Navigating the Payment Industry Alphabet - H is for "High Risk Merchants"

H is for "High Risk Merchants"!

In the payments industry, not all merchants are created equal. Some are classified as High Risk Merchants - a designation that carries significant implications for underwriting, monitoring, and compliance.

Interesting enough, it depends on who you ask in the payment industry as to who they identify as a high risk merchant. If you ask a 'credit' person, you will get a completely different list than if you ask a 'compliance' person. Even the various card networks have different lists! 😐

A High-Risk Merchant is typically a business operating in an industry with elevated exposure to fraud, chargebacks, legal scrutiny, or regulatory complexity.

Common examples include:
* Travel and ticketing services
* Subscription-based models
* Adult entertainment
* CBD and cannabis-related products
* Online gaming and gambling
* Debt collection services

So, what makes a merchant “high risk”? Factors include:
* High chargeback ratios
* Large transaction volumes
* Cross-border activity
* Regulatory uncertainty
* Reputational concerns

From a compliance and risk perspective, onboarding and managing high-risk merchants requires enhanced due diligence. Acquirers must be especially vigilant, as they bear the ultimate responsibility for ensuring these merchants comply with card network rules and regulatory obligations.

🔍 Key takeaway: High-risk doesn’t mean “bad” - but it does mean more scrutiny, more oversight, and more proactive risk management.