Shutdown by Shopify Payments? Here's - Everything You Need to Know - Slackful

High Risk Industries

In the Merchant Processing space there's a ton of businesses, products, and industries which are considered "high risk". These are deemed high risk for a variety of reasons. Some of these products or services just have higher than average numbers of chargebacks, others are kind of grey market industries, and some there's seemingly no reason besides other processors have deemed them high risk. 

And lastly, some are just because it puts processors at risk of being drawn into lawsuits, so things like supplements and nutraceuticals.

There's many high risk businesses which are fairly obvious ie your selling vaping supplies, weed pipes, etc. Many people would never expect something like say hair extensions or fake hair to be high risk, but it is. Shopify Payments and Stripe are both run by Stripe so the TOS, and lists of prohibited services are fairly similar. 

Up until recently dropshipping was actually listed on Stripe's list of prohibited businesses, but it was recently taken off. If you want to read the lists here is the list of Shopify prohibited businesses, and here is the list of Stripe's Prohibited Businesses..

What Will Get You Shutdown

One thing to keep in mind is just because your specific business or product isn't listed, doesn't mean they can't shut you down. They purposely leave the list vague, and it says at the end, they can essentially shut you down for any reason.

Again, some obvious things that will get you shutdown, high number of credit card chargebacks, excessive returns, as well as being in obviously grey area industries like weed pipes, vaping supplies, selling college essays, etc. Anything related to selling cryptocurrency, and not just that sometimes even selling something like Ledger or Trezor wallets, just because they are in the crypto industry and keywords about crypto are on your site you may be shutdown. Anything that violates others intellectual property ie selling movie, tv, video game characters, bands, singers or celebrities merch you don't have the rights to. No you can't sell Backwoods Blunt hoodies if you don't own the rights. No drugs, supplements, or drug paraphanalia. Even adult related products are a 50/50 whether you'll get shutdown. 

What To Do After Shopify Payments Shuts Me Down?

Many people's first reaction is to run out and start antoher store and setup processing through Shopify payments. It may get flagged right away, you may get away with it for a few weeks but this isn't a longterm strategy.

Some people will try to go through Paypal. Paypal and Stripe have different policies, sometimes Stripe is more lenient, sometimes Paypal is, so you can give Paypal a try. Here's the problem, once you are considered high risk chances of other processors considering you high risk are very high.

Here's another thing that sucks about not using Shopify payments. Even though Shopify won't let you use their payment platform and kicked you off, they are still going to penalize you and charge you an additional 2% for not using their payments so if your taking Paypal or your own merchant processing, your gonna get hit with an additional 2% on top of the 3% or so your processor is charging you. 

High Risk Merchant Processors

There's certain banks and processors that specialize in working with high risk industries. One thing to be very careful of, in the high risk space there's more scammers than there are legit companies. Two of the only companies I've run across who can be relied upon are Durango Merchant Services and Charge . 

Now I know many people here don't have much money and are really bootstrapping. You've been spoiled by Paypal and Stripe, a "real merchant account" typically costs money. Your normally looking at about $15 to $30 per month to have the account. Then to hook it up to Shopify you'll need an Authorize.Net account or another gateway, that can run like $6 to $30 a month. The true cost is about $6 but most merchant processors mark it up, so your looking at probably $20 to $40 per month for the merchant account. 

Wrapping Up

For those of you just starting out, or early on in your business who are just discovering that payment processing is going to be an issue. Industries like this that are regulated or how to operate in can be very lucrative since there's a moat to keep people out. That said it's also goign to be a challenge for you. You'll likely over the years have ongoing issues with payments and if payments are a challenge advertising likely will be too since many mainstream advertising channels don't allow high risk industries either.

If your just starting out, don't have much experience in ecommerce, business, or marketing you may want to consider moving on to an industry that's easier to operate in. If you stick with it again it can be very lucrative, but there's going to be challenges.