Running a business brings many challenges. From attempting to outdo your competitors to identifying new market opportunities, there are countless things to think about. With that in mind, payment processing issues aren’t something you really want to over-complicate matters. After all, you have enough problems.
Despite that, a huge number of businesses, and even entire industries, are classified as high-risk by many payment processors. At first glance, that may not seem like much of a problem, but it can create large-scale challenges to overcome. In some cases, there is no choice but to find an alternative.
The reason for this classification is that high-risk businesses face unique issues. These include increased regulatory scrutiny, a higher number of chargebacks, and an increased likelihood of fraud. Due to this, many payment processors don’t want to get involved. Here at PayCompass, none of that matters to us. We understand your problems and we have designed our high-risk merchant accounts with all of that in mind. However, it’s a good idea to understand the payment processors that don’t accept high-risk businesses, to add to your knowledge base.
In this guide, we’ll explore Stripe in particular, and look at the list of Stripe restricted businesses and their unique challenges.
TL;DR
- Stripe restricts payment processing services to a range of high-risk businesses, causing problems with payment processing.
- Financial services are restricted by Stripe due to the high risk of fraud and regulatory challenges.
- Adult content and services are prohibited by Stripe due to the company’s community standards and compliance policies.
- Certain retail services are deemed high-risk due to a high number of chargebacks.
- The travel industry faces payment processing concerns due to high value transactions, fraud risk, and a large number of chargebacks.
- Dating and social networking are also restricted by Stripe due to privacy concerns and regulatory issues.
- PayCompass’ high-risk merchant accounts as a good alternative for businesses restricted by Stripe.
Financial Services
First, let’s talk about financial services, because these face unique payment processing challenges that can potentially derail growth significantly. The main reason why this industry is classified as high-risk, and why Stripe restricts it, is because it has a large risk of fraud and chargebacks connected to it. There is also extreme regulatory control in this sector, and the need to follow all regulations is vital. Add to that the fact that regulations evolve all the time, leading businesses to always remain up-to-date.
Stripe imposes very strict guidelines on businesses in this sector, particularly those that use cryptocurrency exchange, payday loans, and credit repair services. In this case, you can’t use Stripe in some cases, and instead need to look for specialized high-risk merchant accounts, such as our PayCompass offerings. In some situations, you can use Stripe’s services but these are heavily limited and require a lot more documentation and scrutiny.
To summarize, the table below talks about the types of financial services and their main challenges and risk level.
| Financial Service | Key Challenges | Risk Level |
|---|---|---|
| Debt Collection | High chargebacks, strict regulations | Very High |
| Credit Repair | Potential fraud, regulatory scrutiny | High |
| Crypto Exchanges | Volatility, security concerns | Very High |
| Payday Lending | High default rates, legal issues | Very High |
| Binary Options | Regulatory bans, fraud risk | Extreme |
1. Debt Collection Agencies
One niche within the financial services arena is debt collection, and that is another extremely regulated environment. As a result, Stripe deems this type of business too risky.
The main reason is because debt collection agencies come with a high chargeback rate. The reason is disputed debts, along with strict regulations, such as FDCPA (Fair Debt Collection Practices Act). In this situation debt collection agencies often need to look toward recurring billing options and customized payment plans, creating another payment processing headache.
2. Credit Repair Services
We mentioned credit repair briefly, and these are services that help people with poor credit scores improve them to the point where they can apply for credit in the future. The reason Stripe restricts these types of businesses is because there is a high risk of fraud. Again, this is a sector that cannot use Stripe at all.
Again, there are many legal regulations and requirements to navigate here, including the Credit Repair Organizations Act. These rules are complex and very in-depth, often changing over time. The most common challenge for credit repair services is a need for extremely robust customer verification processes, which goes some way to reducing instances of fraud.
3. Cryptocurrency Exchanges
Cryptocurrency exchanges are one of the Stripe prohibited businesses.
Crypto is commonly known for its volatility, which is why it has a high-risk label. There is also a large amount of regulatory uncertainty here, along with high fraud instances.
In this case, Stripe highlights the high transaction volumes these businesses deal with, along with rapid fluctuations in price, that can often be quite extreme. Key regulations include AML and KYC, otherwise known as anti-money laundering and Know Your Customer regulations.
