Introduction
One of the most crucial things that you should know is that, business sector, or, vertical is most likely to be analysed through credit risk, regulatory risk, & reputational risk. Let’s have a look at it. First, we will see the credit risk, industries which have a lagging between the payment and delivery is something that is to be deemed as high risk. And, this is because, if the company runs out of business prior to their fulfilling the order, then in such a scenario the acquirer will take over the liability. Some examples of these are, airline carriers, drop-shippers, tour operators and so on, which are high-risk sector. You can also look here for more details on, high risk merchant accounts & broaden your horizons on the same.
Regulatory & Reputational Risk
Another thing, there are some sectors or business that are regulated strictly and susceptible to great changes. Such unpredictability lessens the stability of the long-term business models, & besides that, in turn it enhances the risk that are involved. Additionally, you can find more laws which are infringed or violated, knowingly or unknowingly, and which comes with results or consequences regarding the same. In reputational risks, there are banks that highly depend on their own reputation, and any activities which could threaten this deemed high-risk, like facilitating legit but frowned upon transactions. So, if your business is known to be of high risk in any of the following ways, then there are high chances that such traditional bank may deny your account application. But that’s where a high-risk merchant account can be very helpful.
Businesses that are High-Risk Sectors
- Alcohol – Adult Entertainment – Advertising Services – Affiliate Marketing – Airline – Travel – Tourism – Lodging.
- CBD Oil – Charities – Credit Repair and Debt Management – Cryptocurrency – Dating and Escort Services – Debt Management and Collection Agencies.
- Direct Sales and Pyramid Selling – Drugs and Drug Products (Including Prescriptions) – E-wallets – Events and Tickets – File Sharing – Foreign Exchange (Forex) Merchant Account/Services – Gambling – Health and Wellness Products.
- Insurance – Investment Schemes – ISP and Hosting Services – Jewellery, Watches & Accessories – Lender Merchant Account & Services – Money Transfer – Nightclubs and Bars – Nutraceuticals.
- Online Auctions – Online Gaming and Gambling – Payday Loans – PPI Merchant Accounts & Services – Prepaid Phone Cards – Pyramid Selling – Software Downloads – Tattoo Studios.
- Technical Support & Web Development – Timeshares and Holiday Clubs – Tobacco and E-cigarettes – Travel and Tourism – Vehicle Sales and Car Parts & VPNs.
Points of Differences Between High-Risk & Low-Risk Merchant Accounts
The most important thing you should know is that learning about the criteria for differentiating merchants as high risk or low risk mainly depends on the or from provider to provider. But there are also, certain key differences like, general signs of the low-risk merchant are based on the account providers favourable evaluation of the work or business and it includes – working with one currency, selling low-risk products like household books, goods, clothing and so on, having well-settled business that has been around for years, next, a revenue of less than £15,000 per month, then the average credit transaction that doesn’t exceeds more than £50 & less chargeback frequency. But that’s not the case with high-risk merchant accounts.
