-risk category due to strict rules and regulation on drugs concerning safety. That’s why payment processors who provide pharmacy merchant account have clear rules on what kind of drugs are allowed.

Second reason is frequent friendly fraud. Customers are very smart what they do is instead of contacting pharmacy for a refund they contact banks to file a dispute.


If you have a e-pharmacy you need to adhere to rules and restrictions set by the government. Look for a processor who has relaxed rules.

8. Large Average Ticket Size:

When people shop online they look for best price for whatever they buy. This results in fierce competition in any retail business. The greater impact will be on online store selling luxury items where each product price will be huge and if a customer files a chargeback it’s a huge loss. That’s why this falls under high-risk category.

Here are few businesses that falls under this category:



Real estate

Travel agencies or services



IPayTotal understands how difficult it is to find a merchant account and we are here to help you we can offer customized payment solutions high ticket business.

9. Direct Marketing:

When businesses that sell services on continuity model it usually results in chargeback because the customers don’t even remember when did they sign up for such service. There are also scammers who offer bogus offers resulting in huge chargebacks destroying the reputation of the business.


If you run a business with continuity model it is best to sign up with high-risk merchant provider such as IPayTotal.

10. Membership or subscription services:

When a customer purchases a product most of the times they will end up ticking the subscription option and end up getting charged monthly. This falls under “harmful decision enrolment” category and hence banks wary such businesses.


Even though recurring billing is safe, convenient and effective for customers who voluntarily opt for, it can be considered as fraudulent by credit card companies. If you are a membership site owner call IPayTotal now we can help you.

11. Multi-Level marketing:

MLM companies falls under high-risk category due to high chargebacks, legal risks and also unpredictable growth patterns.


If you are MLM company contact IPayTotal we can help you with safe and secure payment processing with fraud filters.

12. Business opportunities:

Business opportunity firms offer a course to help people earn online at their home. They charge a membership fee for it.

People usually opt for biz ops to make fast money. This business is prone to high chargeback due to the nature of the business.


Biz ops firms can aim at slowly building a good reputation and good credit score. You can rely on IPayTotal if you are looking for a high-risk merchant account, we understand the risk factor of your business and will provide your business chargeback management system.

13. Loans

Lending companies will remain lucrative business as long as there is a demand for loan from people. Businesses providing loans are categorized under high-risk category due to the nature of the business and high chargeback ratio. There are also people who do not pay back the loan amount on time which is the risk factor.


If you keep the interest rates low lending companies will have a better reputation. Talk to iPayTotal for customized payment solution for your business.

14. Extended warranty services

If you are a merchant offering extended warrant especially in automotive insurance sector your business is considered high-risk mainly due to high level of customer disputes and fraud.


If you are an extended warranty merchant you need to provide a convenient way to pay especially without cash for your clients. IPayTotal can help your business to find a suitable high-risk merchant account.

15. Ticket Brokers

Everyone gets excited when it is about concert tickets. Nowadays people need not stand in long queue to purchase a ticket, now it’s digitalized mobile ticketing. Traditional banks consider ticket brokers as high-risk merchants.

You need to always pre purchase any ticket like concerts, events etc. the only chance for a chargeback is last minute cancellation, schedule change, error etc.


IPayTotal can help ticket brokers with a merchant account with fraud filters and chargeback management tools.

Apply for a merchant account with IPayTotal today. We have worked with thousands of high-risk merchants and understand the challenges you face and help you overcome it with customized solutions. We provide high-risk merchant account features such as fraud filters and chargeback management.

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