High-Risk Payment Gateway

High-Risk Payment GatewayIf you have an online business in Europe that can’t exist without or could benefit from a plethora of cashless payment options, you’ll certainly need a payment gateway that facilitates secure and reliable payment methods of your customers’ choice. Since a payment can’t be processed without first going through the payment gateway, it’s crucial to select a payment service provider that understands every aspect of your business and ensures compliance with relevant regulations so that your and your customers’ funds are safe.

A payment gateway is a client-facing type of software supplied by a payment service provider, integrated into an online store, which enables merchants to either accept or decline credit and debit cards and other methods of payment in a safe and secure way. This is the section of the website where a client is asked to select a payment method (credit or debit card, an e-wallet, or other) and enter the payment information.

Before diving into the finer details, you should know that there are two types of this payment software – low-risk and high-risk payment gateways. You need the latter if your business falls within the category of high-risk businesses.

What Is a High-Risk Payment Gateway

A high-risk payment gateway is directly linked to the financial or reputational risk level of a business that’s assessed by a merchant account service provider and a merchant acquiring bank by applying a particular set of criteria in order to estimate the likelihood of financial losses and reputational damage.

There is no standard list of applicable criteria, however, the following factors related to company records usually determine whether a business is deemed high-risk:

  • New merchants without payment processing history tend to be categorised as high-risk merchants as there’s no track record to prove otherwise
  • The industry the business is in is strictly regulated
  • Exposure to fraud increases if a company engages in economic activities in foreign countries and therefore accepts international payments (certain countries are listed as high-risk third countries in terms of fraud and force the business to be labelled as a high-risk merchant)
  • Large payment volumes (the threshold varies from provider to provider)
  • Card-not-present (CNP) transactions (when a credit or debit card isn’t physically present at the time of the payment processing)
  • Repeated chargebacks, i.e. consumer payments reversed by banks, lead to loss of revenue and therefore affect the company’s reliability
  • A high volume of returns or cancellations
  • Low business credit score
  • Multicurrency transactions
  • High-value products and services
  • Seasonal sales causing inconsistent volumes of transactions
  • Recurring billing

If you had a merchant account before and it was closed due to the failure of your business which resulted in the financial losses for your merchant account provider, it’s highly likely you’ll find your company categorised as a high-risk merchant and listed on Mastercard Alert To Control High-risk Merchants (MATCH). The list is designed to protect other merchant account service providers and help them process new applications. If this is the case, your business can be put back on its feet by a trustworthy high-risk merchant account service provider who can also offer high-risk payment gateways. Let us know if you need help finding one – we’ll be pleased to serve your business by tapping into our vast network of financial partners.

Even if your company can demonstrate spotless records and low-risk payment models, it can still be deemed high-risk due to the industry it’s in. Certain industries are considered high-risk in terms of potential financial loss and reputational damages and therefore automatically force their participants into the category of high-risk merchants.

The following industries and services are considered high-risk:

  • Cryptocurrency products and services (namely, crypto exchanges and crypto wallets) are considered high-risk due to the volatility and swiftly evolving regulations
  • Debt collection businesses are often based in different countries from their creditors which is why they have international transactions and their collection methods are considered high risk
  • Travel businesses are exposed to chargebacks and cancellations mainly due to the early booking services and associated cancellation policies
  • Online gaming companies are susceptible to financial crime and drug trafficking and are therefore strictly regulated; moreover, the industry has historical commercial disputes
  • Online gambling (casinos, online poker, lotteries, etc.) due to the high volume of refunds and chargebacks and susceptibility to fraudulent activities
  • Online dating businesses are seen as high risk due to the history of chargebacks associated with the subscription payment model
  • Ticket brokering poses a high risk of financial loss due to the unpredictability of ticketed events (date change, last-minute changes, etc.)
  • Multilevel marketing businesses are considered high-risk due to high chargeback rates and unpredictable growth which statistically quite often lead to a business termination
  • CBD products are highly regulated and still considered controversial
  • Pharmacies are strictly regulated, especially those selling prescription drugs, and are also susceptible to fraud
  • Tabaco, e-cigarette and vape shops operate within a robust regulatory framework and have a history of fraud which makes them one of the riskiest merchants who aren’t eagerly accepted by most the banks
  • The alcohol industry is strictly regulated and requires specific payment services that guarantee compliance (e.g. no underage sales)
  • Adult entertainment is considered high-risk due to the potential reputational damage posed to a merchant acquiring bank, therefore such companies often experience difficulties in obtaining such payment services and payment gateways in spite of the success and volume of their transactions
  • Subscription and membership services are usually considered high-risk due to the exposure to chargebacks caused by intransparent payment terms (e.g. free trials with automated recurring billing)

Types of Payment Gateways

Based on the required level of integration, you can choose from several types of high-risk payment gateways which can facilitate secure payment authorisation.