4. Payday Lenders
With increased cost of living, payday loans are a common occurrence. Businesses that facilitate these loans, otherwise known as payday lenders, offer short-term options that come with high-interest levels. However, fraud risk is very high here. These businesses have extremely heavy regulations due to the high-interest nature of their products. In most cases, there are state and federal regulations to follow, including caps on interest rates. There is also a very high chance of payment default, by the very nature that someone had to ask for the loan in the first place.
Stripe does not accept these types of businesses, and most other payment processors fall under the same umbrella.
5. Binary Options Trading
Finally, let’s talk about why Stripe restricts binary options trading platforms. These are businesses that offer fixed payout financial options and they face restrictions due to the high chance of fraud, and again, regulatory problems. In fact, in many jurisdictions, binary options trading is either banned completely or extremely heavily regulated. For this reason, Stripe is impossible in these cases.
Adult Content and Services
Another industry that is on the Stripe restricted business list is adult content and services. As you can guess, this industry faces payment processing challenges, mostly due to reputation and compliance risks. Along with this, there are many chargebacks, transaction disputes, and a need to verify age very clearly.
6. Adult Entertainment Websites
With the rise of sites like Only Fans, increased restrictions have been placed on adult entertainment websites. These sites offer adult-oriented material, and as a result, face Stripe restrictions due to content moderation and chargeback rates.
In these cases, websites must have robust moderation systems to ensure illegal material doesn’t make it onto their site. They must also follow record-keeping regulations, such as 18 U.S.C. 2257. Another challenge is the need for specialized billing descriptors, which help to maintain customer discretion. All this creates a challenging picture and causes Stripe to place them on the restricted list.
7. Escort Services
Another part of the adult entertainment industry that is prohibited by Stripe is escort services. In this case, businesses provide companionship to individuals who pay for their services, and this often has sexual implications. It’s unsurprising that these services face restrictions because there is huge potential for illegalities and gray areas.
8. Adult Toy Retailers
One area of the adult entertainment industry that faces slightly less restrictions is adult toy retailers. However, that doesn’t mean that these businesses don’t still face some challenges when it comes to payment processing.
Firstly, these retailers must ensure that any products they sell not only follow regulations around safety, but they also satisfy import laws. Of course, these vary from area to area. Items often need to be shipped in discreet packaging for privacy, and there needs to be a robust system in place to verify age during online sales. All this makes these companies high-risk in the eyes of payment platforms. While they are not prohibited, they are much more closely scrutinized.
9. Pornographic Content Creators
Another of the Stripe restricted industries relates to pornographic content creation. In this case, businesses are heavily restricted and prohibited due to complex moderation issues and legal compliance problems.
Again, much of this comes down to age verification and strict record-keeping requirements, along with mechanisms to prevent content being distributed in an unauthorized way. Such businesses are often subscription-based, which is high-risk in itself, and require highly specialized payment solutions.
10. Adult Live Streaming Platforms
Finally, adult live streaming platforms also fall into the restricted category according to Stripe. Again, we’re looking at content moderation problems, along with a high instance of chargebacks. As with many other businesses in this entire industry, age verification is a huge issue. All this puts adult live streaming platforms on the Stripe restricted business list.
High-Risk Retail and Services
Retail makes up the biggest industry around, yet there are certain businesses that are considered high-risk. Most of this is due to what they sell, e.g. products that raise a certain amount of controversy, or an increased risk of fraud. There are five particular retail services that Stripe restricts, so let’s explore them in more detail
| Industry | Legal Status | Fraud Risk | Chargeback Risk |
|---|---|---|---|
| Online Gambling | Varies by jurisdiction | High | Very High |
| Cannabis/CBD | Complex legal landscape | Medium | High |
| Firearms | Strictly regulated | Low | Medium |
| Tobacco/E-cigs | Age-restricted | Medium | Medium |
| MLM Companies | Legal, but scrutinized | Medium | High |
11. Online Gambling Sites
Online gambling sites are extremely popular, but that doesn’t mean they don’t face challenges. In this case, it’s because they’re heavily restricted by Stripe. This is down to the fact that such sites have to comply with very strict licensing requirements and these often vary a lot between regions.
There is also a high risk of money laundering and fraud in these cases, requiring robust and sophisticated fraud detection systems, along with the need to verify age.
Sports betting is another area that falls under this umbrella and is another extremely popular choice for sports fans. As a result, such companies must identify sports betting payment solutions that overcome restrictions.
