A Simple Guide for High Risk Merchants (and How to Succeed as One)

In digital payments, some industries face more fraud, chargebacks, or regulatory oversight than others. When that happens, the businesses in those sectors are classified as high risk.

This label does not reflect the quality of your business. It only means your industry requires extra checks to keep payments safe.

Our goal is to help you understand what this means, meet your compliance obligations, and keep your business running smoothly. We want to be a reliable partner, so you can accept payments with confidence.

Businesses may be classified as high risk for several reasons. These include but aren’t limited to:

High transaction value or volume

Businesses that process large amounts or very high-value payments can face bigger losses when disputes occur. This increases exposure for both the merchant and the payment provider.

Geography and cross-border activity

Operating in regions with higher fraud rates, limited regulatory clarity, or heavy cross-border volume often requires stricter controls.

Regulatory requirements

Industries that need licenses, age verification, or government approvals are considered higher risk because compliance obligations are more complex.

Chargeback patterns

Businesses with a history of disputes, refund pressure, or fulfilment challenges are likely to be classified as higher risk.

Business model

Subscription models, advance payment models, and services that are delivered later or over time tend to have higher dispute rates.

Industry type

Some industries historically attract fraud or attract more regulatory scrutiny, even if the merchants themselves are reputable.

Below are common examples, though this list is not exhaustive:

• Adult content and services: This sector has strict age-verification rules and a long history of chargebacks due to privacy concerns and subscription models.

• Online gambling and sports betting: These businesses operate in heavily regulated environments and often attract fraud attempts or dispute claims.

• Online pharmacies and tobacco or e-cigarette sellers: Age restrictions, prescription requirements, and varying laws across markets create higher compliance and fraud risks.

• Subscription or free-trial services: Automatic billing models can lead to misunderstandings when customers forget to cancel, which drives dispute volume.

• Skill-based games and certain fantasy sports: Some regions classify these as gambling, while others do not. This creates inconsistent rules and higher regulatory scrutiny.

• Cryptocurrency exchanges and trading platforms: Volatility, identity fraud, and evolving global regulations make this category more complex to support safely.

• High-risk securities trading such as binary options, CFDs, forex, or ICOs: These products carry high loss potential and attract regulatory attention due to past cases of deceptive practices and disputes.

• Cyberlockers or file-sharing platforms: Anonymous uploads and the potential for copyrighted or harmful content create higher content and compliance risks.

• Travel agencies, tour operators, and ticketing services: Travel bookings can be cancelled or disrupted for reasons outside the merchant’s control, which increases refund and chargeback activity.

• Financial services such as lending or debt collection: These businesses handle sensitive financial obligations and often face strict licensing requirements and oversight.

Important to note

Some business types are prohibited for regulatory or safety reasons. Please see our Acceptable Use Policy and Restricted Business list for clarity on what cannot be supported.

Some businesses face more exposure to fraud, disputes, or regulatory requirements. Classifying risk helps us put the right safeguards in place so payments stay secure, reliable, and compliant for everyone.

If your business is classified as high risk, you can still accept payments confidently. It simply means there are extra steps designed to reduce risk and protect your revenue.

You may need to provide documents like licenses, compliance certificates, or financial statements.

Ongoing compliance checks

We may request periodic updates to confirm your business continues to meet regulatory standards.

Higher processing fees

Fees may be slightly higher to support the monitoring and compliance needed to protect your business and your customers.

Account and transaction monitoring

Your account may receive closer oversight to detect unusual activity quickly.

Global acceptance challenges

Some banks or processors may restrict specific high risk industries. We help you find reliable alternatives.

Product and service availability

Some Paystack services may be limited until specific compliance requirements are met.

We don’t expect you to navigate this alone. We help by:

Guiding you through compliance: Clear instructions on documents, onboarding requirements, and ongoing obligations.

Proactive monitoring: We review account and transaction activity to help spot risks early.

Industry-aware support: We offer recommendations, payment options, and controls tailored to your business model.

Taking a few proactive steps can help reduce disputes and strengthen your operations.

Keep documents updated

Maintain current licenses, compliance certificates, terms of service, and financial records.

Be transparent with customers

Share clear refund, delivery, and subscription terms. Make customer support easy to reach.

Strengthen fraud prevention

Use automated tools, identity checks, and internal review processes.

Stay informed

Regulations can change. Monitor updates in your industry and adjust early.

1. “High risk means my business is unsafe or illegitimate.”

   • Not true. Many reputable businesses are classified this way purely based on industry.

2. “I won’t get my payouts.”

   • You will. As long as compliance requirements are met and activities are legitimate, payouts continue normally.

3. “High risk means very high fees.”

   • Fees reflect the level of monitoring and protection required. They’re balanced and fair.

4. “Once high risk, always high risk.”

   • Risk profiles can change as industries evolve or as your own practices strengthen.

Being classified as high risk doesn’t define your business. It helps us put protections in place that safeguard your revenue, your customers, and the wider payments ecosystem. With the right information and the right support, high risk merchants can grow successfully.

If you ever need help or clarity, our team is here for you via support@paystack.com 💙