High Risk Payment Processors – Shopify

Jan 14, 2022

If you’ve been working with the credit card processing industry for any length of time, you’re sure to have heard of Shopify. Has your Shopify account ever been shut down? Subject to holds, reserves, or frozen? If so, you need a better payment processor, and we are here to help.

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Shopify and High-Risk Businesses: A Major Drawback

A Canadian company, Shopify is headquartered in Ottawa, Ontario. The company was founded in 2006, and as of this writing, it is one of the biggest players in the hosted e-commerce platform space. According to their website, Shopify drives over 1.7 million businesses around the world, making over $200 billion USD in sales. There’s a MAJOR downside to Shopify, though… They don’t support certain types of business or any business that is classified as High Risk. Because of this, entrepreneurs are often set up quickly, and then without notice, Shopify shuts their accounts down, destroying their business. A quick google search will yield millions of results from store owners whose accounts have been shut down for no real reason.  

Shopify closed my store for no reason

shopify shut down my account

Shopify as a high risk payment processor

Shopify is not a high risk payment processor. Serving this type of account opens them up to too much risk, so they don’t work with high risk businesses. While you might not think that you fall into the “high risk” category, MANY businesses do! Including high ticket items, supplements, recurring billing products, info products, and businesses doing over $30k / month can all be calssified as high risk, plus many more. Another part of the Shopify platform is their own in-house credit card processing solution, which is aptly named “Shopify Payments”. You can choose another way of processing credit cards, but this is the default when you start using Shopify. The little secret they don’t tell you is that Shopify Payments is actually just Stripe, and here lies the problem. Stripe shut down over 4 MILLION accounts last year without notice…

Definition of a high risk business

Definition of a High Risk Business

In the Payment Card Industry, the term high risk has a fairly specific meaning.  Your business can be considered to be high risk if:

    1. Your industry is considered high risk.  Some vertical markets have higher risk for frequent chargebacks and other fraud, such as gambling, check-cashing services, travel, nutraceuticals & supplements, and vape products.
    2. Your business engages in “risky behaviors” that cardholders are likely to fight, such as offering cyclical sales or providing subscription-based services.  
    3. Your customers have requested chargebacks.  No business is perfect, but if your business has seen too many chargebacks within too short a time, or too small a volume of orders, you may be put into a high risk category. Just two or three chargebacks in a month’s time might be enough to kick off a review of your merchant account.

Online commerce is inherently riskier because the card is not present when conducting the transaction.

But Why?

Some merchants are considered to be high risk because they incur a greater amount of fraud than non-high-risk merchants. Because of this, quite a few payment gateway processors think that businesses that operate in high risk industries are too uncertain and challenging to work with. Therefore, they might be unwilling to provide credit card processing services to those merchants.

Worse than that — even if they’ve served a business for a while, some processors may discontinue services to high risk merchants, even with no apparent reason. This can happen even if you’re successful as a merchant, and even if you have a solid business model backing you.

With Shopify Payments, this has been happening a lot lately.

What you can do if your merchant account was closed by Shopify

If Shopify closed your account it means your business falls into their high risk category whether you like it or not. In cases like this, the best course of action is a payment processor that was built for your industry, such as Easy Pay Direct – we support high risk payment processing. Fill out our quick form below to upgrade to the #1 payment processor for eCommerce shops.

High risk payment processing information

If you own a high risk business, you need a dedicated high risk merchant account, like we offer at Easy Pay Direct.

But what is a dedicated high risk merchant account?

One of the primary differences between using a dedicated high risk merchant account and a non-dedicated merchant account is that the former type of account has its own separate identity. 

Shopify, on the other hand, is a payment service aggregator. In other words, they lump all their customers into one big account.  

All these aggregators offer secure processing. 

In fact, Shopify is a white-labeled version of the popular Stripe payment processing service, which is one of the largest payment processors (along with PayPal and Square).

Payment Aggregators and You

Payment aggregators make setup quick, easy, and nearly painless. That’s attractive, and most of the time it works pretty well. Still, as a service provider, the aggregator doesn’t know your business as well as a dedicated provider would. So if your business performs outside of what the aggregator might consider to be “normal,” they have little recourse other than to freeze your account — or even shut it down.

When you establish your merchant account through Shopify, your account is aggregated with lots of others, which may not be ideal for your situation. Not only that, but when you work with a payment aggregator, you have much less control than you would with a dedicated high risk merchant account.

What Happens With Aggregators?

When you use a payment aggregator, funds from a given transaction will be sent to the account provider first. They will get deposited into your account later, at the discretion of the aggregator.  Most of the time this happens fairly quickly, but these deposits are subject to the rules the aggregator sets, and those rules can be changed at any time — even without your express consent or knowledge!

On the other hand, when using a dedicated high risk merchant account, funds from customer transactions will be deposited directly into your merchant account, which will then go into your business bank account. Just like clockwork.

Additional Risks of Using Payment Aggregators for High Risk Accounts

When you sign up for Shopify, you get a phone number to call, and the promise of 24/7 availability. This alone sets them apart from other payment processors.  

However, the reviews over at the independent Trustpilot site tell a different story. (From the Trustpilot site, “Trustpilot hosts reviews to help consumers shop with confidence, and deliver rich insights to help businesses improve the experiences they offer.”) And out of the 1,130 reviews of Shopify hosted on their site, over 80% of them are one-star, or “bad” reviews.

Most of these reviews tell a story of poor customer service and an unresponsive support team.  

Payment Structuring

All the third-party payment aggregators like PayPal, Square, Stripe, and even Shopify use some type of flat-rate pricing structure. What this means is you pay one flat rate on all the transactions they process, all without paying any monthly fees.  

This is a great option for low volume merchants, and for any business that’s just getting started.  But when a business grows, and when a business owner starts processing more than $5,000 in monthly sales, then aggregator fees start taking a big chunk out of your earnings.

The solution is to get a dedicated merchant account. Yes, the odds are you’ll start paying monthly fees. But you’ll also pay lower per-transaction fees, and your merchant account provider will give you a clear summary of precisely what they’re charging, and where your money is going.

…And They Might Not Even Support You

As you might imagine, these third-party aggregators incur a lot of risk on their end, and they work to minimize this risk.  

Because of this, they’ve started to label some industries as high risk. Many aggregators — like Shopify — won’t even do business with you if any part of your business lies in one of the many verticals labeled as high risk. These include, but are not limited to the supplement and nutraceutical industries, adult businesses, travel, gambling, and vape products industry.

Easy Pay Direct as a High Risk Merchant Account Processor

Although Shopify offers an attractive package, they’re not always the best merchant account processor — especially if you’re in a high risk industry. Since they are a payment service aggregator, your account with them is subject to capricious holds or even cancellations without any warning. 

Easy Pay Direct does business differently than the aggregators.  We take the time to get to know your business, so you won’t be left out in the cold.  

We specialize in working with merchants that others have labeled high risk. Give us a call today, and see how we can help you! We are a payment provider that specializes in working with high risk accounts.  

Start accepting payments through Easy Pay Direct today!

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