You can choose from the following types of payment gateways:

  • Self-hosted payment gateways are completely integrated into your website to facilitate on-site payment which means a customer enters their payment details on your online store and then those details are sent to the payment gateway’s URL
    • The advantages include full control over a customer’s payment experience and a faster checkout process
    • One of the disadvantages is the absence of a technical support team which means any technical hiccups and major failures will be your responsibility and may come pricey
  • Hosted payment gateways facilitate off-site payments as a customer is directed away from your website to enter their payment details on the payment gateway provider’s page for processing
    • The advantages include access to a technical support team, better transaction analytics, and the absence of data security burden as sensitive payment details are stored on the provider’s servers
    • Unfortunately, this type of gateway won’t allow you to fully monitor and control your customer’s payment experience as it doesn’t happen on your online store
  • API-hosted payment gateways allow a merchant to handle the collection of payment data and processing of the payment directly in their online store, thanks to an API (application programming interface)
    • You can benefit from such advantages as complete control of the website design and a fully customisable checkout experience, integrated with a variety of devices
    • One of the disadvantages is compliance with strict local regulations which is your responsibility as all the payment data is stored on your online store

Where to Get a High-Risk Payment Gateway in Europe

European payment service providers supply numerous valuable services enabling businesses to securely accept and manage such payment methods as credit and debit cards, cryptocurrencies, online banking and e-wallets. Normally, you can get a high-risk payment gateway from the same provider who’s opened and services your high-risk merchant account.

If you’ve self-identified as a high-risk business looking to serve the needs of your European customers, a trusted European high-risk payment service provider will basically be life-saving. Not only will it provide you with a high-risk payment gateway and a payment processor but it will also put you in the hands of the right merchant acquiring bank and will ensure your business risks are managed with dedication.

It’s worth emphasising that a high-risk business should only aim to seek payment gateway services from high-risk merchant account service providers as they possess the knowledge of such industries and won’t reject your application merely because of the level of inherent risk. To prevent any disappointments, you should have a closer look at every reputable provider’s history of rejections of businesses operating in your industry.

The following payment service providers are likely to offer you a high-risk payment gateway:

  • Allied Wallet (HQ in the UK, offers payment solutions to international businesses, facilitates payments in over 100 currencies)
  • CutPay (HQ in the UK, offers a range of low-cost merchant services)
  • International Bank Services (IBS) (HQ in the UK, offers payment processing services to gaming, pharmaceuticals, online casinos and other industries in Europe)
  • PurePay (HQ in the UK, serves a variety of high-risk industries in Europe)
  • Opayo (HQ in the UK, serves pharmaceutical, airline and other industries)
  • Windcave (HQ in New Zealand, provides numerous payment solutions in Europe)

When searching for a high-risk payment gateway, make sure that the following criteria are met:

  • A fully licensed provider permitted to work in the countries where your company operates
  • Fair pricing model, ideally with no hidden fees, although it’s worth noting that they usually aren’t publicly available since prices for high-risk merchants are set on an individual basis
  • The provider has a robust understanding of your area of business and is familiar with relevant legal requirements in your country of operations
  • The provider is flexible and willing to negotiate pricing, terms and features of the payment products and services
  • Onboarding and payment processing software is up-to-date, easy-to-use, customisable, flexible and supports numerous payment options
  • A reliable gateway provider must guarantee the security that involves flawless encryption of customers’ bank card details, secure payments, compliance with payment services regulations, fraud prevention policies and software
  • You only want to partner with a payment gateway provider that delivers unmatched customer support, the cornerstones of which are deep professional knowledge, responsiveness and eagerness to go the extra mile when your business is facing a challenge
  • Your selected provider should have a history of onboarding and servicing high-risk merchants, including connecting them with the right merchant acquiring banks

How to effectively select a high-risk payment gateway:

  • Define your business needs and payment methods preferred by your customers
  • Research and compare high-risk payment gateway providers to ensure they’re likely to meet your business needs
    • You can also request a payment gateway from your high-risk merchant account provider who normally offers various other services in addition to a merchant account
  • Eliminate all the providers that might not be licensed in the region or country you’re working in as compliance is of paramount importance
  • Ideally, shortlist the providers that already serve businesses from your industry or other high-risk industries as they have all the required software and risk management policies in place
    • Have a closer look at their success stories to understand how they already help other high-risk merchants, and how effective their high-risk payment gateways are
  • Make sure you’re prepared to meet all the requirements
  • Contact the sales teams of your selected providers to define the best match, particularly by looking at such commitment as higher than regular fees

Requirements for High-Risk Businesses

To get a high-risk payment gateway, you first need to have a high-risk merchant account from a reliable high-risk merchant account provider. If you haven’t got one, start by submitting an online application on your selected provider’s website.

Every fully licensed high-risk payment gateway provider will have to follow know-your-customer (KYC) procedures. Therefore, they’ll usually ask you to provide the following documents:

  • Incorporation documents or equivalent
  • The certificate of good standing or equivalent
  • A business licence (if your business is licensable)
  • A business plan, including a description of products or services the company sells, including marketing materials
  • Proof of registered business address (physical location)
  • Suppliers contract if the high-risk merchant sells tangible products
  • Corporate bank account details, including bank statements from the previous few months
  • The company’s statement of profit and loss
  • Financial statements (3-6 previous months)
  • Proof of identity of the signatory of the account as well as shareholders and directors
  • Proof of residential address of the company’s shareholders and directors

Lastly, a high-risk payment gateway boasts such advantages as:

  • Seamless international payments as the processes require less involvement and are simpler
  • Higher safety, thanks to stricter security measures implemented to guarantee the protection of sensitive data and prevent fraudulent activities that often result in a high level of chargebacks
  • High reporting capabilities enabling you to use your customer data for powerful insights that lead to business growth

If you’re looking to get a high-risk payment gateway, our team here at IB-IA GROUP UAB is well-prepared to assist you in the most efficient way. We have eight years of experience in helping high-risk businesses to get payment services across Europe. We use our vast network of trusted partners in the European financial services industry to offer the most suitable and cost-effective solutions that improve the functioning of the companies we serve. Reserve a personalised consultation now and start growing your business in Europe.