As a payment provider, PayPal is indeed the most ubiquitous and the most famous all over the world. It is also a recommended option for low-risk businesses due to the fact that there are no setup fees, lower online fees, easy integration with most shopping cards, secured transaction reports, and reasonable prices for merchants.
However, high-risk merchants are cautioned when it comes to the use of PayPal and entering an agreement with it. Here are some of the reasons why:
- Holds funds for too long
- Takes longer to have funds deposited into their checking account
- Requesting for funds from PayPal account will take up to five days
Consequently, it is not advisable if your business is dependent on cash flow to operate properly. Moreover, if PayPal suspects that you have some fraudulent sales because of chargebacks, your account will be frozen or shut down.
When operating as a high-risk business, you should stay away from the use of PayPal. At the same time, the payment provider is also vulnerable to fraud. Most of all, funds are usually refunded to the customer even if the item has already been shipped. Fortunately, some alternatives are available to help high-risk merchants.
Popular alternatives to PayPal
- This is the most famous alternative to PayPal due to the fact that it offers payment processing at a flat rate, an online store, and a free point of sale (POS). In addition, it has more than 100 integrations for accounting, delivery services, and e-commerce. It also offers a free virtual terminal and invoices.
- This option provides greater functionality compared to PayPal, making it a popular alternative. Although it has a higher in-person processing fee, its online fee is lower. It is also so easy to get started without any technical knowledge.
- Amazon Pay.You can add PayPal to any online site as added payment method, which is also the same with Amazon Pay. It is now easier to integrate your online store, social selling, or anywhere else and let your customers buy products on your site using their Amazon accounts.
- There is one that has a stronger online store than what PayPal can provide. In fact, Shopify is an excellent alternative because it is among the best and most famous e-commerce solutions on the market. It is also on the list of best payment apps, best POS system, and best virtual terminals.
- If you own a restaurant, you can try Payanywhere as it offers open tabs, employee scheduling, split payments, and tip functions. Its free plan also has a higher transaction rate compared to that of PayPal.
Sample of high-risk businesses
A high-risk business is an activity with high likelihood of experiencing difficulties, including problems with customer dissatisfaction, legislation, or high bankruptcy probability. A number of high-risk businesses from the perspective of financial institutions include the following.
- Adult content
- Crypto business
- Foreign exchange
- Online casino
- Tobacco products
Criteria to determine which businesses are high-risk
- Very high chargeback rate
- Startups are quite risky because of the absence of credit history
- The industry with a high rate of return on funds
- Transactions for very large amounts
- Subscription or recurring payments
You definitely need a high-risk payment gateway if your company falls under one of the criteria. This is the time when you can consider a high risk merchant account provider.