Payment processing fees vary widely based on factors like transaction risk, industry type, and chargeback rates. High-risk industries often face higher fees due to the increased likelihood of fraud, disputes, and regulatory challenges.
Businesses in these categories need to work with processors that understand their specific needs and risks. For more information, check out our high-risk payment processing fees guide.
Understanding why payment processors charge higher fees for high-risk industries is key to managing these costs effectively. High-risk industries typically operate in sectors with a greater likelihood of disputes, fraud, or compliance issues.
Let’s take a look at 10 industries in which payment processing can get pricy compared to other industries.
Is Your Industry Considered High-Risk?
Businesses that fall in the high-risk category will need a high-risk payment processing partner. If you’re looking for a full guide on high-risk payment processing fees, check here.
**Are you looking to lower your fees? Learn more about our chargeback prevention services.
1. Online Dating
Online dating platforms are high risk due to subscription-based models and potential fraud, such as fake profiles or unauthorized charges. High chargeback rates from dissatisfied customers or disputes over subscription renewals further elevate the risk.
Challenges for Payment Processors: The high prevalence of fraudulent activity, such as identity theft and misuse of credit cards, poses a significant risk. In addition, subscription disputes often lead to chargebacks, increasing the overall cost of processing transactions.
Online dating payment processing
2. Travel and Hospitality
The travel and hospitality industry deals with high transaction values, frequent cancellations, and last-minute changes, all of which contribute to increased chargeback risks. Processors classify this sector as high-risk because of the potential for customer disputes and operational disruptions.
Challenges for Payment Processors: Large-ticket purchases, combined with the potential for customer dissatisfaction due to unforeseen circumstances, result in frequent disputes and cancellations. These factors drive up costs for payment processors and businesses alike.
3. Subscription Services
Recurring billing models in subscription services can lead to failed payments when customers’ cards expire or are declined. Additionally, disputes over subscription renewals or service cancellations contribute to a higher risk profile for this industry.
Challenges for Payment Processors: The recurring nature of these payments increases the likelihood of disputes and the administrative burden of handling subscription management. Processors often charge higher fees to offset these risks.
Subscription services payment processing
4. CBD and Cannabis
The CBD and cannabis industries face legal and regulatory challenges, making them high risk. Many banks and payment processors are hesitant to work with these businesses due to varying laws across jurisdictions, compliance concerns, and a history of chargebacks.
Challenges for Payment Processors: The lack of consistent federal regulation and the stigma attached to these products create challenges. Processors must invest heavily in compliance and fraud prevention, resulting in higher fees.
5. Adult Entertainment
Adult entertainment businesses face social stigma and a high rate of chargebacks, often linked to customer regret or fraudulent transactions. This industry’s association with certain legal and ethical concerns also contributes to its high-risk classification.
Challenges for Payment Processors: High chargeback rates and fraud risks, coupled with regulatory pressures, require processors to implement additional safeguards, increasing costs.
Adult entertainment payment processing
6. Online Gambling and Gaming
Online gambling and gaming platforms that handle real-money transactions are subject to stringent regulations and frequent disputes. High chargeback rates and fraud risks make these businesses expensive to process payments for.
Challenges for Payment Processors: The regulatory environment and the need for real-time fraud detection systems create high operational costs for processors. This often translates into elevated fees for businesses.
Online gambling and gaming payment processing
7. Credit Repair
Credit repair companies are flagged as high risk because they operate in a heavily regulated industry and often promise results that may not materialize, leading to high levels of customer disputes and chargebacks. Their business model adds further scrutiny.
Challenges for Payment Processors: High chargeback ratios and regulatory oversight force processors to manage additional risks, which leads to higher fees for businesses in this sector.
Credit repair payment processing
8. Kratom
Kratom businesses face challenges due to the controversial status of the product and varying regulations across jurisdictions. This industry is associated with a high chargeback rate, as well as legal and compliance hurdles.
Challenges for Payment Processors: Due to inconsistent regulations and the stigma associated with kratom, processors require extensive risk management, which drives up costs.
9. Telemedicine
Telemedicine providers deal with sensitive health data, regulatory compliance issues, and potential fraud. Customers disputing charges for services they didn’t find helpful or unauthorized charges contribute to its high-risk status.
Challenges for Payment Processors: Handling sensitive medical data and ensuring compliance with healthcare regulations requires robust systems and adds to processing fees.
Telemedicine payment processing
10. Debt Collection
Debt collection agencies are classified as high risk due to their association with financial disputes and aggressive tactics. Chargebacks can arise when customers dispute payments, and regulatory scrutiny adds further complexity for processors working with these businesses.
Challenges for Payment Processors: The inherently contentious nature of debt collection leads to high chargeback rates, fraud concerns, and compliance challenges, all of which increase costs.
