Merchant Accounts For Shopify

Shopify is a valuable tool for merchants in many industries to launch an online store. However, depending on your business sector, you may not be able to accept payments through Shop Pay, which is Shopify’s proprietary payment gateway. Without this, you can’t take credit and debit cards, which will significantly reduce your income.

In these cases, you can process payments through high-risk merchant accounts for Shopify. Certain payment processors provide seamless integration with Shopify for merchants who may not be able to use Shop Pay.

Adaptiv Payments is a third-party provider that lets you accept card payments and other payment methods for your Shopify store, with better rates and customized solutions based on your business type.

What Is a High-Risk Merchant Account?

Both Shopify and third-party payment processors have identified certain business models as high-risk.

Shopify restricts adult content, weapons, gambling, and regulated substances. Many of these may be heavily regulated in certain jurisdictions or illegal in others, including age restrictions. As such, it’s safer for Shopify to avoid these legal challenges by not offering electronic payment processing.

A payment processor’s definition of high risk includes these factors, but it also considers another factor: these business types typically have more customer disputes and higher chargeback ratios. Not only do processors like PayPal have to worry about legal challenges or security issues, but they also lose money each time a customer makes a complaint or requests a chargeback.

High-risk industries that face challenges in credit card processor or Shopify store setup include:

• Adult entertainment
• Sports betting and online gambling
• CBD and other supplements
• Pharmaceutical and nutraceuticals
• Firearms and ammunition
• Cryptocurrency
• Telemarketing and telecommunications
• Travel and tourism
• Financial services
• eCommerce stores with high transaction volume

As such, merchants in these industries need to find different credit card processing options, which may come with higher fees. Thankfully, options like Adaptiv Payments cater to a high-risk merchant’s unique needs.

Shopify Processing Gateway vs Third Party Gateways

If you are in a restricted industry, you will need to look for other payment options, which may have additional fees or restrictions.

The provider you choose depends on your specific needs. For example, if you have a global eCommerce store, Stripe may be a good option; however, Stripe also doesn’t cater to all industries. Those in certain fields, like CBD, may instead choose Adaptiv Payments, which has the flexibility and competitive rates that these merchants need to thrive.

To understand the difference, consider these elements:

How Does a High-Risk Merchant Account Work?

A high-risk merchant account communicates with Shopify’s system to process payments; it serves as an intermediary between their system and your bank account. Here’s the process from start to finish:

1. The customer selects products and checks out.
2. Shopify transmits order information and encrypted payment information to the third-party gateway.
3. The gateway sends this information to the customer’s payment account to confirm authorization. A hold is placed on the customer’s account while the issuer determines whether the transaction is authorized.
4. For debit card payments, the bank checks the customer’s balance, while for credit card payments, the card issuer checks that the customer has enough credit.
5. If the payment is approved, then the gateway can complete the transaction.
6. Funds are transferred to the merchant’s bank account, minus any third-party fees charged by the gateway.

Some processors require rolling reserves. A percentage of each transaction will be held in a reserve account for 30 to 180 days, then released after that period. This protects the processor from losses due to chargebacks or disputes. Additionally, the processor uses risk monitoring to quickly identify fraud and may place a temporary hold on the account.

Third-party processors can be an essential component of Shopify transactions for certain merchants, diversifying their payment options while minimizing cash flow disruption.

Benefits of a Merchant Account for Shopify

Thankfully, Shopify’s ecosystem integrates easily with third-party payment systems. These integrated solutions help merchants across all industries, including both financial and operational boosts.

Financial factors include:

• Accept credit, debit, online, and in-person payments with the same gateway
• Improve fraud management and chargeback prevention
• Optimize your sales model with recurring billing or product bundling

Operational improvements can include:

• Faster payment settlement
• Secure payment options improve trust with customers
• Expand business operations with global processing services

Adaptiv Payments for Shopify

Adaptiv Payments offers customized solutions for high-risk merchants, ensuring their customers can purchase with confidence. The Adaptiv advantage includes:

• Streamlined application process for high-risk merchants
• Flexible underwriting to accommodate sellers from all industries
• Customized plans for your specific needs
• Dedicated support with industry specialists
• Competitive transaction rates with no hidden costs
• Compliance tools to build trust with customers and improve operations

Our Shopify integrations keep you in control of chargeback rates and provide transaction transparency, which ensures you can enjoy steady business growth for years to come.

