Navigating high-risk payment gateways: a comprehensive guide for businesses

Navigating high-risk payment gateways: a comprehensive guide for businesses

The article has been updated on March 29, 2024

Obtaining a high-risk business can seem problematic at first. Not all payment processors are equipped to accommodate high-risk businesses. But with a closer look, it is simple. In this Genome article, let’s talk about what a high-risk merchant account is and how to open it.

Navigating the landscape of high-risk merchant accounts

In today’s complex financial ecosystem, understanding the intricacies of a high-risk merchant account is essential for businesses that want to select a reliable service provider and improve their financial operations, attract more clients, and stay compliant with regulations.

What are high-risk merchant accounts?

A high-risk merchant account is a type of account tailored specifically for high-risk companies. Such accounts allow companies to use specialized payment processors and a payment gateway (host merchant services) to accept credit card payments and other transactions from clients. 

The reason high-risk merchant accounts exist is the categorization of companies within the banking sphere. There are two types of businesses: low-risk and high-risk. High- and low-risk merchants differ by the potential risk they can bring to an acquiring bank. 

When launching an account for a low-risk business, a bank is relatively protected from possible risks such as a massive volume of chargebacks. However, issuing a high-risk merchant account means more possible challenges for the bank because of several factors.

Why are certain businesses deemed high-risk?

There are a lot of factors why a company can be labeled high-risk. Some industries, such as any travel booking agency or social networks, are even automatically labeled high-risk. Here is a full list of reasons that make business a higher-risk one.

  1. A poor credit history.
  2. Background of account termination.
  3. A business belongs to a high-risk industry.
  4. Selling subscription-based products or services.
  5. Operating with many currencies within one business.
  6. Offering goods or services that result in high-dollar transactions.
  7. Locating business within a country with a potential high chargeback accumulation.
  8. The company is international.
  9. No credit card processing records or very little amount due to the freshly opened account.

Common examples of high-risk businesses

High-risk merchants can be a part of many business spheres. Some of the industries that fall under the high-risk category are: 

  • Travel and booking agencies;
  • Vitamins;
  • Gambling and betting;
  • Subscription-based businesses;
  • Supplements;
  • iGaming;
  • Real estate;
  • Pharmaceuticals;
  • Online casinos;
  • Social networks;
  • CBD products;
  • Telemarketing;
  • Dating sites;
  • Alcohol;
  • Multi-level marketing;
  • Adult entertainment;
  • Tobacco;
  • Investment firms.

Benefits and drawbacks of high-risk merchant accounts

As with most financial products, high-risk merchant accounts have certain advantages and disadvantages. Let’s take a closer look: 


  • Accessibility for companies. Such accounts allow high-risk merchants to use payment providers and payment processors to accept payments from clients.
  • Risk and fraud prevention tools. Due to a higher risk level, payment service providers offer additional anti-fraud features to businesses in this category. 
  • Easier compliance. Following the rules of high-risk payment processors also usually ensures that your company is well-protected and complies with industry regulations and standards. 


  • Not too many options. Unfortunately, not all financial institutions can work with and provide services to companies that are considered high-risk. And when they do, they require extra documentation to ensure their financial security in exchange for their merchant services. 
  • Pricing is different as well, mainly in terms of higher fees. Opening, processing, and providing merchant services will cost more, and this is again one of the bank’s ways to secure itself from potential extra expenses and chargebacks. Higher chargeback fees can also be applied to such businesses.  
  • The short life-cycle issue refers mostly to those companies generating a lot of chargebacks. Overflow of those provokes the termination of an account by the financial institution.

What is a high-risk payment gateway?

Just as in the case of a regular payment gateway, a high-risk payment gateway is a solution that takes part in credit card processing (or the processing of other payment methods, for that matter). The main difference is that high-risk payment gateways work with businesses deemed high-risk. 

Challenges that high-risk merchants encounter during high-risk payment processing

Payment processing is a complex process that allows companies to receive payments from their clients. The payment gets authorized, authenticated, and settled to the merchant’s account. 

