High-risk businesses in the UK face many challenges other businesses don’t, simply due to the highly regulated nature of their transactions. Not only that, but UK-based high-risk businesses face even more unique challenges than companies throughout the rest of the world.
The regulations specific to Great Britain are typically more inflexible and harder to navigate, and non-compliance can lead to business closure, costly fines, and other issues nobody wants to deal with as a business owner.
Fortunately, partnering with the right high-risk merchant account tailored to the industry you’re working in (and familiar with UK-specific regulations) can help you prevent many of the issues and tackle problems head-on.
Here’s what to know about what to look for and who’s the best high-risk merchant account provider in the UK today.
Understanding UK High-Risk Merchant Accounts
An establishment is considered high-risk by UK financial institutions if it operates in a high risk industry. Duh, right? Typically, what that means is that the business’s financial transactions are inherently more exposed to risk than others.
These high-risk industries include:
Adult
CBD/Cannabis
Gambling
Cryptocurrency
Vape & E-cigarettes
Travel
Precious metals
Working in one of these sectors makes you a high-risk merchant, which applies to your worldwide imports, exports, and sales.
Additionally, high-volume tickets and trading goods with countries listed under the high-risk third country list will automatically put you at a greater chance of risk when operating in the UK.
High-risk third countries, according to current UK regulations, include:
Bulgaria
Croatia
Burkina Faso
Cameroon
Democratic People’s Republic of Korea
Democratic Republic of Congo
Haiti
Iran
Jamaica
Kenya
Mali
Mozambique
Myanmar
Namibia
Nigeria
Philippines
Senegal
South Africa
High-Risk vs. Low-Risk Merchant Account
Being in the high-risk industry (compared to the low-risk industry) is typically much more complicated, even though both high-risk and low-risk categories have their own perks and downsides.
Being classified as a business in the high-risk industry often comes with stricter requirements, such as higher processing fees, an increased chance of chargebacks and disputes, and, of course, the requisite customized high-risk merchant services.
On the other hand, an establishment in the low-risk sector commonly faces fewer issues with transaction processing, lower chargeback rates, and fewer regulations overall. The differences between the two stem from regulatory environments, evaluation of risk, and different pricing structures.
High-risk merchants should, therefore, take into account that the processing fees will reflect the additional risk.
UK High-Risk Merchant Account vs. High-Risk Payment Gateway: Which Do You Need?
In the high-risk industry (and honestly, even in non-high-risk industries), we see that merchants often get confused about the differences and use cases between a high-risk merchant account and a high-risk payment gateway.
While they sound similar, it’s important to recognize the differences between the two and how they work together in transaction processing.
Typically, it’s easy to differentiate a good solution provider from a lower-quality one by the services they offer, as a merchant account and a gateway are usually provided together to ensure an efficient and all-inclusive solution for merchants in the higher-risk industries.
Regardless, here’s a breakdown of each to ensure you understand the basic differences.
UK High-Risk Merchant Account
A high-risk merchant account is a bank account exclusively dedicated to enabling payments for high-risk businesses. Why do they need a special account, though?
As mentioned, being categorized as a high-risk establishment affects transaction processing and the operational side of a business. Typically, acquiring fees are deducted from the merchant’s account before being released to the merchant’s primary business account.
This account can approve not only the efficiency of payment processes but also the cash flow management, access to broader markets, and the ability to diversify payment methods.
UK High-Risk Payment Gateway
A high-risk payment gateway is the technical part of a merchant’s website where customers insert their card information and data.
The latter is then sent to the card-issuing bank through the acquirer. After the transaction is processed, the information is sent back the same way. This allows the merchant to see whether the transaction was approved or not.
A specialized high-risk payment gateway acts as a digital bridge and is essential for e-commerce businesses with higher chances of risk. A quality gateway integrates with your existing systems and shopping carts seamlessly, securing high-value transactions and providing other helpful tools for fraud prevention and PCI compliance.
Which Is Best?
You don’t have to choose between a high-risk merchant account and a smart payment gateway.
In reality, they work hand-in-hand, complementing each other to create seamless transactions and aid the financial operations that go into managing a high-risk online business.
That’s why it’s better to join forces with a solution provider that offers the whole package tailored precisely to your industry and region-specific needs.
It's usually always easier and better to get high-risk merchant account and payment gateway solutions from the same provider. At FastoPayments, we work with five different gateways, allowing us to cover a majority of the acquirers in the world.
Key Features to Look for in a UK High-Risk Merchant Account Provider
When choosing a UK high-risk merchant account provider, it’s key to keep in mind the essential factors that will shape the experience and service you receive and offer to your customers.
So, it’s important to take the time to research and assess the services being offered. We’ve taken a look at some of the core services that any great UK high-risk merchant account should have to make the decision process a little easier.
Security Measures
Security measures may include encryption, 2-factor authentication, 3DS verification, tokenization, and other steps that can be taken in order to protect sensitive data.
A service provider that can offer such tools will guard your information as well as your customers against data leaks and cyber threats.
Fraud Prevention Tools
Modern systems that are strategically designed to detect various fraudulent activities and pick up on attempts at fraud are essential nowadays.
These tools can include AI-driven systems developed to monitor transaction patterns and catch suspicious activity, as well as give chargeback alerts, for example.
Brokerages that can equip you with such tools can save a business in a high-risk industry from notable financial losses.
