30 High-Risk Payment Gateway Statistics Every Merchant Should Know in 2025

Data-driven insights on fraud, chargebacks, processing fees, and compliance challenges shaping the high-risk payment landscape

High-risk merchants operate under different payment processing conditions than many standard retailers. Businesses in sectors such as CBD, nutraceuticals, and subscription commerce often face stricter underwriting requirements, increased compliance obligations, and greater exposure to disputes, which necessitate more resilient payment and operational infrastructure. To address these challenges, merchants often rely on ecommerce platforms that support flexible payment integrations and transparent fee structures. Platforms like Swell, which offer integrated payment gateway options and support for external processors, can help merchants better manage complexity and maintain operational continuity as they scale.

Key Takeaways

• Market growth is accelerating – The high-risk payment processing market will grow from $63.46 billion in 2025 to $214.8 billion by 2033 at 13.5% CAGR
• Fee disparities are substantial – High-risk merchants pay 4-8% processing fees versus 2-3% for standard accounts
• Chargebacks are exploding – Ecommerce chargeback rates surged 222% from 0.15% in Q1 2023 to 0.47% in Q1 2024
• Fraud costs multiply – Every $1 of fraud costs US merchants $4.61 in total losses
• AI detection achieves 90% accuracy – Financial institutions using machine learning reach 90% fraud detection rates
• Compliance remains elusive – Only 14.3% of companies achieved full PCI DSS compliance in 2023

Understanding 'High-Risk' in Payment Processing: Key Definitions and Factors

1. 98% of merchants experienced at least one fraud type in 2024

The MRC Global eCommerce Payments & Fraud Report confirms that 98% of merchants face fraud attempts, making robust payment infrastructure non-negotiable. This universal exposure means every ecommerce business—regardless of industry classification—must prioritize security.

2. 80% of chargebacks stem from fraud-related causes

Both third-party fraud and first-party "friendly fraud" account for 80% of all chargebacks. This statistic explains why payment processors classify certain industries as high-risk: elevated chargeback rates directly correlate with fraud exposure.

3. Global chargebacks reached 238 million in 2023

The sheer volume of 238 million chargebacks globally demonstrates the scale of the problem. By 2026, this number will increase 41% to 337 million, putting additional pressure on high-risk merchants to implement proactive prevention strategies.

4. Industry-specific chargeback rates vary dramatically

Higher-risk verticals experiencing notably elevated levels. Online gaming and sports betting, as well as adult entertainment, report average chargeback rates of around 3.5%, while CBD retail typically sees rates closer to 2.5%. Service-based industries can face even greater exposure, with education services recording chargeback rates near 4.8% and travel and hospitality approaching 4.7%.

Key Statistics on High-Risk Merchant Account Challenges and Success Rates

5. High-risk payment processing market valued at $124.5 billion

The current $124.5 billion market valuation reflects substantial demand for specialized payment solutions. This figure will increase more to $462.7 billion by 2033, driven by expanding ecommerce in regulated industries.

6. Global ecommerce revenue exceeded $7 trillion in 2025

The Global ecommerce market revenue surpassed $7 trillion. With nearly 25% of all retail sales now happening online, payment gateway reliability becomes essential for capturing market share. Platforms like Swell process payments across 230 currencies, enabling merchants to serve global customers without friction.

7. Ecommerce companies lose $48 billion annually to fraud

This staggering $48 billion loss represents revenue that could fuel business growth. For high-risk merchants operating on tighter margins, implementing proper fraud prevention isn't optional—it's survival.

8. Travel chargeback rates surged 816% year-over-year

Between 2023 and 2024, travel and hospitality chargebacks exploded to 816%. This dramatic increase illustrates how quickly industries can shift into high-risk territory based on market conditions.

9. Merchants win only 45% of disputed chargebacks

Even with proper documentation and representation, merchants successfully dispute just 45% of chargebacks. This low win rate underscores the importance of prevention over recovery—stopping chargebacks before they occur.

