Businesses labeled as “high-risk” often face significant challenges when it comes to setting up merchant accounts. High-risk businesses, such as those within industries like online gaming, cryptocurrency exchange, nutraceuticals, and adult entertainment, can struggle to secure processing capabilities due to the perceived higher level of chargebacks or regulatory scrutiny associated with their operations. However, with the rapid globalization of trade and eCommerce, international high-risk merchant account have become an essential solution for these businesses.
Below, we explore some options for securing international merchant accounts and the key considerations businesses should keep in mind when evaluating them.
What Makes a Business High-Risk?
Before understanding the options available, it’s crucial to understand what might categorize a business as high-risk. Financial institutions and payment processors label businesses as high-risk if they have a higher probability of financial disputes, regulatory complexities, or fraudulent activities. Common indicators include high chargeback rates, industries with frequent customer disputes, or companies processing large transaction volumes.
International High-Risk Merchant Account Options
1. Dedicated High-Risk Payment Processors
Some financial technology companies specialize exclusively in offering merchant accounts for high-risk businesses. These service providers cater specifically to industries prone to higher levels of scrutiny or chargebacks. They typically offer global payment solutions, multi-currency support, and a strong internal fraud management system.
Popular examples include companies such as PayKings, Durango Merchant Services, and Instabill. These providers are known for tailoring their offerings specifically to meet the demands of high-risk clientele and navigating complex regulatory requirements of specific industries.
2. Offshore Merchant Accounts
Offshore accounts have become a popular solution for international high-risk merchants. Offshore processing refers to setting up a merchant account with a bank or payment provider located outside of your home country, often in jurisdictions like Malta, Cyprus, or the Cayman Islands.
Offshore accounts often offer lower processing fees and relaxed regulatory requirements compared to domestic banks. They also provide key advantages, such as access to multi-currency processing and improved privacy. However, merchants must be mindful of the potential tax and legal implications of using offshore services in certain jurisdictions.
3. Aggregator Services
For businesses struggling to obtain approval through traditional means, some opt for payment aggregators like PayPal or Stripe, which provide an entry-level option for small accounts. However, these solutions are typically not optimized for high-risk merchants and come with higher fees or account termination risks for businesses engaged in restricted activities. For more reliable long-term growth, dedicated high-risk merchant accounts are better suited.
4. Full-Service International Merchant Banks
Several international banking institutions provide specialized high-risk merchant accounts with premium services. These accounts include benefits like fraud detection tools, chargeback dispute resolution, and high authorization rates. Examples include HSBC’s global processing division and niche processors within the European and Asian markets.
What to Look for in a High-Risk Merchant Provider
If you’re exploring account options, here are some essential factors to consider before making your decision:
- Reputation: Partner with merchants or financial institutions that have substantial experience and positive reviews in the high-risk industry.
- Transparent Pricing: Look for providers that offer clear fee structures without hidden costs, ensuring you know exactly how much processing will cost based on turnover.
- Global Access: Ensure your processor supports multiple currencies and regions to efficiently cater to an international audience.
- Fraud Management Tools: Make fraud detection and prevention a top priority, as it can significantly reduce risks to your business assets.
Final Thoughts
For businesses operating in high-risk sectors, securing an international high-risk merchant account is crucial for supporting growth and building trust among customers. By choosing the right processing options and understanding their unique requirements, high-risk merchants can establish efficient payment systems while protecting their bottom line.
