When it comes to payment processing, not all merchants are created equal. Some operate in industries where chargebacks, fraud, or regulatory scrutiny are more prevalent, earning them the label “high-risk merchants.” These businesses often face uphill battles in securing stable payment processing, managing compliance, and navigating financial uncertainty. 

In this article, we’ll define what makes a merchant high-risk, the specific pain points they experience, and how innovative financial solutions can help them thrive. 

What is a High-Risk Merchant? 

High-risk merchants typically operate in sectors prone to high chargeback rates, more regulations, or financial volatility. Some common examples of industries that are considered high-risk include: 

• CBD & Hemp Retailers 
• Kratom & Botanical Shops 
• Seed Banks 
• Smoke & Vape Shops 
• Consumer/B2B Lending 
• Tribal-Owned Businesses 
• Gun & Tactical Gear Retailers 
• Telemedicine & Online Pharmacy 
• Debt Collection Agencies 
• Adult Products 
• High-Risk E-commerce 
• Subscription Products 

These businesses often deal with high transaction volumes, rapid growth, and customer disputes. Combined, these factors can make traditional financial institutions wary. 

Top Challenges Faced by High-Risk Merchants 

“Why is my business considered high-risk?” “How can I get payment processing for a high-risk business?” “How can high-risk merchants lower chargebacks?”  

If you’ve found yourself asking any of these questions, you’re not alone. High-risk merchants face unique challenges only solved by unique payment providers. The top five challenges these merchants face include payment processor rejections, chargebacks, compliance, capital access, and limited banking relationships. 

1. Payment Processor Rejections and Instability

Most mainstream payment processors have strict risk tolerance. If your business is labeled high-risk, you may face: 

• Application rejections for merchant accounts 

• High processing fees 

• Sudden account freezes or terminations 

For example, a CBD company may be denied service by a traditional bank due to regulatory concerns, even though its operations are fully legal in its region. Working with a payment processor that helps you maintain compliance can help avoid these shutdowns and allow you to keep accepting payments.

2. Chargebacks and Fraud Exposure

High-risk industries often experience elevated chargeback rates due to: 

• Subscription billing disputes 

• Unsatisfactory customer experiences 

• Fraudulent transactions or identity theft 

Too many chargebacks can lead to shut downs, increased fees, or being placed in monitoring programs like the Visa Acquirer Monitoring Program. It’s crucial to work with a payment provider that is experienced in high-risk verticals and able to support these challenges.

3. Regulatory Compliance and Licensing

From age verification requirements for adult content to FDA rules for nutraceuticals, high-risk merchants are under constant regulatory scrutiny. Non-compliance can result in: 

• Hefty fines 

• Legal issues 

• Business shutdowns 

Navigating compliance frameworks across state and international lines is a persistent hurdle. 

4. Limited Banking Relationships

Many banks hesitate to support businesses in stigmatized or misunderstood industries. This results in: 

• Limited access to checking or savings accounts 

• Poor customer support from financial institutions 

• Reluctance to offer tailored financial services 

High-risk merchants face a unique set of challenges – from payment processor instability and elevated chargeback rates to regulatory complexity. These obstacles can hinder growth and create operational uncertainty. Navigating these hurdles requires the right partner. 

What Payment Platforms Support High-Risk Merchants? 

At Valmar, we believe innovation shouldn’t be limited in traditional risk categories. Our mission is to empower high-risk merchants with the tools and financial infrastructure they need to operate with confidence and scale without friction. 

Here’s how we help: 

• Stable, high-approval merchant processing tailored to high-risk verticals 

• Advanced fraud protection and chargeback mitigation systems 

• Compliance support to help businesses meet evolving regulatory requirements 

• Dedicated relationship management to guide your growth and advocate for your business 

Whether you’re a thriving CBD startup or a subscription-based content creator, Valmar is your trusted financial partner and we’re built to understand your risk and back your growth. 

Start processing with us today.