High-risk merchants often encounter difficulties in securing payment processing services from traditional financial institutions. Businesses in sectors including adult media, CBD and Seeds products or online gaming typically experience greater regulatory scrutiny and higher risks of fraud and chargebacks, leading them to seek alternative payment options that accommodate their specific needs.

Offering multiple payment methods can give high-risk merchants a significant competitive advantage, reducing payment friction and optimizing sales. By understanding the different options available, high-risk merchants can make informed decisions and adopt the types of payment processing that best align with their customers. Here, we explore four different options: PIX, SEPA, Pay by Bank, and Cryptocurrency.

1. SEPA 

SEPA, or “Single Euro Payments Area” is an initiative that facilitates cross-border bank transfers in the Euro currency, across 36 countries in the European Union. Introduced in 2008 for credit transfers, and the following year for direct debits, SEPA has completely streamlined payments across the region.

Benefits of SEPA for high-risk merchants:

• Europe-Wide Market Potential: SEPA enables merchants to reach customers across the European Economic Area (EEA) with ease, expanding their target audience, supporting cross-border trade and maximizing growth.
• Reliability and Trustworthiness: The standardized nature of SEPA ensures predictable and reliable payment processing, helping to build customer trust and loyalty.

While SEPA processing is quick on average, payments are not processed instantaneously and can take up to 24 hours or longer. Other aspects for merchants to consider include the geographical and currency limitations of SEPA transactions, which may not fulfil the needs of more global businesses. All in all, adopting SEPA is a strong option for high-risk businesses with a European customer base.

2. PIX 

PIX is an instant payment system developed by the Central Bank of Brazil, first launched in November 2020. It enables real-time payments and transfers between individuals, businesses and government entities across Brazil.

Offering a highly simplified payment experience, this innovative state-owned payment option is accessible and financially inclusive. Instead of traditional credit card details, transactions are made using a unique identification code known as a PIX key.

The Benefits of PIX for High-Risk Merchants:

• Instant Transactions: Payments are processed instantly, reducing the likelihood of fraud and chargebacks.
• 24/7 Payments: Unlike traditional banking systems with limited hours, PIX operates continuously.
• Widespread Adoption in Brazil: Given its increasing popularity in Brazil, PIX provides access to a wide customer base, with huge growth potential in the future.

PIX is an extremely attractive option for high-risk merchants looking to target a Brazilian customer base. As the geographical limitations of PIX mean it cannot be adopted outside Brazil, it is an ideal option for high-risk merchants to offer in tandem with other more international payment processing methods.

3. Pay by Bank 

Pay by Bank is a payment processing method that enables customers to make payments directly from a bank account, eliminating the need for traditional credit card networks.

Benefits of adopting Pay by Bank for high-risk merchants:

• Direct Payments: Payments are made directly from the customer’s bank account, minimizing the risk of chargebacks and fraud. This simplified process also reduces payment friction, enabling more conversions and encouraging returning customers.
• Reduced Transaction Fees: Bypassing credit card networks, Pay by Bank often results in up to 75% lower fees for merchants, making it a particularly attractive option for high-risk merchants.
• Instant Transactions: Pay by Bank offers transactions in real-time, improving cash flow for merchants and maximizing revenue potential. 

Pay by Bank is particularly gaining popularity across the EU, where credit card adoption is typically lower than in other parts of the world.

4. Cryptocurrency

Cryptocurrencies are decentralized digital currencies that rely on blockchain technology for transactions. Over the past decade, some of the best known cryptocurrencies including Bitcoin and Ethereum have become increasingly popular internationally as a secure payment option.

Benefits of Crypto for High-Risk Merchants:

• Global Accessibility: Cryptocurrencies are borderless, allowing merchants to accept payments from customers worldwide without the inconvenience or cost of currency conversion.
• Complete Anonymity: Cryptocurrency transactions are one of the most secure and anonymous ways to make a payment, which is a real draw for customers in certain high-risk sectors.
• Irreversible Payments: Blockchain technology makes transactions irreversible, significantly reducing the risk of chargebacks. 

The Bottom Line: 

High-risk merchants face a variety of challenges in securing reliable and secure payment processing options. By exploring alternative payment methods such as SEPA, PIX, Pay by Bank, and Cryptocurrency, these merchants can provide greater flexibility, allowing customers to choose the payment method that best suits their needs.

By offering multiple payment processing options, high-risk merchants can build a more resilient and adaptable payment infrastructure that meets the evolving demands of their customers, on a global scale.

Want to find out more? Contact us if you’d like to learn more about the payment processing options that best suit your business. We specialize in supporting businesses to accelerate growth with innovative and reliable payment processing.