Comparing Payment Gateway Fees: What High-Risk Businesses Should Know

10. Processing fees reach 4-8% for high-risk merchants

Standard merchants pay 2-3% processing fees, while high-risk businesses face higher rates of 4-8%. This fee differential makes platform selection critical for profitability. Swell charges 0% transaction fees on external payment gateways, providing significant savings compared to competitors who charge up to 2% on top of gateway fees.

11. Setup fees range from $100 to $500

High-risk merchant account setup costs $100-$500 versus $0-$50 for standard accounts. These upfront costs add to the already elevated ongoing expenses high-risk merchants absorb.

12. Chargeback fees run $25-$100 per incident

Each disputed transaction costs merchants $25-$100 in fees—before accounting for lost merchandise or services. With chargeback rates of 2-5% in high-risk verticals, these costs compound rapidly.

13. Rolling reserves hold 5-15% of transaction volume

High-risk processors typically require 5-15% rolling reserves to protect against chargeback exposure. This capital lockup restricts cash flow and limits growth investment for emerging brands.

14. Every $1 of fraud costs $4.61 in total losses

US merchants face a $4.61 cost on fraudulent transactions when accounting for chargebacks, fees, and operational expenses. Similarly, every $100 in fraudulent orders generates $207 in actual business losses.

The Role of Robust Online Payment Security in High-Risk Verticals

15. Card-not-present fraud losses will hit $28.1 billion by 2026

The projected $28.1 billion CNP fraud losses demonstrate why security investments matter. High-risk merchants processing subscription payments or digital goods face elevated CNP exposure.

16. 91% of merchants worry about AI-powered fraud

Over the next 12 months, 91% of ecommerce merchants expect AI-enhanced fraud attacks to increase. This concern is driving adoption of sophisticated detection tools across the industry.

17. 72% of merchants saw increased friendly fraud in 2024

First-party fraud—where legitimate customers dispute valid charges—rose significantly, with 72% of merchants reporting increases. This trend makes comprehensive checkout customization essential for creating clear transaction records.

18. North America accounts for 42% of global ecommerce fraud

With North America accounting for approximately 42% of global ecommerce fraud, high-risk merchants operating in the U.S. face disproportionately elevated exposure compared to other regions. This concentration increases the importance of preventative measures, making the implementation of PCI-compliant checkout solutions a foundational step in reducing vulnerability to common fraud and data-security threats.

19. Mobile transactions drive 33-41% of fraud expenses

Mobile fraud accounts for 33% of US ecommerce fraud costs and 41% in Canada. As mobile commerce grows, high-risk merchants must ensure their payment infrastructure handles mobile-specific vulnerabilities.

Leveraging Advanced Analytics for High-Risk Credit Card Processing Decisions

20. 71% of financial institutions use AI for fraud detection

The widespread AI adoption among financial institutions highlights its effectiveness in fraud detection, with 71% of institutions now using AI-based systems for this purpose. These tools consistently outperform manual review processes, enabling higher accuracy and faster risk assessment at scale.

21. AI fraud detection reduces costs by 30%

Research confirms that machine learning implementation cuts fraud detection costs by 30% while improving accuracy. This efficiency gain is particularly valuable for high-risk merchants facing elevated fraud exposure.

22. 37% of merchants accept real-time payments

Current RTP adoption remains moderate, but 42% of non-adopters plan implementation in 2025. 37% of merchants accept real-time payment processing which creates both opportunities and risks for high-risk merchants—faster settlement but reduced fraud review windows.

23. 60% of merchants use tokenization for payment security

With around 60% of merchants using tokenization to enhance payment security, the approach has become a standard method for protecting stored payment credentials while supporting subscription billing and repeat purchases. Platforms like Swell offer native tokenization through encrypted card vaults, allowing merchants to manage recurring transactions securely without relying on third-party tokenization services.

24. 63% of organizations experienced BEC fraud in 2024

Business email compromise attacks affected 63% of organizations, highlighting fraud vectors beyond direct payment processing. High-risk merchants must secure entire operational workflows, not just checkout flows.

Optimizing Payment Processing Platforms for Scalability and Risk Management

25. 82% of merchants struggle with fraud management technology

Data and technology challenges affect 82% of merchants attempting to manage fraud. API-first platforms simplify integration of fraud prevention tools while maintaining checkout speed.