However, this operation can be challenging for high-risk businesses. It is, again, why they are considered high-risk: they can potentially encounter more fraudulent transactions. This, in turn, leads to a higher number of chargebacks. And chargebacks are detrimental for high-risk businesses, as they lead to financial and reputational losses. According to Mastercard, the annual global chargeback volume is expected to reach 337 million, which is 42% more than in 2023. 

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How can the right payment service help with the challenges of high-risk merchants?

As mentioned previously, the risk level for high-risk businesses is associated with fraud and chargebacks. This is where a challenge for a high-risk payment processor arises: it must offer advanced solutions to account for certain risk factors: 

  • A payment service provider needs fraud prevention tools to minimize the risks for merchants;
  • Merchant account providers must ensure a seamless transaction process to prevent payout delays that can occur due to high transaction volumes;
  •  High-risk payment processors should also utilize instruments that allow chargeback alerts and refunds to avoid or at least decrease chargeback and fraud-related losses.  

Tips for choosing the right payment gateway for high-risk businesses

Although high-risk merchants have fewer options than businesses that seek low-risk merchant accounts, they can still use reputable high-risk service providers. 

When selecting a payment provider, consider the following criteria and features:

  • Your interests must be accounted for. You first need to ensure that payment processing companies you see as potential partners provide high-risk accounts for your specific industry. Some payment processors open high-risk accounts for multiple business spheres, while others focus on 1 or 2 particular industries. It will be preferable if your payment service provider has special features and offers for your company type.
  • Locations matter. A merchant services provider must operate within your jurisdiction. If you plan to open additional branches in other countries, make sure that high-risk merchant services of your financial provider are available there as well.
  • Compliance is crucial. To choose the right payment gateway solution, you need to check if it abides by strict rules and policies imposed by countries and the banking industry. Ensure that they comply with PCI DSS, GDPR, and PSD2, as well as their local regulations of high-risk services provision. 
  • Availability of payment methods. Check the list of payment methods a payment processor offers. These need to be in line with what your clientele prefers. The most common payment methods for high-risk merchants are credit and debit cards, e-wallets, bank transfers, prepaid cards, and local alternative payment methods.
  • Anti-fraud solutions. These are crucial to keep high-risk merchants away from chargebacks and low credit scores. Consult with the representatives of a payment processor to learn which instruments they use and how they help detect fraud and prevent chargebacks. 
  • Global reach. Planning for international sales and expanding your clientele. Then, you need to check if a merchant account provider allows you to accept online payments from your chosen geographical regions. 
  • Compare the fees. High-risk merchant accounts usually require higher fees for maintenance and security tools, and they might also have higher chargeback fees. Compare the prices and processing fees to find what works for your company.

If you need a business account, why not try Genome? Our electronic money institution has all the tools necessary to grow your company. From payment security tools to mass payouts and corporate cards. Track your operations, transfers, transaction fees, etc., with Genome’s financial statements, which are available online at any time!

The iGaming Industry and High-Risk Payment Gateways

The iGaming companies are considered high-risk as well. Thus, such a company requires a high-risk payment gateway that has the necessary tools for payment processing and chargeback mitigation, as well as a high-risk business bank account and a dedicated merchant account.

Importance of high-risk payment gateways in iGaming

Having a high-risk payment gateway certainly is an industry gateway for many businesses. Such payment gateways are equipped to work with higher-risk payments common for iGaming companies, while regular merchant account providers will refuse to process them.

Also, many high-risk payment gateways are usually equipped with tools and solutions for dealing with chargebacks and fraud. Thanks to this, high-risk merchants are better protected from financial losses and poor credit scores. 

Overall, the main role of high-risk payment gateways is to enable credit card processing in the high-risk iGaming industry.

Common challenges for iGaming businesses

If an iGaming business is looking for a service provider, it must base its choice on how well the high-risk payment gateway can help with its primary challenges. 

