High-Risk Merchants are Always at Risk of Shutdown
The Stripe Services Agreement states in sections 6.1 and 6.2 that your account could be shut down without warning for reasons such as:
Higher than anticipated chargeback rates
Concerning rates of suspicious activity
“Bad actor” reports of the account
Operating in “high-risk” industries like gambling, gaming, dating, CBD, and e-commerce
If an account has already been deemed “high-risk” and has issues with chargeback rates, suspicious activity, or fraud reports, the account could be shut down until further review.
Once an account is flagged for review, it is unlikely any amount of appeals will get operations moving again and a Stripe alternative would be needed to process payments.
Who is Classified as a High-Risk Merchant?
While Stripe and its financial institutional partners do have a restricted business list, the reality is that who is classified as a high-risk merchant varies from region to region.
A merchant can be labeled as “restricted” or “high-risk” at any point during a relationship with PSPs like Stripe. A certain amount of chargebacks can trigger a review or even a “false flag” can get an account frozen.
Visa uses a tiered system and Merchant Category Codes to designate high-risk businesses. Falling into any one of these tiers puts your business at increased risk of being shut down by Stripe, even if your industry isn't highly regulated.
This means merchants in crypto, CBD, free trial subscriptions, games of skill, gambling, dating, travel, digital health, and more could be designated as high-risk. While Stripe support will help some merchants find success, many will not. A merchant must go through many hoops to begin transacting again.
These Stories Are Not Unique
Passes Turned to Basis Theory After an Unexpected Account Shutdown
"Our PSP said they were okay with our business but they ended up going back on their word and shutting us off without any warning. We wanted to make sure that we're always in a position where we will have a provider even if something happens."
Basis Theory removes PCI compliance scope for a high-risk merchant. Collect payment data, tokenize and store it in your cardholder data environment (CDE) hosted by Basis Theory.
This removes most of the burden of maintaining PCI compliance and provides freedom through network-agnostic tokens that high-risk merchants can use as part of a Stripe alternative, partner, or network.
Owning this data means building dynamic routing to reduce payment risks when processing. Then, if your PSP creates any issue, you have alternatives.
