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Online merchants have become commonplace in this day and age. These entities ensure that virtual transactions run smoothly and they represent a key component of e-commerce. This is great news for vendors and buyers alike, there are many payment options to choose from. However, it is also important to remember that certain industries represent more of a risk than others.

This is why understanding the notion of a high-risk merchant is important. High-risk merchants are those associated with products or services known for excessive chargebacks. Other situations can include potential fraud, identity theft or simply a volatile marketplace. As a result, these merchants tend to pay high processing fees and it can be difficult to obtain liquidity. Let’s take a look at some common examples of high-risk merchants.

Accounting & Tax Prep

Accounting and task preparation can sometimes represent a high-risk industry. This depends upon the type of client that the merchant is catering to. Although fraudulent transactions are not commonplace, there can be times when clients fail to settle an outstanding bill. Therefore, lenders may experience a higher level of chargebacks when compared to other industries.

CBD & Hemp

One of the main issues with CBD oil and hemp products involves legality. While the benefits of these substances have been documented, they are still prohibited in certain regions. So, the risk involves selling to a customer that is not allowed to make a purchase. Vendors and merchants will need to be very careful in terms of the target demographic. Furthermore, transactions may be cancelled more frequently. Customers are not always aware of the associated regulations before making a purchase.


Currency (Forex) trades are known as high-risk ventures by their very nature. As the value of currencies can fluctuate rapidly, traders expose themselves to a fair amount of volatility. This very same risk translates to online merchants and similar investment platforms. While the level of risk can be controlled to a certain extent, it cannot be eliminated. This is why Forex merchants will often choose to open offshore accounts (risky in and of themselves).

Drop Shipping

Drop shipping is a rather new concept. Sellers now utilise online e-commerce platforms to send products and services to buyers who may be located thousands of miles away. As this is a direct-to-customer service, drop shipping can be useful in terms of reducing total transaction fees. However, there are also times when fraudulent purchases are made. Two examples include using stolen credit card details or providing false customer information. These are some of the reasons why drop shipping can be classified as a high-risk industry.

High Volume

High-volume online sales have become commonplace thanks to streamlined shipping services. Of course, there is always a certain amount of risk involved when shipping bulk goods to a buyer. Examples include damages during transit, substandard items and product returns. As the merchant will assume a sizable portion of this risk, high processing fees can be commonplace. Clients who are dealing with limited budgets may therefore choose to look elsewhere. Finally, it is important to remember that instances of online fraud within this sector have been on the rise in recent years.

Moving Companies

Most moving companies will require robust insurance policies. This is due to the fact that accidents can occur on occasion. From damaged personal goods to the need to transport extremely valuable items, risk is an inherent part of the industry. Online moving firms are even more susceptible, as they tend to deal with a much wider client base. While instances of fraud are rare, other issues such as chargebacks resulting from damaged goods could cause processing fees to exponentially increase.

SaaS Companies

Many businesses utilise Software as a Service (SaaS) to meet their everyday e-commerce needs. Still, it should be mentioned that not all bundles deliver the same results. There is always an inherent risk that the software in question is not suited for the end user. Therefore, SaaS vendors and their associated merchants may be at a higher risk for chargebacks. This often depends upon the size and reputation of the provider. Smaller firms may be even more vulnerable to chargebacks, as they do not often possess the liquidity to make up for significant losses.

Tech Support

Tech support has existed since the early days of the Internet and it is now more important than ever before. In the same respect, merchants within this industry can fall into the high-risk category on occasion . The main issue in regards to tech support involves payment processing. Some customers may fail to settle their accounts. As a result, the merchant will incur direct losses. This can sometimes make it challenging to find a lender that is willing to take on such risks.


The adult entertainment sector represents one of the largest online industries in the world today. At the same time, it is also associated with appreciable amounts of fraud and identity theft. This is why it only stands to reason that merchants within this industry are considered to represent a risk. Although many security protocols have been put in place, illegal activities can still occur on a regular basis. Merchants involved with this sector may therefore encounter difficulties when opening an account.

Online Gaming & Casinos

Similar to adult entertainment, the online gaming and gambling industry has grown at a breakneck pace. Unfortunately, the same holds true in regards to instances of fraud and online identity theft. Furthermore, it should be mentioned that online casinos are prohibited in several regions of the world. As many visitors choose to access these sites through virtual private networks (VPNs), the chances of fraud can increase even more. This is why merchants who are involved with these sectors are often viewed as high risks by banks and similar financial lenders.

