Industries Considered High Risk and Why

In the world of payment processing, not all industries are viewed equally. Some carry elevated levels of chargeback exposure, regulatory scrutiny, or financial volatility, and that means banks and payment providers are more cautious about working with them. These are known as high-risk industries.

If your eCommerce business operates in a high-risk vertical, securing reliable payment processing can be more challenging. But understanding why certain industries are flagged this way is the first step to managing the risks, choosing the right partners, and scaling safely.

What Does “High Risk” Actually Mean?

A high-risk industry is one where businesses face a greater-than-average chance of financial disputes, customer chargebacks, fraud, or compliance violations.

From a payment processor’s point of view, these businesses are more likely to generate losses or legal exposure. As a result, they require additional underwriting, monitoring, and, in many cases, higher transaction fees or rolling reserves.

It’s important to note that “high risk” is not a reflection of the legitimacy of your business. Many successful, compliant brands operate in high-risk categories. The classification simply means your vertical has historically posed greater challenges for payment providers.

Common Industries Considered High Risk

While every provider uses slightly different criteria, there’s a broad consensus about which industries fall into the high-risk category. Some of the most commonly flagged sectors include:

CBD and Cannabis Products
Despite growing legalization, CBD remains a regulatory gray area in many jurisdictions. Varying laws, banking restrictions, and marketing limitations make this industry risky for processors, even when businesses are fully compliant.

Nutraceuticals and Supplements
Health and wellness supplements often attract scrutiny due to unverified claims, high refund rates, and customer dissatisfaction. Recurring billing models in this space add another layer of chargeback risk.

Adult Entertainment and Content
Adult businesses are labeled high risk due to age verification concerns, content regulation, and historically high fraud and chargeback rates. Banks are particularly conservative when underwriting in this sector.

Gambling, Fantasy Sports, and Online Betting
Any business involving chance, wagering, or gaming is typically considered high risk. Regulatory issues and potential for abuse make these verticals difficult for mainstream payment platforms to support.

Subscription and Continuity Billing Models
Even outside specific verticals, businesses with recurring billing structures, such as subscription boxes or memberships, are seen as higher risk. Misunderstood charges, failed rebills, and forgotten subscriptions often lead to disputes.

High-Ticket or Luxury Goods
Industries selling expensive items, from jewelry to electronics to travel, often attract more chargebacks. Fraudsters are drawn to high-ticket products, and customers may dispute purchases to avoid liability for large expenses.

Digital Goods and Downloadable Content
Instant delivery products, such as software, eBooks, and digital licenses, are harder to verify and refund, which makes them more susceptible to friendly fraud. There’s no shipping proof to defend against disputes.

Financial Services and Credit Repair
Businesses promising financial outcomes, like debt relief, credit repair, or investment guidance, are seen as high risk due to legal scrutiny and high levels of consumer dissatisfaction.

Why Are These Industries Considered High Risk?

There are several factors that push a business into the high-risk category, and they’re not always tied to shady practices. In many cases, it’s about pattern recognition and financial exposure.

The first and most common reason is high chargeback rates. Payment providers are held liable when a customer disputes a transaction, so industries that regularly exceed the acceptable chargeback threshold (usually 1%) are considered dangerous.

Legal or regulatory complexity is another key factor. If the legality of your product varies by state, country, or municipality, it increases the compliance risk for your processor. They may be unwilling to assume that burden.

High fraud potential also triggers concern. This includes both friendly fraud, when a customer knowingly disputes a valid charge, and criminal fraud, where stolen cards are used to place orders. Digital goods, adult content, and high-ticket products are common fraud targets.

Reputational risk plays a part, too. Banks and processors may avoid certain industries not because of financial loss, but because of how those industries are perceived. This is particularly true with adult entertainment, gambling, or controversial political and social content.

Lastly, business model mechanics can increase risk. Subscription-based businesses, for instance, can face higher chargebacks simply due to billing frequency, unclear cancellation policies, or customer forgetfulness, even when the product itself is solid.

What It Means for Your Business

If your business operates in a high-risk industry, you’ll likely encounter higher processing fees, stricter onboarding requirements, and rolling reserves held by your payment processor.

You may also have fewer options when it comes to platforms. Traditional gateways like Stripe, PayPal, or Square often reject high-risk applications or shut down accounts without notice if their risk teams flag your vertical.

To operate smoothly, you’ll need to work with high-risk payment processors that specialize in your industry. These providers understand the specific risks, offer tailored fraud tools, and provide underwriting that accounts for your business model, not just generic thresholds.

More importantly, you’ll need to build a payment infrastructure that is resilient, flexible, and optimized for risk. That means using smart checkout logic, routing transactions through multiple PSPs, and capturing first-party data to monitor fraud and performance.

How Lasso Helps High-Risk Brands Operate Smarter

At Lasso, we understand the unique payment challenges that come with high-risk eCommerce. That’s why our platform is built to support dynamic, flexible payment routing across multiple providers, ensuring that your business stays online, even if one processor fails or freezes.

We empower merchants with real-time checkout control, first-party data capture, and advanced fraud detection integrations. Whether you're in CBD, supplements, adult content, or another high-risk vertical, Lasso gives you the infrastructure to grow confidently without compromise.

Our tools aren’t just built for compliance, they’re built for conversion, making sure your business stays protected while maximizing revenue.

Final Thoughts

Being labeled “high risk” doesn’t mean your business is untrustworthy. It means you need to be more strategic with how you handle payments, compliance, and fraud.

Understanding why certain industries are flagged, and what to do about it, allows you to make better decisions about who you work with, how you structure your checkout, and what tools you invest in.

With the right infrastructure in place, even high-risk businesses can scale successfully, protect their revenue, and build trust with both customers and payment partners. And with a checkout engine like Lasso, you don’t have to sacrifice flexibility or speed to do it.