Fraud & Chargeback Rates – Businesses with a high chargeback or fraud rate are automatically classified as high-risk by banks and payment processors. Businesses with a chargeback ratio over 1% are usually considered high-risk. Chargebacks can occur for any number of reasons, from customers forgetting they signed up to getting billed without their consent.

Types Of Products And Services – Products such as software, tickets, seasonal items, etc. can point to a business with more unusual or inconsistent revenues. Payment processors consider this a very red flag and a sign of financial uncertainty.

Reputational Risk – Companies that deal with sensitive customer information may suffer reputational consequences. This includes companies in the adult and tech sectors.

Recurring Payments – Certain business models with high instances of chargebacks or fraud can send a warning signal to payment processors. A common example is recurring or subscription-based providers, with an increased risk of chargebacks, identity theft, and account takeovers. 

Monthly Sales Volumes or Transaction Value – Financial institutions might consider a business high-risk if they routinely accept high-value transactions. B2B companies mostly have to deal with this factor.

Credit Score  – Banks are less inclined to lend money to individuals or businesses with poor credit scores. As a result, if you have a low personal credit score, your business may fall into high-risk categories.