Competitive Pricing
Payment solutions come at a cost, especially in the high-risk industries. That’s why it’s important to research the fees included to have a good overview of exactly what you’re paying for. Competitive pricing isn’t about finding the cheapest solution.
Instead, when picking a payment processor, it’s more about finding a provider whose quality of service correlates with the proposed prices. This is especially true in high-risk sectors since the fees in these cases, which are usually higher, often reflect the additional risks at hand.
Transparent Fee Structures
It’s just as important to find a service provider who can break down the fees and explain every additional cost so that you can make an informed decision and avoid any surprises down the line.
There are a lot of cheap options available on the market, even for high-risk merchants, but these types of contractors often can’t live up to their promises and might be hiding important fees. Some might even guarantee instant approvals, which in most cases are myths in the high-risk industry.
Customer Support
Excellent customer support is important in succeeding in the highly competitive and regulatory environment within high-risk trades.
This is why you should look for a payment processor willing to provide round-the-clock support from a responsive team of industry experts to solve any issues on the spot.
Look for a company with a proven track record of effective support and successful merchants.
Account Management
Account management denotes the ease of use of the provided tools and services. This includes how easily you’re able to access the transaction data, filter tools to your preferences, and resolve problems.
Convenient tools and modern solutions can make managing your business easier and less time-consuming in all areas.
Integration Capabilities
You should also be able to seamlessly integrate the offered payment processing services into your existing systems, like your platform, shopping cart, or accounting applications.
A provider that can equip you with APIs, for example, can make the whole process from onboarding to actual transaction processing a lot less complicated for a merchant.
Customization of Payment Solutions
Each establishment is different and comes with different needs and preferences. The service provider you’re opting for should be able to accommodate your individual needs, which might depend on your location, your target market, or the industry you’re in. This is why a flexible transaction solution is so important.
Essentially, offering multiple payment methods or currencies to your clientele can help you grow your reach with little additional work.
When choosing a high-risk payment gateway, it does matter which one you have. For example, while it might seem small on paper, losing even 1% of your revenue yearly is a lot of money in the long run. The acquirer they work with will affect your approval odds, so it's important to consider what you do and who you work with.
Best High-Risk Merchant Account Providers in the UK
As mentioned above, it’s difficult to secure a high-risk merchant account provider in the UK, regardless of which high-risk industry your business falls into. Luckily, there are a few PSPs that have an established reputation as successful merchants and quality services.
Some of the top payment processors have now partnered up to create a network of reliable PSPs that can work side by side, complementing each other’s best qualities.
Whereas some of our own partners have a good reach but only work regionally, at FastoPayments, we offer our services to people all around the world.
So, if a partner of ours offers their services in Spain, for example, and has an excellent track record within that region but can’t really support merchants outside of their area of expertise, like the UK, they might refer the customer to us.
Similarly, if a transaction processor can’t help a business because of the highly regulated environment in the United Kingdom, they would direct the establishment to us or another partner who’d be able to provide the needed attention and solutions.
How to Apply for a High-Risk Merchant Account
Obtaining any services for a high-risk business typically requires you to submit numerous documents or certificates proving compliance with regulatory terms as well as the aim of your mission.
So, it’s smart to start the application process by gathering the needed information. To authorize your company, which is the first step in this process, the requirements include:
Certificate of incorporation
Articles of association
Copies of passports
Utility bills for directors, owners, and authorized signers
Proof of domain
Last three months of bank statements
Local representation
After you’ve gathered all the primary company documents, it’s time to verify your website. For that, you’d need to provide:
Customer service number
Website policies
SSL secure payment page
Company name and address
Customer service email address
Login credentials
The last batch of documents might differ depending on the industry you’re in but mainly consist of:
Supplier agreement
Copy of operating licenses
Rental agreement
Lab tests for CBD products
Processing statements
Sole proprietors
PCI self-assessment questionnaire
PSI scans if direct integration is needed
This list of documentation covers all of the requirements for high-risk merchants looking to apply for a UK merchant account.
However, it’s important to remember that some of the required information can be industry-specific. For example, a lot of gambling establishments applying for a gambling payment gateway need to provide proof of certain licenses. So, you might be asked for more specific information.
💡 For a complete overview of the required (and suggested) documents, view our checklist of requirements here!
Managing Your High-Risk Merchant Account
To maintain a reputable merchant account in the UK, it’s important to consider the measures you can take to prevent the most common struggles in the high-risk industry.
To achieve that, we suggest using the right tools to reduce chargebacks and ensure secure transactions. Staying compliant with regulations is, of course, another way to ensure longevity as a business and avoid any penalties or termination.
For a high-risk merchant in the UK, this can mean following restricted import-export regulations, ensuring your products don’t contain any legal substances and are approved by authorities, and compliance with FATF (Financial Action Task Force) requirements.
Following these guidelines will ensure the operational durability of your business while also making it more appealing to customers. This is especially important nowadays, as concerns that come with processing sensitive data and high-volume tickets are higher than ever.
Work With One of the Best Merchant Services Providers in the UK
Often, success in high-risk trades in the UK is contingent upon picking the perfect high-risk merchant account provider. The right fit for most, if not all, high-risk merchants often ends up being the provider who can offer the most inclusive solutions and up-to-date knowledge on the UK-specific regulations.
FastoPayments stands out in such cases with our reliability and responsiveness, along with a high degree of experience.
For merchant account and payment gateway solutions from a provider who understands the needs of high-risk businesses in the UK, get a free, no-obligation quote for a UK high-risk merchant account here.
