Shopify payments may be an option for most aspiring merchants looking for secure payment processing solutions on the popular eCommerce platform.
For high-risk business owners, however, there’s more to consider.
Many high-risk merchants using the standard payment solution on the site have encountered problems, proving that Shopify just isn’t the right fit for riskier businesses.
One merchant using the platform said: “My business was shut out by Shopify payments for an elevated risk of customer disputes. We deal with high ticket items ranging from $500-$3000 and have not come across one chargeback yet but I understand where Shopify comes from. I had a feeling it would come to this considering Shopify is mostly used for low-medium risk stores.”
Issues like this are why we’ve taken a closer look into:
- How Shopify classifies the businesses they work with
- What’s involved in managing a high-risk account
- Why Shopify Payments might not be the best fit for your online business
- What are the best available options for high-risk payment processors on Shopify
You’ll find everything you need in this comprehensive guide (spoiler alert: FastoPayments can cover all your high-risk payment processing needs!).
How Does Shopify Classify a Business as High Risk?
Shopify has their own set criteria for classifying the high-risk nature of a business. To figure out the exact level of risks involved, Shopify analyzes factors such as:
- Your industry
- Your transactions
- Your history of fraud and chargebacks
Apart from the typical factors that make a business high-risk, Shopify will likely categorize your establishment as a liability if the reputation of your trade happens to be a bit more “controversial” than others, like the adult industry or gambling.
High value goods or high-value tickets can also put you under the higher risk category according to the guidelines Shopify has followed thus far (keep in mind these can change, though).
So, if you own an eCommerce store and sell extremely expensive watches, for example, the odds are you won’t have the easiest time running the shop solely relying on Shopify Payments either.
Shopify Payments & High-Risk Merchants
If you end up opting for the standard payment method Shopify offers, there are some things to keep in mind that could eventually make or break your business.
Firstly, to even start processing your transaction with Shopify Payments, your business would have to meet the criteria to be eligible for the services. This includes your country of incorporation, which has to be supported by Shopify, compliance with relevant laws, and the type of products you sell. Shopify does not support highly regulated goods like tobacco, for example.
Along with meeting that strict criteria, Shopify could also impose several limitations and restrictions on your business ventures even after having your application approved. That might be due to their cooperation with Stripe, and as we all know, Stripe isn’t the biggest fan of high-risk businesses either.
💡 We don’t have beef with Stripe—it’s just a fact that it’s difficult to work with them as a high-risk merchant. Learn everything you need to know in our full guide Can I Use PayPal, Stripe, Venmo, or Square as a High-Risk Merchant in 2024?
The biggest problem that we've seen on Shopify is that they have this closed environment. They have very close ties to Stripe—they're the only one with a direct integration with Stripe. But because Stripe doesn't work with high-risk businesses, it's complicated.
Merchants in high-risk trades often encounter issues on Shopify that have to do with held accounts, frozen funds, or abrupt terminations of their contracts.
We know what you’re thinking. This is due to high levels of fraud or chargebacks, right? Wrong.
Having your high-risk payment processing account closed on Shopify doesn’t necessarily indicate classic high-risk issues. High-risk merchants on the platform have confirmed that you could have your account terminated due to dynamic demand or just high-end goods, too.
These limits that come with the payment method, however, can shape the future of your business. Limiting your reach, revenues, potentially causing financial burdens, and implying overall uncertainty.
Understanding Shopify Terms and Conditions
All high-risk merchants operating on Shopify should have a clear understanding of their terms and conditions. This includes knowing which products are prohibited for sale, which industries pose higher risks, and what are the exact limitations of certain gray areas like transaction values.
On top of that, it’s important to know the grounds on which your account could be held or terminated completely.
A high-risk merchant on the platform had their account terminated and received an email that read:
“We have reviewed your account and determined that your shop presents a level of risk that we are unable to support. As a result, we are no longer able to host your account…”
This is interesting, as it doesn’t really indicate why their account was closed. The merchant then headed to the site to check their dashboard, which said:
“Your store is prevented from selling in the Shopify app for reasons other than those listed below.”
Again…this doesn’t clarify anything. Basically, what we’re trying to say is this is exactly why it’s so important to be aware of the risks you’re putting your business at once you choose to work with Shopify and rely on them for your payment processing needs.
What Industries Does Shopify Consider High-Risk?
Shopify considers many areas of business as higher risk, actually. These include:
Adult industry
Gambling and betting industry
Travel service providers
CBD and cannabis
Tobacco products
E-currencies
Luxury goods
Aside from the usual suspects, like gambling and adult trades, Shopify views other sectors like tobacco and CBD as high-risk due to their strict regulations across different regions.