12. Cannabis and CBD Products
Another increasingly common industry relates to marijuana or hemp-derived products. The problem here is that legality varies across jurisdictions, which automatically puts these businesses in the high-risk category, and on the Stripe prohibited businesses list.
Of course, CBD payment processing then becomes challenging, along with the need for specialized inventory tracking systems to ensure regulatory compliance. Again, we can talk about age verification during online sales, which creates an even more complicated picture.
13. Firearm and Ammunition Sales
Any businesses that sell guns or related items online or in stores are extremely heavily restricted and this also extends to Stripe. Unsurprisingly, these are also Stripe prohibited businesses, creating the need to find alternative options.
Much of this comes down to the mere product that is sold and the fact that such businesses must comply with robust laws, on federal, state, and local levels. Extremely secure systems must be in place in terms of background checks and transfers, with a requirement for specialized shipping processes.
14. Tobacco and E-cigarette Vendors
E-cigarettes have become extremely popular, but are one of several Stripe restricted industries.
Moving on with our list of Stripe restricted businesses, tobacco and vape sellers also face severe restrictions. This is mostly due to age verification needs, along with many associated health concerns.
Tobacco businesses must comply with many regulations, including FDA-regulations and state specific laws. To further complicate matters, businesses often need to have specialized shipping processes in place to comply with regulations.
Despite all of this, such businesses are extremely popular, which raises the need for payment processes that cover all bases. You can look to PayCompass for specialized accounts in this sector. Our merchant accounts are designed to help you comply with regulatory standards, which can change on a regular basis.
15. Multi-level Marketing Companies
Finally, let’s talk about multi-level marketing companies, which use tiered networks to sell products. However, they face heavy restrictions due to increased regulatory scrutiny, and the risk that they could be pyramid schemes. As a result, such companies have to have clear structures in place in terms of compensation, helping them to avoid any legal problems.
Travel and Timeshares
You might not consider the travel industry to fall under the high-risk umbrella, but it does. For that reason, it is one of the Stripe restricted industries, creating many payment processing problems for online travel agencies in particular.
Let’s explore the individual businesses that Stripe restricts, creating the need for alternative options for travel payment solutions.
16. Travel Agencies
Travel agencies, particularly online versions, help individuals arrange their travel plans. This includes transport, such as plane and rail tickets, accommodation, and excursions. However, there is a large risk of chargebacks, along with fluctuations in cash flow due to seasonal demand. For instance, these businesses make more money during the summer months than compared to the winter.
To overcome Stripe’s restrictions, our travel agency merchant account services are an alternative option that counteract these issues. Our accounts offer a secure processing solution that easily integrates into your booking systems. With fraud and chargeback prevention, these accounts help you handle high-risk transactions.
17. Airlines
Airlines are also classed as high-risk businesses due to many of the same reasons we just discussed. While not quite as seasonal as full vacation packages, flights are often busier during the summer months. Additionally, the high transaction values and associated increased fraud risk puts airlines into this bracket.
Airlines must ensure their prices are optimized by using high-tech yield management systems, along with strong fraud detection systems. These are particularly targeted at preventing ticket reselling scams. Of course, airlines also often face cancellations and changes to their schedule, and businesses also need specialist solutions to overcome these.
18. Timeshare Companies
Companies selling shared ownership of vacation properties are also heavily restricted in many different ways, including by Stripe. The reason is complicated contracts, and the high potential for dissatisfaction, resulting in customer disputes.
To overcome some of these risks, timeshare companies require highly specialized contract management systems, along with systems to handle long-term commitments. However, none of this changes the fact that Stripe heavily restricts payment processing, requiring the need for alternative choices, particularly for recurring payments.
19. Vacation Rental Platforms
Businesses like AirBnB fall into the vacation rental platform category and these are also Stripe restricted businesses, along with any other website that arranges short-term property rentals. The reason is something we’ve talked about several times so far – regulatory problems and fraud potential.
There is a strong need for robust identity verification processes here, both from a regulatory standpoint and for user safety. Businesses must also have secure payment escrow systems in place to protect guests and the hosts themselves.
20. Cruise Lines
Finally in this category, let’s talk about cruise lines. Again, this isn’t an industry you’d expect to face heavy restrictions, but due to high-value transactions, it’s on the list. Another reason is the potential for cancellation, which could be large-scale in some cases.
