High Risk is a term in the merchant processing industry that is used to identify businesses that are statistically more likely to have higher chargebacks.
Since giving money back to a business owner can ultimately fall to the responsibility of the merchant account provider, whether they come from chargebacks or credit card fraud, merchant account providers need to charge higher fees to businesses that are more likely to experience chargebacks and fraud.
Despite its abrasive sounding label, high risk businesses are quite common.
Merchant account providers are able to profitably provide services for high risk businesses using thorough underwriting, and charging appropriately priced fees to allow these merchants to accept credit card and process payments.
It's all about balancing risk.
Though not exhaustive, let's take a look at a few examples of things that are considered high risk:
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