In the world of payment processing, some businesses are classified as high risk due to various factors. Being labeled as high risk affects the merchant’s ability to obtain a traditional merchant account, which can have implications for their payment processing capabilities. In this article, we will delve into the factors that make a merchant account high risk, shedding light on the considerations involved in this classification.

1. Industry Factors:

Certain industries inherently carry a high risk merchant due to the nature of their operations. The following sectors often face challenges in obtaining traditional merchant accounts:

2. Adult Entertainment:

Businesses involved in adult entertainment, including adult websites, video streaming services, and adult novelty stores, are often categorized as high risk due to the legal and moral complexities associated with the industry.

2. Online Gaming and Gambling:

The online gaming and gambling industry is subject to legal restrictions and potential regulatory issues, making it a high-risk area for payment processors. Factors such as chargebacks and fraud risks further contribute to the high-risk classification.

3. Pharmaceuticals:

Merchants selling pharmaceuticals, especially prescription drugs, often face scrutiny due to the potential health risks associated with the misuse or counterfeit products. Compliance with regulations and licensing requirements is crucial for these businesses.

4. Travel and Tourism:

Travel agencies, tour operators, and online travel booking platforms are considered high risk due to the potential for chargebacks and cancellations, as well as the higher likelihood of transactions involving international customers.

5. Financial and Operational Factors:

Apart from industry considerations, certain financial and operational factors can contribute to a merchant account being classified as high risk. These factors include:

6. Poor Credit History:

A history of financial issues, such as bankruptcies, late payments, or excessive chargebacks, can signal financial instability, leading to the high-risk categorization.

7. High Chargeback Ratios:

Chargebacks occur when customers dispute transactions and request refunds. Excessive chargebacks can indicate issues with customer satisfaction, product quality, or potentially fraudulent activities, making the account high risk.

8. High Average Transaction Value:

Merchants processing transactions with a high average value are often deemed high risk. This is primarily due to the potential for larger financial losses in case of chargebacks or fraudulent transactions.

9.Subscription-Based Services:

Businesses offering subscription-based services face higher risks due to the recurring nature of transactions and the potential for customers to dispute charges or cancel subscriptions unexpectedly. For high-risk merchants seeking innovative solutions and expert guidance, then must visit is your go-to resource. We’ve partnered with an industry-leading payment processor,, to bring you the latest insights and strategies.

III. Legal and Compliance Factors:

Legal and compliance issues can significantly impact a merchant’s risk level. Factors in this category include:

  1. Regulatory Compliance:

Certain industries, such as financial services, healthcare, or legal services, are subject to strict regulatory compliance. Failure to adhere to these regulations can result in a high-risk classification.

  1. Legal Restrictions:

Operating in regions or countries with legal restrictions on certain products or services, such as cannabis-related businesses, can increase the risk associated with the merchant account.

  1. Reputation and Brand Image:

Negative publicity, involvement in legal disputes, or association with controversial activities can tarnish a merchant’s reputation and increase the risk level.


Several factors contribute to the classification of a merchant account as high risk. Industry considerations, financial and operational factors, and legal and compliance issues all play a role in determining the level of risk associated with a merchant’s account. Understanding these factors is essential for businesses seeking payment processing solutions. While being labeled high risk may present challenges in obtaining traditional merchant accounts, specialized high-risk merchant account providers exist to cater to the unique needs of these businesses, ensuring they can process payments securely and efficiently.