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November 27, 2023 No Comments

WHAT MAKES YOUR BUSINESS HIGH RISK?

You may think high-risk businesses are mostly those that sell shady products or services. But that's not true.

Here are reasons why businesses get put in the high risk category by credit card processing companies:

Questionable products: This is the most obvious type of high-risk business. It might include those that sell adult entertainment, drug paraphernalia, and weapons.

Higher chargeback rate: Some industries get more chargebacks than others. This includes travel services and electronics. High legal regulation: Businesses like tobacco and nutraceuticals require strict legal compliance.

Sales model: Some businesses have questionable sales practices. For example, MLMs have a reputation for being scams. Even if you're totally legit, you'll still be treated with more caution. Vulnerable customers: Businesses like debt consolidation services cater to a riskier customer base.

Subscription businesses: A lot of customers forget to cancel their subscription or free trial and then issue a chargeback.

Online service-only businesses: Businesses that only provide an online service, like SEO/SEM, are risky because there's no tangible product and often have high value transactions.

Bad personal credit: Providers may see you as not being financially responsible and associate that with how you run your business.

High-dollar sales: If the average ticket size of your transactions is over $500, the chargeback risk increases. This is why businesses like furniture stores are considered high risk.

High monthly volume: If your business regularly processes more than $20,000 a month, the risk for chargeback increases.

International sales: Accepting foreign currencies means more risk, especially if you sell to countries with more fraud (typically, this means any countries except for the U.S., Canada, Western Europe, Australia, and Japan).

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