High risk payment gateway

When choosing a high risk payment gateway for e-commerce it is very important to know what is a payment gateway, is it legal and safe to use it and what types of it exist?

A high risk payment gateway has an elevated fraud risk index due to a large number of possible chargebacks that the business can receive, causing the losses for the financial entity that has provided the merchant account. Therefore, it is very common for the bank to take its time during application process and investigate the nature of client´s commercial activity.

Characteristics of high risk business

A business activity is classified as a high risk when it has one of the following characteristics: 

• The country of incorporation of the company is included in a list of high risk jurisdictions.
• It has from 1% to more chargeback rate.
• It has high or very high average sales ticket.
• The incorporation date of the company is very recent.
• The industry in which the business is developed is considered high risk.
• The website of the company lacks security protocols (Https, Refund policy).

Is it legal to use high risk payment gateway for my website?

Acquiring banks do not accept and don’t provide merchant accounts to illegal businesses related to money laundering, however, they do include high risk commercial activities into the list of their clients. The difference, as we all understand, is hidden in the nature of the business and whether it is illicit or licit.

High risk payment gateway is a completely legal way to accept online payments. The businesses that choose it for their commercial activity are usually those with a very high average sales ticket or businesses that have legal gaps. Banking entities, unable to identify them as illegal, automatically classify them as high risk and offer them merchant account services.

How does a high risk payment processing work?

Payment processing involves 9 simple steps interconnected between the acquiring bank, payment gateway and the card issuer.

Step 1: The customer visits a web and decides to make a purchase.

Step 2: He adds the product to the shopping cart and starts the checkout process introducing his personal information and credit card details.

Step 3: The payment gateway collects information from the online store and notifies the acquiring bank about the transaction and order number.

Step 4: The acquiring bank detects that a credit card wants to perform an operation for an amount that has been notified by the payment gateway.

Step 5: The acquiring bank contacts the brand of the card used for the purchase (Visa, MasterCard, Amex ...).

Step 6: The brand of the card verifies with the card issuing bank if the client has sufficient funds to carry out the operation and notifies the acquiring bank if the operation is authorized or not.

Step 7: The customer is required to enter the security PIN in the 3D form that the card issuing bank has sent him.

Step 8: The payment gateway collects the information and authorizes or not the transaction.

Step 9: If the operation has been authorized, the card issuing bank transfers the money to the merchant account number.

High risk payment gateway for online store

Sale of high risk intangible services

The high risk online intangible services are:

Tarot, application and cancellation of credits, collection agencies for delinquent, dating websites and escort services, software sales, payment methods providers, financial services, Forex currency exchange, insurance, erotic content, betting, bingo, casino and gaming in general, legal services, loans between individuals, marriage services, multi-level marketing, payment protection insurance, social gaming networks, purchase and sale of shares, computer support, telemarketing, investment in options Binary, Virtual currencies (Bitcoin, PeerCoin, Ripple, Dogecoin, Litecoin, Ethereum), satellite channels, scholarship application.

Sale of high risk tangible products

The high risk tangible products sold on the Internet are:

Sex shop, air tickets and travel agencies, sale of first-line clothing, sale of tobacco and cigars, electronics stores (mobile and computers), products sold on the auctions, pharmacy (license required) and nutritional, growshop, clubs, weight loss supplements, sales made on social networks.

Payment gateways that can be used for both, sale of high risk tangible products and intangible services are characterized by elevated number of chargebacks and its fees that the merchant has to assume. It is common practice for payment processing providers to apply a rolling reserve towards the merchant accounts, which can potentially be used by the acquiring bank to compensate these chargebacks.

High risk payment gateway fees

* The activation of the high risk payment gateway is a one-time payment. No further monthly or annual maintenance fees are required. 

* The prices can vary depending on the commercial activity of the client and the level or risk his business involves. For any questions, please, contact us via e-mail, chat or by phone.