Some of the issues and risk factors that the iGaming industry encounters are:

High transaction volume. The iGaming companies receive a lot of online payments and other transactions from payments throughout the day. To keep their operations active at all times, they require a service provider that can handle the transaction volume and keep the business safe from fraud while maintaining a seamless customer experience for players. 

The high-risk payment gateway must enable such companies to accept large transaction amounts from credit and debit cards simultaneously and offer additional host merchant services if necessary. In addition to accepting credit cards, a payment service provider must also offer alternative payment methods to such online businesses. 

Fraud and chargebacks must be properly addressed. As in the case of many high-risk businesses, iGaming merchants can encounter many fraudulent transactions and chargebacks. These can result in financial and reputational losses, bad credit scores, and, ultimately, the company closing. According to the Nilson Report, in 2020, card fraud amounted to $28.58 billion among the companies featured in their research. Moreover, it is expected that losses from this type of fraud will reach $49 billion by 2030.

To counter this threat, a service provider utilizes a set of anti-fraud and risk mitigation tools. For instance, some payment processing services offer chargeback alerts that allow iGaming companies to refund a client before the chargeback happens.  

Tailored solutions for high-risk transactions in iGaming

All in all, there are some features and services that a payment processor can offer to help the specific needs of an iGaming business. Let’s take a look at Genome’s tailored solutions for iGaming as an example:

  1. In-house product-build capabilities with customized financial solutions;
  2. EUR IBAN accounts for B2B payments and a dedicated account manager;
  3. Multiple multi-currency accounts available at once;
  4. Issuance of hundreds of corporate virtual Visa cards;
  5. Issuance of Visa Business cards for corporate expenses;
  6. Mass, seamless payouts with different transfer options available;
  7. Security features and compliance with all major regulations. 

All the details can be found in our dedicated presentations on iGaming operators and affiliate marketing.

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The role of financial institutions in high-risk payment processing

Financial institutions play a crucial role in high-risk payment processing by providing specialized services and risk management solutions. Their involvement enables businesses to conduct transactions in industries with elevated risk factors, fostering resilience and liquidity in the overall transactional landscape.

Other actionable tips for businesses in high-risk industries

High-risk industries can be very turbulent. To gain better control, high-risk merchants need to monitor the latest regulations set for their specific sector by countries and banks. Compliance with policies is one of the keys to their seamless, secure work. 

Key Takeaways

All in all, high-risk industries are dependent on specialized payment gateways to operate properly. To be on top of your game, you need to select the best, most reliable payment gateway solutions.

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FAQs (Frequently Asked Questions)

What are high-risk payment gateways?

A high-risk payment gateway is a type of gateway that merchant services providers offer to businesses that fall under the high-risk category. Using these, such companies can accept credit and debit card payments, as well as alternative payment methods from their clients.

High-risk payment gateways exist as separate companies or are part of a payment processor that works to support high-risk merchants. Not all payment solution providers work with high-risk businesses, so a merchant from such an industry should be mindful of that when selecting a payment solution.

What is considered a high-risk transaction?

A high-risk transaction is a type of transaction that occurs with high-risk businesses or activities that are prone to a higher level of risk. These transactions often require a specialized high-risk merchant account with advanced risk management tools. 

A monthly account fee, transaction fees, processing fees, and other charges are usually higher for these merchants. Not to mention that a rolling reserve also tends to be higher for high-risk industry businesses. (Note: a rolling reserve is money that payment processors withhold as a safeguard against potential losses due to different risks, such as chargebacks).

How does a high-risk merchant account work?

A high-risk merchant account is a type of account used by businesses from high-risk industries to accept credit card payments from clients. After such a company applies and gets approved for a merchant account, it can integrate a payment gateway to accept payments and access other payment processing services. When everything is set up, clients will be able to send payments to the high-risk business. The service provider will check the transactions using anti-fraud and chargeback mitigation solutions. After, the funds will be settled in the merchant account. 

What’s the difference between a high-risk payment gateway and a high-risk merchant account?

The difference is that a high-risk payment gateway facilitates secure transaction processing, while a high-risk merchant account manages funds and settlements. A company needs both to accept payments.