Debt Consolidation

Debt consolidation services are on the rise in recent years. As more individuals are burdened with less-than-perfect credit, these firms are used to reduce the amount of money that is owed. However, these very same customers may default on their loans. This presents a very real problem for the services themselves, as the vetting process is not always straightforward. The other potential issue is that some debts are extremely substantial. As a result, they will require a significant amount of time before they are settled. This can make lenders wary about doing business with such merchants.

Educational Seminars

There are several reasons why educational seminars may sometimes be classified as high-risk ventures. First and foremost, it is difficult for the associated merchant to guarantee attendance. Another possible pitfall involves the fact that many of these events are being provided to attendees who are on limited budgets. A final possible issue is that seminars can often be fraudulently recorded and disseminated without the approval of the company itself. These are some of the reasons why educational sessions may sometimes be equated with a higher level of risk.

Hunting & Outdoor Equipment

The hunting and outdoor equipment sector enjoys a loyal customer base. It is nonetheless important to mention that this may also be classified as a high-risk industry. One reason involves the legality of selling, shipping and owning firearms. There may also be times when fraudulent purchases are made in order to obtain equipment that may otherwise be prohibited. As a result, it can be difficult to secure funding. Other problems such as transaction limitations and increased institutional oversight can cause issues for the merchants themselves. This is particularly relevant for a firm that does not possess a proven or lengthy track record.


There are several risks associated with non-profit organisations. Some examples include a failure to disclose earnings, questions with tax exemptions, copyright infringement, and general misuse. There are also times when non-profit organisations may be used for fraudulent purposes (such as tax havens). This is why these firms have been placed under an increasing amount of scrutiny in recent times. Merchants who are associated with the non-profit sector may likewise face higher transactional fees. It can also be difficult to be approved for funding by lenders.

SEO & SEM Services

Search engine optimization (SEO) and search engine marketing (SEM) are truly booming sectors. As the number of firms offering these services continues to increase, so are the levels of oversight. Still, it should be highlighted that strategies and recommendations tend to be updated on a regular basis.

This could prove to be problematic from a risk standpoint. Not only may customers be less than satisfied with the services rendered, but they could fail to meet their payment obligations. Finally, most SEO and SEM companies are not based within physical offices. As they operate solely within the cloud, they can be classified as high-risk merchants on occasion.


Some consider telemedicine to represent a rather questionable sector. Not only are many of its practices unproven, but there are doubts about their effectiveness altogether. Furthermore, many who claim to be “experts” within this field may not possess adequate medical training. This opens up the very real possibility of fraud, lawsuits and even medical dangers to the customers themselves. It should come as no great surprise that merchants associated with the telemedicine sector can find it difficult to obtain funding.


Airline payment processing is considered to be a high-risk sector. There are three main reasons behind this observation. The first involves the sheer number of passengers (increasing the chances of fraud). Secondly, the proportion of chargebacks is on the rise. This is obviously less than beneficial for the merchants themselves. Finally, airline payments use different currencies. This can be seen as an extra amount of hassle. Another point to mention is that not all institutions are equipped to deal with currencies from foreign nations.

Clothing & Apparel

There are a handful of reasons why the clothing and apparel sector is regarded as a high-risk industry on occasion. Volatile consumer demands are often a key concern. The short life cycle of the products themselves can also signify that quality may be called into question. Additionally, issues with supply chain flexibility and competition from overseas producers can present other challenges. As it can be difficult to create accurate market forecasts for this sector, it only stands to reason that it is thought to pose a risk. While larger chains may not encounter issues, small merchants can often suffer from the problems mentioned above.

Digital Downloads

Millions of digital downloads take place on a daily basis. Videos, mobile phone applications and software are three common examples. The risk involves downloads that have not been properly vetted. These may contain viruses, malware and other malicious programming. It can also be difficult to verify the transparency of the merchant in question. As a result of these circumstances, complaints and chargebacks are more likely to occur when compared to brick-and-mortar products.


The consumer electronics sector can be associated with high levels of risk. Supply chain limitations are one concern, as global demand continues to rise. Also, technology tends to advance at a breakneck pace. Products can quickly become outdated. As a result, merchants may accrue substantial losses from time to time. A final hurdle involves competition from multinational electronics conglomerates. Due to their industry dominance, it can be difficult for smaller firms to achieve a substantial return on investment (ROI). All of these factors contribute to higher levels of risk.

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Jet Charter

The private jet charter industry tends to be marketed to a niche audience. As this sector is considered to represent a luxury as opposed to a necessity, it is subject to economic volatility. For instance, economic recessions can drastically reduce the number of clients. Other issues such as regional security and terrorism can likewise impact this sector. Perhaps the most well-known example in recent times involves the global pandemic. As travel was reduced to a trickle, countless merchants suffered. It is now clear to see why lenders associate the jet charter market with an appreciable level of risk.

