High-Risk Merchant Accounts in the UK. Industry Guide
High-risk merchant accounts in the UK refer to specialised payment processing accounts that allow UK-based high-risk businesses to accept credit card payments.
In the UK payment industry, merchants are primarily categorised as low risk and high risk. Merchants that operate in regular industries that are not subject to strict regulatory scrutiny and do not have the potential of attracting high chargebacks are considered low-risk merchants. On the contrary, some industries are highly regulated and have historically had a high risk of chargebacks; these merchants are considered high risk.
While low-risk account merchants get many providers that they can choose to work with, on the other hand, high-risk merchants in the UK struggle to find credit card processing solutions. These merchants should approach UK-based high-risk PSPs (payment service providers.)
Since 2016 QuadraPay has been assisting e-commerce businesses in finding the best high-risk merchant account in the UK. Our UK high-risk credit card processing experts have written this guide. The objective of this guide is to answer all possible questions that may have about high-risk merchant services in the UK. Let’s begin.
Top Reasons You May Need a High-Risk Credit Card Processor in the UK
Credit card processors in the UK carefully evaluate merchants applications before coming to a decision. While evaluating the application, some key reasons demotivate underwriters, and as a result, many applications are rejected. These reasons signal that such businesses should only work with high-risk credit card processors. Let’s explore these factors in detail.
High Chargeback and Fraud Risks
Some industries are at a higher risk of facing chargebacks and fraudulent activities. Traditional UK-based sponsor banks generally prefer not to work with businesses from such industries; thus, these businesses must seek the assistance of high-risk credit card processors only.
Regulatory and Legal Challenges
Certain industries face strict regulatory scrutiny. Merchants operating in industries like gaming, CBD, vaping, MSB, and money transfers face significant challenges getting a card processing account. Only specialised processors onboard such merchants, as doing so requires more than average due diligence.
Seasonal Business Challenges
Seasonal businesses are difficult to place, as they don’t have regular cash flow, making it challenging for credit card processors to forecast their sales and profits. If a processor onboard a large number of seasonal merchants, then it can result in a big problem for the processor. Seasonal businesses are unstable and have unpredictable revenue cycles. High dependency on seasonal merchants can risk earnings for the processor.
Cross-Border Transactions
When a merchant accepts domestic credit card transactions, it is considered low-risk. However, when a UK-based merchant starts accepting transactions from customers in other nations like Canada, Australia, New Zealand or the US, then it is considered a high-risk activity. Low-risk providers generally avoid processing a large volume of cross-border transactions.
Subscription-Based Payment Needs
Various industries depend on subscription payments. When a payment processor allows a merchant to accept subscription payments, it exposes itself to additional risk. Customers may forget that they ever accepted the subscription. Some may even dispute the transaction if they don’t recognise the descriptor. Whatever the case, offering subscription payments is a challenging task for low-risk providers, which is why merchants choose UK-based high-risk payment gateway providers.
Key Features of High-Risk Merchant Accounts
These accounts meet the unique transaction processing needs of high-risk merchants by implementing various risk reduction measures. Specialised merchant service providers offer features like enhanced fraud protection, flexible underwriting, and chargeback alerts that together make it possible to process payments for high-risk merchants.
High-risk payment processors in the UK offer features such as multi-currency transactions, recurring billing, and integration with various e-commerce platforms like Shopify, WooCommerce, WordPress, and Magento.
Although these high-risk credit card processing accounts may be slightly pricier and may have stricter terms than regular processors in the UK, they still play an important role for many businesses. High-risk merchants in the UK find hope in these accounts.
By offering a stable merchant account, such providers serve as the greatest support system for high-risk merchants in the UK, enabling them to accept payments from customers, expand operations, and stand strong in the competitive world.