The businesses that fall under one or the other of the aforementioned industries often face more scrutiny, binding terms, and stringent policies they must follow. So, it’s fair that they’re considered high-risk. However, what’s not fair is that Shopify accepts to work with such merchants only to restrict or close their accounts later.
So, to use Shopify as a high-risk merchant, first and foremost, you’ll need to be 100% certain you’re following their terms and conditions and are in compliance with industry standards, of course. Otherwise, you could face frozen funds or ultimately a terminated account.
Keeping your staff up to date with the relevant laws and regularly screening your business’s operations could save you from a headache, too.
That’s why we always recommend our high-risk merchants to explore alternative processing options, doing your due-diligence on their offered terms, and ensuring you have a clear understanding of what’s expected of you and your business.
What Should You Do if Your Shopify Merchant Account Is Put on Hold?
Seeing an email from Shopify saying “your shop has been terminated due to…” is every merchant’s nightmare, especially if you’ve put countless hours, sweat, and tears into building your business on the site, as one does.
However, there are ways to wiggle yourself out of this mess and save your business.
The first and most important step is to get directly into contact with Shopify support. This is the simplest way to figure out the root of the problem. Provide your support assistant all the needed details and a clear overview of what has gone down.
Be ready to submit any supporting documents and extra information promptly. Quick replies and clear communication will help you along the way. Plus, keeping your legal documentation, transaction records, and any other supporting documents in order at all times can help you stay out of trouble and solve any business-related issues in a timely manner.
Why You Should Avoid Payment Aggregators for High-Risk Processing on Shopify
Payment aggregators are third-party payment service providers who act as the middle-men between a merchant and an acquiring bank. They effectively process payments in batches for multiple merchants at a time and are there to enable businesses to accept and process payments in a variety of different methods, like credit cards, debit cards, e-wallets, or e-currencies.
So, when your standard merchant account provider assigns a unique account to your business, payment aggregators sort of ‘connect’ the process by pooling the transactions and processing them under the same account.
While this may sound convenient, there are some significant disadvantages that come with these types of payment services. Usually, you’ll have to take into account that in this case, you likely won’t have much control over your merchant account, the fees, nor the settings.
With a dedicated high-risk merchant account, that’s not the case. These specialized accounts offer you a personal approach, the much needed support to help your business thrive, negotiable terms, and an overall personalized experience.
How To Set Up a High-Risk Merchant Account on Shopify
To be fair, creating a merchant account on Shopify is quite simple. That’s why so many high-risk merchants choose this route (and end up regretting it later).
To sign up for a merchant account on the platform, you’ll start by making sure your business is eligible for an account and in accordance with Shopify’s terms and conditions.
After that, you need to find a high-risk payment gateway that works with the industry you’re in, and has high-risk-specific payment processing experience.
Don’t just settle for the first one you find. Make sure the gateway you end up choosing is integrable and compatible with Shopify. So, do your research, check reviews on different processors, contact the providers, and get a good overview of what the processor can do for your business.
After you’ve found a suitable processor, follow their instructions and get your account set up. To speed up the process at this stage, be sure to gather all the necessary documents before-hand for a seamless and quick integration.
Best High-Risk Payment Processors for Shopify
Finding the “best” payment processor actually depends on many different factors. As mentioned, the determining factors here will likely be:
- Your industry
- Your business-specific risk factors
- Transaction volumes
- Your products or services
- Your business model
- Regional specifics (like country laws and regulations)
So, basically, what might work your friend’s CBD shop might not work for your tobacco store, despite the two being somewhat similar businesses. In the end, they’re regulated differently and will likely require slightly different solutions.
FastoPayment’s Shopify Merchant Services
We’ve got years of experience under our belt in just about every high-risk industry there is. We’ve used these years to build the most convenient and secure solutions for each merchant we work with, offering them a tailored and personalized approach to process transactions.
Our biggest suggestion is to work with someone who has access to and the abilities to support Shopify. At FastoPayments, for example, we have a partner for that and are able to connect merchants with the right platform or partner who can help them set up their account according to their needs.
Trust FastoPayments as the Best Payment Processor for Shopify
At the end of the day, managing a high-risk business is challenging, whether you decide to do it using Shopify payments or a separate processor. The difference comes simply from the support and guidance you’ll have access to.
However, the truth is, if you want to operate your business on Shopify without borders, you’ll need specialized high-risk payment processing services to ensure continuity, compliance, and growth.
As a dedicated high-risk merchant services provider, we can help you access all of that (and more). Get a free, no-obligation quote for high-risk merchant account and payment processing services here. We’ll review your business information and get back to you ASAP.
