Navigating eCommerce as a High-Risk Business: Challenges & Solutions
eCommerce is a booming industry, but not all businesses have an easy time setting up online stores. Some businesses are labeled as "high-risk" by payment processors and eCommerce platforms, making it more difficult to find payment solutions, advertise, and maintain compliance. Industries such as CBD, adult products, firearms, supplements, and gambling often fall into this category. High-risk businesses, while not the majority, represent a significant and growing portion of the eCommerce landscape, especially in sectors like CBD, adult products, gambling, and cryptocurrency, which continue to grow rapidly.
When I first started building eCommerce stores, I quickly realized that setting up a high-risk business was on a whole different level of difficulty. Payment gateways would reject applications, advertising platforms would block campaigns, and even finding the right banking partner felt like an uphill battle. However, through trial and error, I learned that with the right strategies and persistence, it was possible to build a thriving high-risk eCommerce business.
Read on to learn why some businesses are considered high-risk, the challenges they face, and how they can successfully navigate eCommerce platforms like Shopify and Squarespace.
What makes a business High-Risk and for who?
There are several factors that determine if a business is classified as high-risk.
If it has high chargeback rates, meaning If customers frequently request refunds or chargebacks, payment processors see this as a risk.
Have regulatory issues, like facing legal restrictions, making them riskier to banks and processors.
If they are sensitive to fraud risks, like businesses that deal with high-value items or age-restricted products may attract more fraudulent transactions.
With recurring billing like subscription-based models, can lead to disputes and higher chargeback rates.
Banks and payment processors assess these risks before approving a business for payment services.
If a business falls into the high-risk category, it may face higher fees or even be denied access to major payment gateways like Mollie, PayPal, or Stripe.
What are the challenges High-Risk businesses face in eCommerce
One of the hardest challenges when running a high-risk business online is Payment Processing Difficulties. Many mainstream payment gateways like Mollie, PayPal, and Stripe do not support high-risk industries, requiring businesses to use specialized high-risk merchant accounts that often come with higher fees. Additionally, some payment processors impose rolling reserves, where a percentage of funds is held back to cover potential chargebacks, making cash flow management more challenging.
There are also platform restrictions by Shopify and Squarespace, which have strict policies regarding what can be sold, with Shopify Payments (powered by Stripe and Mollie) prohibiting high-risk businesses such as CBD or adult products. As a result, businesses must integrate third-party payment processors, which can be costly and require additional setup.
High-risk industries face hurdles when it comes to advertising. Platforms like Google and Facebook often block ads for certain products like CBD or adult content. To overcome this, businesses must be creative. SEO (search engine optimization), content marketing, and influencer marketing can drive organic traffic without relying on paid ads. Building a strong online community and using email marketing is another way to stay connected with customers.
Shopify and Squarespace for High-Risk Businesses
While Shopify and Squarespace allow high-risk businesses, they have a lot of restrictions.
Shopify’s native payment gateway “Shopify Payments” doesn’t support high-risk industries. But with third-party processors like Authorize.net or NMI, you can still run a business on Shopify. Adding apps like Fraud Filter and Chargeback Protection can also help mitigate risks and reduce potential losses.
Squarespace uses Stripe and PayPal, both of which have policies against high-risk businesses. This means you’ll likely need a third-party payment provider.
For these reasons some businesses go the custom route, developing a tailored solution that integrates high-risk-friendly payment options.
How Can You Start a High-Risk eCommerce Business?
For someone starting out, it’s important to break things down into manageable steps. Here’s a simple framework:
Start by choosing a niche that interests you and before diving in, make sure you understand the legal rules and regulations related to your product. For example, if you want to sell CBD, check your country and state’s laws on the sale of cannabis products. This will help you avoid getting into trouble later.
Since many popular payment gateways won’t support high-risk businesses, you'll need to find specialized payment processors. Look for high-risk merchant accounts that allow your product category. Providers like PayKings or Durango Merchant Services are designed for businesses like yours. They may charge higher fees, but they help you get paid.
You’ll need a website or an online store to sell your products. Choose a platform that fits your business needs. If you’re selling high-risk products, you may need to use Shopify or WooCommerce, but you'll need to integrate third-party payment processors. Choose a platform with flexible payment options and ensure it has the features you need to run a successful online business.
Where you can open a company
Setting up your business in the right jurisdiction is crucial for success, especially when operating in high-risk industries. Certain countries offer favorable conditions, not just for business registration, but also as hotspots for digital nomads looking to run high-risk eCommerce businesses from anywhere.
Cyprus: Competitive tax rates, popular for online gaming, crypto, and forex
Belgium: Stable regulatory environment, great for health and supplement industries
Netherlands: Ideal for tech businesses, CBD, and health products
Spain (Islands): Special tax incentives, great for online gambling and fintech
Malta: A go-to place for online gaming, financial services, and cryptocurrency
Estonia: Known for its e-Residency program, simplifying company management remotely
Greece: Growing market for health supplements and adult products
Portugal (Madeira & Azores): Low tax rates and business-friendly conditions
Singapore: Business-friendly, ideal for tech, crypto, and online gambling
United Kingdom: Easy company formation, excellent for health products, supplements, and CBD
These countries not only provide business-friendly environments but also attract digital nomads due to thriving eCommerce ecosystems, favorable tax policies, and high-speed internet. Locations like Portugal (Lisbon, Algarve), Thailand (Bangkok, Chiang Mai), and Mexico (Mexico City, Playa del Carmen) are becoming popular among entrepreneurs, allowing them to run high-risk businesses while enjoying an affordable, flexible lifestyle.
The rise of “Crypto-Friendly” payment processors and the role of Blockchain in fraud prevention
In recent years, cryptocurrency payment processors have been gaining traction, particularly in high-risk industries. By accepting payments in Bitcoin, Ethereum, and other digital currencies, businesses can bypass traditional banking systems, which are often hesitant to support sectors like CBD, adult products, and online gambling. Companies like CoinGate and BitPay enable merchants to accept crypto, opening doors to new markets and offering faster, cheaper transactions—without relying on mainstream payment gateways. This flexibility is particularly appealing for businesses in high-risk sectors that face constant hurdles with traditional financial institutions.
Beyond payments, blockchain technology is emerging as a powerful tool for fraud prevention. With high-risk industries frequently targeted by fraudsters, blockchain’s decentralized ledger provides transparency, reduces fraud risks, and increases customer trust. By recording every transaction securely and immutably, blockchain can help prevent chargebacks and fraudulent activity. In particular, industries like CBD and pharmaceuticals are using blockchain to track product authenticity, ensuring that consumers receive genuine, safe products while minimizing the risk of counterfeit goods entering the market.
Navigating high-risk eCommerce can be tough, but with the right strategies, you can build a successful online business. If you're in a high-risk industry and need help setting up a secure, high-performing e-shop, we’re here for you. At UneedASite, we specialize in building eCommerce websites for high-risk businesses and can guide you through every step. Whether you need a custom website or advice on overcoming common challenges, we’ve got you covered.
Read this and more articles from Nadia Nikolaidou on Linkedin.
