A Stripe high-risk business faces a greater chance of account bans, funding holds, and increased scrutiny from the payment processor.
That’s very bad for your business.
Let’s examine what this means to you, a merchant.
Then, we’ll look at how best to avoid getting banned.
There’s a lot to talk about.
Stripe High-Risk Business Explained
A high-risk business, according to Stripe, is one that poses a greater chance of chargebacks, fraud, or regulatory complications.
Stripe uses a variety of signals,like industry type, transaction patterns, and financial history—to determine your risk profile.
Being flagged as high-risk doesn’t automatically mean you’ll be banned, but it does mean increased scrutiny. Your transactions might be monitored more closely, you may face funding holds, and your account could be suspended or closed if your risk level increases.
For high-risk merchants, it’s especially important to stay ahead of disputes, communicate clearly with Stripe, and use tools like Stripe Radar and ChargebackStop to prevent issues before they escalate.
How Does Stripe Define High-Risk Business?
Defining a merchant or business as high-risk is a bit complicated. Many criteria are assessed.
These include:
Industry type: Certain industries are prone to high chargeback rates, fraud, and regulatory scrutiny—examples are adult entertainment, gambling, tobacco, and pharmaceuticals.
Business model: Subscription models offering free trials or recurring billing are deemed high-risk.
Financial history: If you have a history of excessive chargebacks, fraud, or financial instability, you may be flagged as high-risk.
Product or service delivery time: Businesses with a long delay between purchase and delivery are ranked as high-risk due to high rates of chargebacks and cancellations.
Country of operation: Certain countries are rife with fraud or may have embargos on doing business with payment gateways.
Transaction size and volume: High transaction rates attract fraud and may result in significant financial exposure to chargebacks.
It’s time to move on to what you can do to avoid being banned.
Why Stripe Might Ban Your Account (And How to Avoid It)
Stripe reserves the right to ban or suspend merchant accounts to protect its network—and that usually happens when a business poses too much risk.
Here are some of the most common reasons Stripe bans accounts:
- Excessive chargebacks (usually above a 1% ratio)
- Fraudulent transactions or abuse reports
- Inaccurate or outdated business info
- Violation of Stripe’s Terms of Service or Prohibited Businesses list
- Non-compliance with local regulations or financial laws
When your account is closed:
- You cannot process transactions.
- You cannot accept payments.
- You cannot access the funds in your account.
- You are reported to high-risk merchant databases like MATCH.
- You are subject to additional fees and penalties.
- You may or may not get a reason for the ban.
- You can’t bring in money if you can’t process transactions or accept payments.
Stripe doesn’t always provide detailed explanations, and if your account is banned, you’ll likely lose access to funds, processing ability, and even face placement on industry blacklists like MATCH.
Avoiding a ban means being proactive: keeping chargebacks low, preventing fraud, and staying in Stripe’s good graces with accurate info and transparent business practices.
Best Practices To Avoid Ban For Stripe High-Risk Business
These best practices affect your entire business. Each is an essential part of a cohesive overall anti-ban plan.
Transparent Business Practices
Clearly describe your products and services. Make this information easy to find on all documents and customer correspondence regarding purchases.
Ensure your website content (terms of service, privacy policy) complies with Stripe's requirements.
Maintain Accurate Account Information
Keep business information, including contact details and bank account information, up to date. Also, make this information readily available.
Implement Fraud Prevention Measures
Utilise tools like Stripe Radar and ChargebackStop to detect and prevent fraudulent transactions.
Adopt additional verification methods for high-value transactions.
- Two-factor authentication (2FA)
- Manual review
- Customer verification calls
- Advanced fraud detection tools
- Payment method verification
- Transaction limits and alerts
Manage Chargebacks Effectively
Respond to chargebacks promptly to avoid penalties from Stripe.
Understand and Comply with Regulatory Requirements
Stay informed about the legal and regulatory landscape of your industry.
Maintain compliance with laws in your jurisdictions, including data protection and financial regulations.
Regular Financial Reviews
Monitor transaction patterns and volumes to identify anomalies.
Keep financial records to provide evidence of compliance and legitimate business operations.
Engage with Stripe's Support Proactively
Communicate openly with Stripe about changes in your business model or operations.
Seek guidance from Stripe when expanding into new products or markets.
Avoiding Fraud and Chargebacks Before They Happen
Our service, ChargebackStop, provides a complete automated platform to reduce fraud and chargebacks by 99%.
With a low chargeback rate of 1%, you are unlikely to get banned.
Identifying and stopping fraudulent activities as they occur can mitigate falling victim to bad actors.
Having a real-time, automated chargeback prevention platform gives you control you don’t have when handling chargebacks after they are enacted.
Stopping chargebacks and fraud in their tracks is the key.
High-Risk Industries Stripe May Restrict or Monitor
Certain industries are flagged by Stripe as high-risk based on historical data, chargeback trends, or regulatory red flags.
Here are examples of businesses Stripe is more likely to monitor—or reject:
- Adult entertainment
- Gambling, betting, or lotteries
- CBD, cannabis, or tobacco
- Nutraceuticals or health supplements
- High-ticket electronics
- Multi-level marketing (MLM)
- Subscription services with free trials
- Travel and event ticketing
Even if your business is legitimate, operating in one of these sectors might result in stricter oversight or even a denial of service.
If you’re in one of these verticals, it’s even more critical to use chargeback prevention tools, be upfront about your policies, and monitor your Stripe risk status regularly.
Looking Forward
Visit ChargebackStop to ask your questions about Stripe, chargebacks, fraud, or prevention platforms like ours.
We’ll also fix you up with a free demo of our platform.
Give ChargebackStop.com a free try today.
FAQs
How can I find out if my business is considered high-risk by Stripe?
Stripe may notify you directly if your business is categorised as high-risk. However, you can also review Stripe's terms of service and prohibited businesses list or contact Stripe support to clarify your business's status.
What are the common reasons for a Stripe account ban?
Common reasons include violating Stripe’s terms of service, engaging in prohibited business activities, experiencing excessive chargebacks, or failing to comply with legal and regulatory requirements.
Can I appeal a ban decision made by Stripe?
Yes, Stripe provides a process for appealing bans. You should respond promptly to any communication from Stripe regarding your account status and follow their instructions for submitting an appeal.
What are some best practices for avoiding chargebacks?
To minimise chargebacks, clearly describe your products and services, communicate shipping times and return policies clearly, and use fraud and chargeback detection tools like Stripe Radar and ChargebackStop. Provide excellent customer service to resolve disputes before they escalate.
Why is maintaining accurate account information important for avoiding a ban?
Accurate account information ensures Stripe can contact you about any issues and verify your business’s legitimacy. It also helps in compliance checks and reduces the risk of your account being flagged for suspicious activity.
