High-Risk Payment Service Providers: A Guide for Beginners

Monday, September 26th, 2022

A high-risk payment service provider (HPPSP) is a company that specializes in processing payments for merchants that face a higher risk of fraudulent transactions. These services are also known as third-party payment vendors, risk management solutions, or POS vendors with risk management services. 

High-risk payment service providers provide services to reduce the risks associated with accepting certain types of payments and help merchants meet regulatory compliance standards. 

When choosing a payment processor, it’s essential to understand the risks involved and the type of company best suits your business needs. 

What Qualifies a Business as High Risk?

There are many different types of businesses that can be considered high risk. The most common examples include:

•  Companies that sell products or services with a high chargeback rate or disputed payments (e.g., subscriptions, gambling, health & wellness, or adult content). 
• Businesses that fall outside the regulatory compliance guidelines (e.g., those that accept international payments or those that don’t comply with certain states’ laws governing acceptable payment types). 
• Businesses that accept a payment method with a high risk of fraudulent transactions (e.g., gift cards, cryptocurrency, prepaid cards, cash, or checks). 
• Businesses that experience a high rate of fraud.

How do HPPSPs Help Mitigate Risk?

High-risk merchants contract HPPSPs to provide services such as:

• Payment gateway integration
• Fraud detection and prevention services
• PCI compliance
• Account setup
• Ongoing support

High risk payment services like cutpay also process transactions for the merchant. 

These services help businesses better manage the risks of accepting certain payment types, such as cryptocurrency. 

Payment gateway integration

The most common service offered by HPPSPs is payment gateway integration.

This service allows companies to accept credit card payments directly through their website or application without having to process the payment through another company’s system. 

By accepting payments directly, merchants can minimize the risk of information being stolen or compromised while saving time and money. 

Fraud Detection

Another common service is fraud detection and prevention services. Most HPPSPs offer some form of fraud detection, but larger services also offer proactive services such as account monitoring, suspicious activity reports, and identification verification.

Final Words

With many HPPSPs competing to serve merchants, you too can find the perfect fit and position your high-risk for success.