26. 93% of consumers require local currency pricing

93% of global shoppers overwhelmingly prefer transactions in their local currency. Swell's multi-currency support across 230 currencies removes this friction for international high-risk merchants.

27. Payment industry market valued at $61.1 billion

The broader payment processing market reached $61.1 billion in 2023 with 10.5% CAGR projected through 2032. High-risk segments represent growing portions of this market as regulated industries expand online.

Addressing Compliance and Regulations in High-Risk Credit Card Processing

28. Only 14.3% achieved full PCI DSS compliance

Verizon research reveals that just 14.3% of companies met complete PCI requirements in 2023. Swell Checkout handles PCI compliance automatically, removing this burden from high-risk merchants.

29. Over $200 million in regulatory fines issued

Payment processors and merchants faced $200+ million in fines for insufficient merchant due diligence over a three-year period. These penalties underscore the importance of partnering with compliant platforms.

30. Over 98% of financial institutions report rising compliance costs

98% of financial institutions face increasing compliance expenses. For high-risk merchants, these costs often pass through as elevated fees and stricter requirements.

Customer Behavior Driving High-Risk Classifications

Understanding why chargebacks occur helps merchants prevent them:

• 72% of customers don't understand the difference between refunds and chargebacks
• 81% of customers filed chargebacks because it was easier than contacting merchants

These statistics highlight the importance of clear communication, accessible customer service, and transparent billing descriptors—all areas where headless commerce platforms provide customization advantages.

Customer behavior is a key driver of chargebacks, with many disputes arising from confusion or convenience rather than fraud. Platforms like Swell help mitigate this risk by enabling clearer billing descriptors, customizable checkout experiences, and more accessible customer communication.

Frequently Asked Questions

What defines a high-risk payment gateway?

Payment gateways classify merchants as high-risk based on several factors: industry type (CBD, gaming, adult content), chargeback history exceeding 1% of transactions, subscription billing models, international sales, and average transaction values. High-risk classification typically results in processing fees of 4-8% versus 2-3% for standard merchants. These elevated rates reflect the increased financial risk processors assume when serving businesses with higher chargeback exposure and fraud vulnerability.

How can businesses reduce chargebacks with a high-risk merchant account?

Effective chargeback reduction requires multiple strategies: clear billing descriptors, robust customer service, comprehensive transaction documentation, and fraud prevention tools. Since 81% of customers file chargebacks due to convenience, making refund processes accessible prevents many disputes. Implementing AI-powered fraud detection can achieve 90% accuracy in identifying suspicious transactions before they convert. Additionally, providing transparent product descriptions and shipping timelines reduces customer confusion that often leads to friendly fraud.

What security measures are essential for high-risk online payments?

Essential security includes PCI DSS compliance, tokenization (used by 60% of merchants), 3D Secure authentication, and AI-driven fraud detection. Swell provides hosted, PCI-compliant checkout that handles encryption and security automatically, plus an encrypted card vault for subscription billing without third-party dependencies. These foundational protections must be complemented with proper operational security, as 63% of organizations experienced business email compromise fraud in 2024.

Are transaction fees generally higher for high-risk businesses?

Yes, substantially higher. High-risk merchants pay 4-8% processing fees compared to 2-3% for standard accounts, plus setup fees of $100-$500 and rolling reserves of 5-15% of transaction volume. Each chargeback incurs $25-$100 in fees, and fraudulent transactions create a $4.61 cost multiplier when accounting for all associated losses. Platforms like Swell that charge 0% fees on external gateways provide meaningful cost advantages for high-risk merchants navigating these elevated expenses.

Can a headless commerce platform improve high-risk payment processing outcomes?

Headless architecture offers significant advantages for high-risk merchants. API-first platforms enable integration of specialized fraud prevention tools, custom checkout flows that reduce friendly fraud, and flexible payment gateway selection based on risk profile. Swell's unified backend API provides full access to all payment functionality, allowing merchants to customize security measures without sacrificing checkout speed or user experience. The ability to create tailored checkout experiences with clear transaction records helps address the fact that 72% of customers don't understand the difference between refunds and chargebacks, directly reducing dispute rates.