Fantasy Sport

One reason why fantasy sports and e-sports pose a risk involves the fact that these are two relatively new sectors. Thus, it is difficult to predict where they may be headed from a long-term perspective. Fraudulent payments and chargebacks are also very real concerns in terms of liquidity. Public opinion likewise plays a crucial role. If customers are not happy with the latest iteration of a certain gaming platform, sales can plummet. These are all obvious concerns in terms of the ability to be approved by a qualified lender. However, many believe that the popularity of fantasy sports may soon cause these risks to be moderated to a certain extent.

Smoking Accessories

Growing health concerns and an increasing number of government regulations have caused the smoking industry to represent a high-risk sector. Furthermore, some of the associated accessories have been linked to other illegal drugs in the past. This places a greater amount of pressure upon merchants in terms of accountability. Another potential concern involves where certain items are shipped; some regions have tighter restrictions than others. Considering the fact that the underage sale of these materials is prohibited, it is clear why institutions may be hesitant to lend to specific merchants.

Vape & eCig

Vaping and electronic cigarettes are both relatively new trends. It is therefore reasonable that these are often labelled as high-risk markets. Additionally, some evidence suggests that these practices may be more hazardous than initially believed. Some have even called into question the long-term sustainability of this market. Merchants who specialise in e-cigarettes and the associated accessories are understandably concerned about their future. These worries will often translate directly into the lending community.


Cryptocurrencies are not currently regulated by any form of central bank. Thus, there are a number of inherent risks involved. These are frequently attributed to the relative volatility of currencies such as Bitcoin and Ethereum. Also, transactional caps and a growing amount of industry oversight both signal that regulatory changes may be on the horizon. This can be worrisome for some merchants who initially took advantage of the industry due to its relatively loose guidelines. It should also be mentioned that consumers have yet to fully trust cryptocurrencies as a standard form of electronic transaction.

Continuity & Subscription

Continuity – and subscription-based merchants may also be categorised as high-risk firms on occasion. One common issue involves the practice of negative billing (customers being forced to pay for items that they did not purchase). Another problem is that some subscription-based firms are not clear in regards to their terms and conditions. A growing number of lenders and credit agencies are wary about becoming involved with their operations. In other words, these services can often be classified as high-risk ventures thanks to higher changes of chargebacks.

Document Preparation

These types of firms prepare legal documents and other types of important paperwork. Why are some merchants labelled as a risk? The most common reason is that such services will often determine how a business makes money. So, even small mistakes can lead to serious problems. This is even more relevant when referring to specific services such as accounting and bookmaking. Merchants involved with such practices will often be classified as high risk. It can therefore be more difficult for them to obtain the funds required for their ongoing operations.


Dating websites are extremely popular and yet, they are also classified as high-risk merchants. The main reason for this involves the number of chargebacks that can be placed by unsatisfied customers. Users may revoke a subscription after a short period of time or forget to cancel an account. Both of these lead to chargebacks. As the dating sector is highly competitive, it can also be difficult to find a niche market. Furthermore, dating sites are often classified within the “adult” industry. Some banks and lenders may become hesitant to link their operations to such businesses.


MLM (multi-level marketing) firms have existed since the early days of the Internet. They have also always been considered high-risk merchants. There are three main observations behind this conclusion. Once again, customers will often want their money back due to poor results. Legal liabilities can also pose issues; especially if the MLM company makes promises that it cannot deliver. Volatile growth patterns and even instances of fraud are other factors which have increased the risks of this sector.

Property Management

The main problem with property management services is that medium-term prices can be unpredictable. Also, sudden economic downturns such as a recession can have a devastating effect upon this industry. High chargeback rates over tenant disputes and evictions can likewise cause problems on occasion. On a final note, property management firms tend to deal with relatively large transactions. Many lenders consider large transfers to represent a form of risk.

Sports Betting Advice

As the title suggests, any type of online advice is inherently risky. Extremely high chargeback rates may occur if the wrong guidance is provided or if the user is unhappy with the final outcome. Regulations can also come into play, as sports betting is not allowed in some regions of the world. As many sports betting sites pop up on a regular basis, it can be tough to determine which ones are legitimate. Therefore, sports betting portals have always been associated with high-risk merchants.

Web Design Services

Website design guidelines change on a regular basis. So, it can be difficult for companies to remain one step ahead of the curve. This may result in unhappy customers and ultimately, chargebacks. Another interesting reason is that many website designers charge relatively high one-off fees for their services. Lenders who normally serve the retail market could therefore become wary about providing their services. Also, there have been cases of fraud linked to web design in the past. All of these reasons heighten the inherent levels of risk.