A high-risk merchant is a business that presents a greater-than-average risk to payment processors, acquiring banks, or card networks. This elevated risk may stem from the merchant’s industry type, business model, transaction behavior, or compliance history.

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Industries typically labeled as high-risk include:

• Online gambling
  
• Adult content
  
• Pharmaceuticals (especially online sales)
  
• Alcohol and tobacco
  
• Payday lending
  
• Travel and ticketing services
  
• Subscription-based or future-delivery models (e.g., pre-orders)

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A merchant can also be deemed high-risk due to operational factors  such as a lack of processing history, high average order value, large volume spikes, or poor credit standing. For example, a newly launched electronics site accepting large upfront payments for future delivery might raise red flags due to the potential for customer disputes or fulfillment failures.

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High-risk merchants often undergo enhanced underwriting, face higher processing fees, may be subject to rolling reserves, and are closely monitored. They may also be required to enroll in card brand compliance programs that apply stricter oversight.

While these merchants can generate significant processing volume, they require robust risk controls to protect the payment ecosystem from fraud, financial losses, and reputational damage.

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