PayCompass’ merchant accounts can help in this regard, but cruise lines in general must have complex booking systems to manage their pricing. Additionally, cruise lines often have to give refunds due to itinerary changes, so specialized solutions must also be in place in that regard.
Dating and Social Networking
The final of our Stripe restricted industries is dating and social networking. These businesses have highly unique payment processing challenges, often related to user identification and increased fraud risk. As a result, Stripe imposes restrictions that can make business owners’ lives difficult.
The table below gives more information about various platforms and their challenges.
| Platform Type | User Verification | Content Moderation | Payment Challenges |
|---|---|---|---|
| Dating Sites | Critical | High | Subscription fraud |
| Matchmaking | Extensive | Medium | High-value transactions |
| Social Media | Moderate | Very High | Advertising fraud |
| Chat Apps | Low to Moderate | High | In-app purchases |
| Adult Social | Critical | Very High | Chargebacks, privacy |
21. Online Dating Websites
The first Stripe restricted business type in this category is online dating websites. These are platforms that bring two individuals together with the hope of forming a romantic relationship. However good their intentions are, this focus attracts restrictions mostly due to fraud and safety concerns.
To help provide quality services, dating websites must have sophisticated matching algorithms, but ID verification is vital to prevent catfishing attempts. Of course, there are also big security concerns about virtual dates, with secure video chat features required.
22. Matchmaking Services
Matchingmaking services might sound similar to online dating sites but in this case, it’s more face-to-face. These businesses pair clients registered on their books, yet they’re also classified as high-risk. This is mostly due to the potential for dissatisfaction and the high-value transactions often involved.
23. Social Media Platforms
Social media platforms are Stripe prohibited businesses.
Most of us use social media on a daily basis without even realizing the challenges that go on behind the scenes. It might be surprising to learn that these platforms also face payment processing issues due to their high-risk label.
In this case, the categorization is because of moderation challenges and the increased risk of illegal scams and activities. All of this pushes Stripe to add these businesses to its restricted list.
24. Chat and Messaging Apps
Another surprising feature on the Stripe restricted business list is chat and messaging apps. Again, we often use these on a daily basis without understanding their underlying issues, which mostly relate to privacy concerns and the potential for illegal moves.
To overcome these challenges, apps must have end-to-end encryption, along with strong systems to prevent abuse and spam. Apps also need features that ensure secure file sharing.
25. Adult-oriented Social Networks
Finally, we have adult-orientated social networks. These straddle the ground between the adult entertainment industry and dating and social networking. However, they cater specifically to adults and provide content that often faces moderation issues, along with a range of legal complications they must comply with.
Again, this comes down to age verification. Such platforms must have robust systems in place while preventing illegal material. As for payment processing, Stripe does not accept such businesses, and they must find secure payment systems as an alternative.
Why PayCompass Is the Best Alternative to Stripe
Throughout this guide, we’ve talked about a large number of different industries and businesses that are on the Stripe restricted business list. It might come as a surprise to learn about some of them but they all face payment processing challenges due to their high-risk label. While Stripe may not completely ban them all, they place severe restrictions on them, making it difficult to run and grow a business. Yet, there is one answer – PayCompass.
Our high-risk merchant accounts are designed with the problems you face every day. Whether it’s a high number of chargebacks, a risk of fraud, or difficult regulations, we understand and have you covered. For instance, our merchant accounts come with chargeback prevention built-in, while our real-time monitoring helps you spot any potential fraud before it becomes an issue. All of this frees you up to focus on what you do best – running and growing your business.
Final Thoughts
We’ve talked at length about the large number of Stripe restricted businesses, and it’s clear that they span across many industries. If you’re a high-risk business, you’ll no doubt know about the problems that come along with that label – increased chargebacks, potential fraud, and increased regulatory scrutiny. None of it makes running a business easier.
The good news is that Stripe isn’t the be-all-and-end-all of payment platforms. In fact, it’s just the tip of the iceberg. Exploring PayCompass and our range of specialized high-risk merchant accounts will set you free from the constant restrictions and blocks that stand in your way. We understand your situation perfectly and have designed our accounts to make your business life easier. So, if you’re keen to avoid payment processing headaches and focus on your work, fill in our contact form today. One of our experts will be in touch to help you ease the payment waters and look forward to a smoother process.
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