2019 Trends to Watch for High Risk Merchants

Today’s modern business owners understand the value of having the ability to accept debit and credit cards as a form of payment. With this ability, you can increase revenue by reaching a target audience that doesn’t use cash to make purchases. It also helps you reach people who shop online. Credit and debit card processing is also essential in order to be able to process loyalty and gift cards. If your business is part of an industry that is considered to be high-risk by financial institutions, you may find it difficult to find a merchant services provider who is willing to take you on as a client.

Businesses that fall into these categories will frequently require a high-risk merchant services account for their credit and debit card processing:

  • Offshore businesses
  • Those selling certain products or services in high-risk industries (adult products, drug paraphernalia, vape products, etc.)
  • Those with a history of excessive chargebacks
  • Those with owners with bad personal credit
  • Those associated with a high-risk of fraud

Some of the most common industries that are considered high-risk for credit card processing include:

  • E-commerce
  • Computer hardware
  • Pawn shops
  • Adult entertainment
  • Jewelry
  • Tobacco/vaping
  • Cannabidiol/medical marijuana
  • Credit repair and debt consolidation
  • Marriage services

If your business is in a high-risk industry, you should make a point to be aware of the following trends which will affect high-risk merchant services in 2019.

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Increased Fraud Protection

Consumers expect transactions, even those online, to be secure and for their credit card information to be protected. You as a business must prove that you take the credit card information security of your customers seriously. A great way to do this is by taking advantage of the increased availability of tools to protect against fraud. There are new strategies in place to help combat fraud, such as looking into orders that have different billing and shipping addresses. There are also new machine learning and artificial intelligence technologies that add critical fraud protection to credit card payment processors.

Increases in Online Gambling and Gaming

Online gambling is on the rise. In 2018, the industry was worth $50 billion. There is an increase in live table games, virtual reality games, and a more robust emphasis on mobile gaming. As a result, many of today’s high-risk payment processors are turning their attention toward providing services to those in the online gambling industry. High average chargeback ratios, fraud risk, and gray areas where gambling versus gaming overlap are common challenges online gaming merchant accounts usually face.

Rise of Mobile Payments

Mobile payments are on the rise across the globe. There is also a rise in the use of cryptocurrency as a form of payment. In fact, it is believed that mobile payments will be the future of commerce. Across the world, there are roughly 1.2 billion people who have bank accounts, and nearly 5 billion who have mobile phones. That number will continue to grow as younger generations start using mobile devices and open bank accounts, making customers with mobile devices a valuable source of potential revenue for your business.

Drop-Shipping Is Continuing to Increase

Drop-shipping takes place when merchants sell products without having physical inventory. Since a third-party manages the inventory, this sometimes causes retailers to have a higher risk of chargebacks. This occurs because the merchant doesn’t have control of the inventory, including what gets shipped. When looking for a credit card processor, it is important to find one that specializes in working with companies that do drop-shipping (this applies if you sell drop-shipped items). A processor with experience in working with drop-shipping merchants will have the knowledge it takes to help you minimize chargebacks.

Changing trends can be hard to keep up with, especially in an industry as complicated as merchant services. Your payment processor can take care of the hard work for you, so it’s important to make sure you’re choosing a processor that has your best interests in mind. Here’s 5 more tips to help you determine which credit card processing company will fight for you as a high-risk merchant. 

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