How Standard Payment Gateways Can Fail Your Risky Business

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Some payment gateways can fail your business if they aren’t equipped to handle some of the associated risks. Because of this, your company needs a specialist payment processor that can handle the associated risks. Risky businesses such as those in gambling, cannabis products, and even video games can see high decline rates or cross-border fees that can cost thousands.

Account Freezes and Closure

There are usually pretty strict terms and conditions when it comes to payment gateways. Recent examples even include Visa refusing to accept payments for adult video games on Steam and Itch.io. As such, companies in heavily monitored sectors like adult entertainment need an adult merchant account that has the facilities and capabilities to handle risky payment processing. If you don’t choose a provider like this, you are risking thousands of dollars and halted operations.

Low Authorization, High Decline

The handling of payments relies on complex systems that flag suspicious activity, resulting in higher decline rates. High-risk businesses, such as online gambling, see more of this kind of behavior from internal payment gateway systems because of the nature of the business, even if transactions are completely legitimate. This can result in thousands of lost revenue per year, and even a damaged brand reputation, leading to automatic declines through banking.

Standard Payment Gateways Can Fail with Chargebacks

Risky businesses in sectors such as video games, gambling, and crypto see more chargebacks than other industries, often losing between 2.5x and 4.6x the usual amounts. Choosing payment gateways for international commerce can help reduce the amounts, as they are equipped to handle more complex transactions. However, they can impose “rolling reserves” that lock a percentage of transactions to cover disputes, and you can be blacklisted for removal.

Excessive Cross-Border Fees 

Subscription services often see high transaction volumes, and these can be flagged by some payment systems as suspicious, even when they are legitimate. As such, risky businesses can see higher churn rates (canceled subscriptions) when payment services struggle to serve the business model. Some also go as far as to impose extra fees when using them for cross-border payments, which will cause businesses to increase prices to meet the excessive demand.

Poor Protection Against Fraud

Most payment gateways provide some form of fraud protection, but they may not be designed to handle the higher risk associated with some services. There are many ways to protect your business from credit card fraud, but a specialist payment provider who understands your sector is typically the best way to go about it. Even something like an unjustified customer dispute for a chargeback can add up to massive losses, and you need a service equipped to handle this.

Summary

Account freezing and closure are one of the ways that standard payment gateways can fail a high-risk business such as adult entertainment. There is also the potential for a higher number of chargebacks that can cost your business thousands, and specialists offer fraud protection. So if your business is flagged as high risk, you will need to look for a specialized processor.