Low Risk refers to businesses that are generally considered to have a low likelihood of experiencing chargebacks, fraud, or other financial risks. Factors contributing to a low-risk classification might include the following:
- the merchant’s industry
- average transaction size
- processing history
- chargeback ratio
- length of time the merchant has been operating
- the merchant’s financial stability
- merchant’s history of complying with legal and regulatory requirements
Low risk businesses often operate in stable industries, have a consistent and established customer base, and do not sell goods or services that are commonly associated with fraud or other financial risks.
Because low-risk merchants present less risk to payment processors and acquiring banks, they are often able to secure more favorable terms, such as lower processing fees and less stringent contract requirements.