Payments glossary · Risk
High-Risk Merchant
A high-risk merchant is a business that acquirers and PSPs consider more likely to cause chargebacks, fraud, regulatory or reputational problems because of its industry, business model, history or markets, and which therefore faces stricter onboarding, pricing and terms.
How High-Risk Merchant works
Industry is the most common factor. Card schemes treat certain merchant category codes as high risk: Visa's current list of high-integrity-risk codes for card-absent sales includes betting and gambling (7995), pharmacies and drugs (5912 and 5122), outbound telemarketing (5966), adult content and services (5967), dating and escort services (7273) and tobacco (5993), and Visa requires such merchants to be registered with it. Other common flags include free-trial subscriptions, forex and crypto, travel and ticketing with delayed delivery, high average order values, cross-border sales and a history of disputes.
Being classed as high risk usually means more documents at onboarding (licences, business plans, processing history), higher fees, rolling reserves, lower processing limits and closer monitoring. Acquirers answer to the schemes for their merchants' dispute and fraud levels under programmes such as Visa's Acquirer Monitoring Program. Merchants terminated for serious problems can be added to shared databases such as Mastercard's MATCH or Visa's Merchant Screening Service, which makes finding a new provider much harder.
High risk does not mean unbankable. Specialist acquirers and PSPs serve these sectors, and merchants can improve their terms by keeping chargeback and fraud ratios low, using 3-D Secure, publishing clear terms and refund policies, and being open with providers about what they sell.