When it comes to payment processing, being a high-risk business is difficult, especially in the fast-paced digital era we are living in. 

Indeed, handling a large amount of transactions - especially online - is complicated for all, but it gets harder when your business is labeled as high risk. 

1. What is a High-Risk Business?

The risk is the probability of any negative occurrence, that is caused by internal or external factors, and that may be avoided by preemptive actions.

In the payment processing industry, risk is mostly calculated in terms of frauds and chargebacks. The more your business is likely to experience credit card frauds and chargebacks, the higher its risk level will be. 

2. What makes my business “high-risk”?

Most of the factors associated with being a high-risk business are related to either fraud level or chargeback ratio, here’s a list of factors that make your business being considered high risk:

• High chargeback ratio, high employee turnover rate, high credit card fraud level, or high online transactions rate

• Noncompliance with the security regulations of your industry

• Being established or doing business in certain countries with high chargeback and/or fraud ratio

• Being labeled as a TMF (Terminated Merchant), meaning you’ve already lost a processor due to high chargeback ratio.

• Having a bad credit score/history. As the business owner, it can considerably impact your risk level.

• Having a bad reputation

However, even if your business is associated with one of these factors it’s not a death sentence! You can always reduce your risk level with good customer service, stable financial history and in improving the quality of your services.

3. What industries are usually considered “high-risk”?

Usually, depending on the industry your business is in (online gambling, online gaming, casinos, sport booking, travel and advanced booking, telemarketing services, air transportation, bitcoin mining, Forex trading, etc.) it could be labeled as high-risk.

The travel and air transportation industries are considered very high-risk due to the high ratio of frauds and chargeback they’re usually associated with.

4. How can I reduce my level of risk?

• Make your contact information very easily accessible: Some customers start filing for a dispute out of frustration because they weren’t able to discuss the issue with you or clearly locate you. Always make sure your contact information is available and easily accessible on your website.

• Have a clear refund policy: Make it easy for your customers to return your products in case they’re not satisfied. It might be scary for merchants because they might lose some revenue, but it’s a very beneficial strategy in the long run for your business. You should be focused on avoiding disputes at all costs!

• Be (PCI DSS) Compliant: By being compliant with the Payment Card Industry Data Security Standard, you are sure you’re handling cardholder data safely, meaning you are less likely to experience chargebacks associated with frauds or unauthorized transactions.

• Send confirmation emails and contact customers with suspicious orders, ask for a signature upon delivery: This will help customers to contact you with all the order details, making it easier for them to discuss any issue with you directly instead of initiating a chargeback. It also helps you to make sure the transaction is not fraudulent, and your customers received his order without any issues.

5. Most frequent reasons that trigger a chargeback

1. 56.9%: Fraud, no authorization

2. 15.1%: Cancellation/Returns

3. 7.8%: Quality Issue

4. 7.7%: Non-receipt of goods

5. 6.3%: Processing error

6. 5.9%: Authorization

7. 4%: No receipt information

6. What about TCB Pay?

When you partner with TCB Pay, whether you are a low, mid or high-risk merchant, you receive high levels of service and security from a payment processor that knows the payment industry inside and out. 

From e-commerce payment gateways to retail and restaurant solutions, business-to-business (B2B) and business-to-government (B2G) processing capabilities to electronic invoicing, we offer cost-effective merchant credit card processing services that are fast, secure and easy to integrate. 

Our extensive experience and expertise helps you get the lowest rates, best security features so that you can save money while safely accepting all major credit cards, debit cards payments for increased profits and improved business.