Why Shopify Classifies Some Businesses as High-Risk

Shop Pay, which is Shopify’s integrated payment gateway, will not work with merchants in certain industries. These include CBD, pharmaceuticals, weapons, adult content, and payday loans.

However, being in an accepted industry does not necessarily mean you will be approved. Shop Pay will consider factors like chargeback history, refund ratio, and compliance with industry regulations when determining whether you’re eligible for an account.

High chargeback or refund rates can suggest low-quality products, high fraud, or persistent customer dissatisfaction. Meanwhile, any legal compliance issues are a red flag for Shop Pay and may lead to a denial.

While you may still be able to use Shopify, depending on your industry, you would need to use a different payment processor.

Additionally, Shop Pay isn’t available in every country Shopify is. This means global companies may choose a different payment gateway so they have an integrated solution that works across all their regions.

How to Get Approved for a High-Risk Shopify Merchant Account

To get approved for a high-risk merchant account, follow these steps.

Gather Business Documentation: You’ll need your business license, articles of incorporation, three months of bank statements, and three months of processing statements. Additionally, the principal owner will need to provide ID.

Improve Credit Score and Chargeback Ratios: Pay down debts and develop a robust dispute-resolution process to keep chargebacks low.

Select the Right Provider: Compare their terms like transaction fees, contract restrictions, and customer support, then complete your application.

Test Integration Before Launch: Use a test environment to check that there are no problems before you go live.

Common Challenges for High-Risk Shopify Merchants

While a third-party payment processing solution can be invaluable, there are some downsides you must consider first.

Account Holds: Because this is a third-party gateway, there may be a delay in releasing funds, leading to holds. Practice good cash flow management to avoid overdrafts or other problems.

Rolling Reserves: Some processors will hold a percentage of your revenue in reserve and release it after a certain period.

Higher Fees: A high-risk merchant account also comes with higher fees to protect the processor. Talk about the expected fees with your provider so you’re not surprised by charges.

Transparent communication and transaction monitoring will ensure strong cash flow and keep your account healthy.

Tips for Reducing Chargebacks on Shopify

Chargebacks are a significant problem in certain industries, but they can be avoided through smart management.

Have Clear Policies: Make your refund policy clear, simple, and easy to find. Include a disclaimer on any products that can’t be returned.

Require CVV Verification: Cardholders are particularly vulnerable to fraud, so requesting the CVV or CVC for any transaction can prevent chargebacks.

Monitor Fraud Analytics: Pay close attention to your analytics. You can then block profiles with a high rate of chargebacks or disputes.

Use Shopify Plugins for Dispute Alerts: Apps like Chargeback: Auto Prevention, Disputifier, and ChargeFlow can give you immediate alerts when a customer requests a chargeback so you can try to resolve the problem without involving the credit card company.

Conclusion

Certain industry sectors or high-risk merchants cannot use Shopify’s native payment solution, meaning you will need to look for different options. Adaptable and compliant payment processors can be an invaluable tool for keeping your Shopify account in good standing while improving customer service. Contact Adaptiv Payments to find a secure, high-risk merchant account with chargeback prevention, personalized support, and competitive rates.

FAQs About Merchant Accounts for Shopify

What makes a Shopify business high-risk?

High fraud risk, regulatory uncertainty, and large chargeback ratios all make certain businesses more high-risk than others.

Can Shopify Payments approve high-risk businesses?

Certain business types, like CBD or online gambling, will not be approved by Shopify Payments. These companies will need a third-party processor like Adaptiv Payments.

How can I lower my processing fees on a high-risk account?

Improving your credit score, lowering your chargeback rate, and reducing your credit utilization can all reduce your processing fees. You may need to negotiate with the processor and provide evidence of your improved financial standing.

What documents are needed to apply for a Shopify merchant account?

Documents you will need include:

• Business documents, like a license and a business plan
• Business address and phone number
• At least three months of bank statements
• At least three months of processing statements (if applicable)
• Credit report
• Proof of ID, like a Social Security Number and government ID
• URL of Shopify store and social media accounts

Does Adaptiv Payments integrate directly with Shopify?

Adaptiv Payments uses a third-party API to connect with your Shopify account. Our team will help you test the integration and ensure everything is working before you launch.