If you’re selling digital products online, you’re entering one of the most lucrative and yet most challenging industries for getting approved for payment processing. That’s because, despite the benefits, digital goods can easily trigger red flags for banks and processors.
In this guide, we’ll break down:
- What qualifies as digital goods
- Why digital goods are labeled high risk
- How to reduce your risk
- And why Easy Pay Direct is the trusted solution for digital goods merchant accounts
Let’s dive in.
Table of Contents
What Are Digital Goods?
Digital goods are products or services delivered electronically rather than physically. They’re often intangible, instant, and replicable, which makes them both valuable and vulnerable.
Common types of high risk digital goods include:
- Software and SaaS subscriptions
- Online courses and coaching programs
- Membership sites and paywalled content
- eBooks, PDFs, and digital templates
- Audio, video, and streaming content
- NFTs and downloadable games or assets
While these products are exploding in popularity, the nature of how they’re delivered and consumed creates risk for both the merchant and the payment processor.
Why Are Digital Goods Considered High Risk?
When banks or processors label a business as “high risk,” they mean it carries a greater potential for chargebacks, fraud, and regulatory issues. Let’s explore why digital goods fall into that category:
1. High Chargeback Rates
One of the biggest concerns for payment providers is the chargeback ratio. With digital goods, chargebacks are more common because:
- The product isn’t tangible, making delivery harder to prove
- Customers forget about subscriptions and dispute charges
- Fraudulent buyers claim they didn’t receive the product
- Unclear refund or cancellation policies cause confusion
High chargeback rates lead to merchant account freezes, excessive fees, or even termination.
It’s important to note that even if your business has a flawless track record with zero chargebacks, you can still be impacted by others in your industry. If competitors engage in shady practices or generate excessive disputes, processors may flag the entire industry as high risk.
And if your account wasn’t properly underwritten from the start, you could face an unexpected shutdown, through no fault of your own. This is just one reason why companies like Stripe often close accounts without notice.
2. Fraud & Piracy Risk
Digital goods are easy to duplicate and share illegally. Consequently, piracy and fraud become major threats. Fraudsters can exploit instant delivery and weak verification systems, making your business a liability in the eyes of processors.
This combination makes digital goods merchants a target for fraud and a liability for processors.
3. Recurring Billing Disputes
Many digital goods companies operate on a subscription model. Unfortunately, recurring billing brings its own risks:
- Customers forget they subscribed
- They don’t recognize the charge on their statement
- Cancellation procedures are unclear
- Subscription terms aren’t communicated clearly
This leads to increased chargebacks and potential merchant account shutdowns.
How to Reduce Risk When Selling Digital Goods
Just because your business falls under high risk doesn’t mean you’re doomed. With the right practices, you can lower your risk profile and protect your revenue.
Post Transparent Refund & Billing Policies
Make sure your website clearly outlines your refund, cancellation, and delivery policies. Keep them accessible and easy to understand.
Use Detailed Product Descriptions
Avoid vague or misleading claims. Be specific about what buyers will get to reduce post-purchase disputes.
Leverage Fraud Detection Tools
Use AVS (Address Verification System), 3D Secure, IP filters, and fraud monitoring software to block unauthorized transactions.
Track Transaction Patterns
Monitor sales volume, chargebacks, and customer behavior. Catch suspicious activity early to avoid processor flags.
Ensure Website Compliance
Your site should feature secure checkout (SSL), terms of service, privacy policy, contact info, and clear product pricing. These are essential for processor approval.
Why PayPal and Stripe Aren’t Ideal for Digital Goods Merchants
PayPal and Stripe may seem convenient, but they often create more problems than they solve for medium to high risk businesses.
These platforms don’t underwrite your account, so they have no real understanding of your business model. That means even small changes—like a spike in volume or a single dispute—can trigger sudden account freezes, fund holds, or shutdowns.
Worse yet, chargeback policies favor the buyer, and getting real support is nearly impossible when something goes wrong.
For digital goods merchants, this lack of stability can disrupt your business overnight.
If you’re serious about scaling a digital goods business, you need a dedicated high-risk merchant account not a general-purpose platform.
Why Easy Pay Direct Is the Best Choice for Digital Goods Merchants
At Easy Pay Direct, we specialize in helping digital goods merchants get approved and operate smoothly with reliable, high-risk payment solutions. In fact, Easy Pay Direct is the fastest, safe way to accept payments.
The truth is, your payment processor isn’t just a tool. It’s a growth lever.
For example, a recent survey of 500 U.S. merchants found that 64% said their payment strategy played a critical role in increasing revenue over the past year.
That’s why Easy Pay Direct builds custom setups designed to help digital goods businesses thrive.
From the start, our team takes the time to understand your business model and strategically matches you with the right banking partner to minimize the risk of account shutdowns and ensure long-term processing stability. As part of the process, you’ll be assigned a single, dedicated point of contact who provides full white glove service to guide you through setup and get your merchant account processing quickly, efficiently, and securely.
To support this, our Easy Pay Gateway is designed specifically for businesses that sell online. It makes payment processing simple and secure, with features like:
- Easy integration with almost any online shopping cart
- Support for multiple currencies and international customers
- Compatibility with Apple Pay, Google Pay, and other mobile payments
- Top-level security with Level 1 PCI Compliance
- An Authorize.net emulator for easy platform switching
- A developer-friendly API for smooth custom setup
- Advanced reporting tools to track your sales and performance
- Smart transaction routing that splits payments across multiple accounts to keep things running smoothly.
From subscription billing to fraud protection, we tailor everything for the demands of selling digital products. You’ll also get competitive rates, chargeback support, and proactive monitoring, so you can focus on growing your business, not managing payment issues.
Get Approved for a High Risk Digital Goods Merchant Account
Don’t let outdated processing systems or unfair policies block your growth. If you’ve been turned down or burned by traditional processors, we’re here to help.
Apply today with Easy Pay Direct and discover how simple and safe it can be to accept payments for your digital goods business.
