Risk Disclosure
This Risk Disclosure summarises the principal risks associated with applying for and operating high-risk merchant payment processing. It should be read together with our Indemnity & Risk Disclosure Agreement and Terms of Use. Merchants should review these risks carefully and seek independent professional advice before applying.
1. Approval risk
Approval by an acquiring bank or payment service provider is never guaranteed. Decisions are made by independent third parties based on their own credit, compliance and commercial criteria, which may change without notice. Prior approvals, indicative quotes or pre-screening outcomes do not bind any acquirer.
2. Pricing and reserve risk
High-risk merchants typically face higher Merchant Discount Rates (MDR), additional scheme fees, monthly minimums, chargeback fees, retrieval fees and KYC/monitoring fees. Acquirers commonly require rolling reserves of 5% to 15% (or higher) of processed volume, held for 90 to 270 days. Reserves and pricing may be revised at any time based on risk performance.
3. Settlement and cash-flow risk
Settlement may be delayed during initial onboarding, after a spike in chargebacks, during AML or fraud investigations, or where documentation requests are outstanding. Investigation periods of 30 to 90 days — or longer — are normal and expected. Merchants must maintain sufficient working capital to operate during settlement delays.
4. Chargeback and dispute risk
Chargebacks expose the merchant to the disputed amount, the chargeback fee and potential reputational damage. Card-scheme programmes (such as Visa VDMP/VFMP and Mastercard ECP) impose monthly fines and remediation costs once chargeback or fraud thresholds are exceeded. Exceeding these thresholds can result in MID termination and placement on the MATCH/TMF list, which impedes future acquiring relationships for several years.
5. MCC and product-coding risk
Merchant Category Code (MCC) miscoding — whether deliberate or accidental — is treated by card schemes and acquirers as a serious violation. Consequences include immediate MID suspension, freezing of funds, scheme fines passed through to the merchant, MATCH/TMF listing and potential reporting to regulators. Merchants are solely responsible for ensuring their MCC accurately reflects their products and services.
6. Regulatory and licensing risk
Operating regulated activities (gambling, financial services, crypto-asset services, pharmacy, regulated supplements, adult content in regulated jurisdictions, etc.) without the required licence is illegal in most countries and is a frequent cause of MID termination, fund seizure and criminal exposure. Merchants are responsible for obtaining and maintaining all licences and authorisations applicable to their business.
7. Geographic and sanctions risk
Acquirers apply jurisdiction-specific restrictions. Processing transactions involving sanctioned persons, sanctioned jurisdictions or restricted card BINs may result in seizure of funds, termination and reporting to authorities. Sanctions lists are updated continuously; merchants must screen customers and counterparties on an ongoing basis.
8. Operational and platform risk
Outages, payment-gateway downtime, 3DS or scheme rule changes, card BIN re-issuance and consumer authentication failures can disrupt processing. Merchants should build operational resilience and not rely on a single acquirer or gateway.
9. Reputational risk
Public complaints, social-media campaigns, regulator notices and negative media coverage can cause acquirers to revisit risk appetite, increase reserves or terminate. Maintaining ethical practices, accurate marketing and clear refund/cancellation policies is critical.
10. No advice
Information published by VaultPay is general guidance and does not constitute legal, regulatory, tax or financial advice. Merchants must obtain independent advice tailored to their circumstances before making any decision.
11. Acceptance of risk
By applying through VaultPay, merchants confirm they have read, understood and accept the risks summarised above and as set out in our Indemnity & Risk Disclosure Agreement.
Last updated: May 2026. Questions? Contact support@vaultpay.org.uk.