Definition
A high-risk merchant is a business that card networks (Visa, Mastercard), acquiring banks, and PSPs classify as presenting elevated probability of financial loss, regulatory exposure, or reputational risk. Industries categorised as high-risk include online gambling, adult entertainment, pharmaceuticals, nutraceuticals, subscription services with complex cancellation terms, and money transfer businesses.
This classification triggers distinct commercial treatment: higher processing fees, mandatory rolling reserves, stricter underwriting, limited acquiring bank options, and in some jurisdictions, outright refusal to process transactions.
For iGaming specifically, the high-risk designation stems from several structural characteristics. First, chargeback rates historically run 2–5 times higher than standard e-commerce due to friendly fraud - players disputing legitimate gambling losses - and the irreversible nature of the service.
Second, gambling is heavily regulated or outright prohibited in many jurisdictions, creating legal and reputational risk for acquiring banks. Third, the industry is disproportionately targeted by financial crime, with money laundering through deposits and withdrawals a well-documented AML risk vector attracting regulatory scrutiny of any bank enabling the transactions.
The commercial consequences are material. While a standard e-commerce merchant processes cards at 1.5–2.5% interchange-plus fees, iGaming operators typically pay 2.5–4.5% for regulated markets and 4–8% for offshore operations.
Setup fees, monthly minimums, rolling reserves of 5–15%, and chargeback fees of €20–€50 per dispute add further cost. The total effective cost of card acceptance for a high-risk iGaming operator can be 3–4× that of a comparable retail business, representing significant margin drag that must be factored into bonus economics and player acquisition cost models.
Navigating high-risk classification requires building relationships with specialist PSPs - Nuvei, Paysafe, Payvision, and Worldpay for Gaming - that have pre-negotiated BIN ranges and MCC codes (7995) approved for gambling. Operators with strong compliance programmes, multiple licences, and clean chargeback histories can partially offset the risk premium over time.
Diversifying across multiple PSPs and payment methods (bank transfers, e-wallets, crypto) reduces concentration risk and ensures payment continuity if one PSP terminates the relationship.
A mistake operators make is assuming that a reputable licence (MGA, UKGC) automatically resolves all processing challenges.
Worked example
iGaming operators are classified as high-risk by Visa/Mastercard, paying 3–8% processing fees vs 1.5–3% for standard merchants.
Related terms
Frequently asked questions
Browse more iGaming terms in our glossary.
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