Payment processing platforms, including Stripe, have strict rules for certain high-risk industries. These rules are not just about following laws; they can really affect how you run your business and deal with customers.
Many activities, like adult content, gaming, and cannabis, are closely watched. If your business is in one of these areas, you need to find other ways to take payments. In this article, we'll look at which businesses Stripe doesn't allow and how you can find other payment options.
Key Takeaways
- Stripe restricts services for industries deemed high-risk, impacting payment processing options.
- Alternative payment solutions are available for businesses that cannot use Stripe.
- Be aware of jurisdiction-specific legal and commercial prohibitions.
- Prohibited business categories include adult entertainment, gaming, and marijuana-related industries.
What Are Prohibited Businesses?
Prohibited businesses are those that can't use Stripe for payment. Stripe list certain industries and services that are off-limits. This includes illegal products, some financial services, adult content, and businesses in high-risk areas. These rules help keep Stripe safe and in line with financial laws.
Stripe has a long list of restricted businesses it won't work with. For example, online pharmacies selling prescription drugs are not allowed. Also, gaming, including games of chance, and charity raffles are banned. Marijuana businesses, even where it's legal, are also restricted due to risk and compliance issues.
- Products with CBD or THC, like hemp-based items, are not allowed.
- Adult content, like adult entertainment and adult toys, is banned.
- Travel companies, like airlines and cruises, are seen as high risk and can't use Stripe.
- Tobacco and e-cigarettes are also off-limits.
- Investments, cryptocurrency, and money transmission services are not supported.
Stripe's policies aim to protect the platform and its users from harm or fraud. Following Stripe's rules helps businesses stay legal and keep their payment processing smooth. Knowing what businesses are prohibited can help you make better choices and avoid service disruptions.
Why Stripe Restricts Certain Businesses
Stripe has rules to keep transactions safe and follow the law. This means some businesses, like those in gaming or adult services, face extra checks. These checks help prevent fraud and protect everyone involved.
High-Risk Industries
Certain industries, such as gaming, adult content, financial services, and illegal activities, are deemed high-risk. Stripe and other payment processors limit these businesses to reduce fraud, legal liabilities, and non-compliance. For example:
- Gaming: Heavily regulated, with strict licensing and monitoring.
- Adult Content: Often faces legal and reputational issues.
- Financial Services: Includes payday lenders and debt collectors, with high chargeback rates.
- Illegal Activities: Any business dealing in illegal goods or services is banned from payment platforms.
These businesses may need alternative payment solutions.
Fraud Prevention
Fraudulent activity, like chargebacks and identity theft, is a major concern. Stripe monitors transactions for unusual patterns and signs of fraud, such as:
- Chargebacks: High chargeback rates can lead to penalties or account suspension.
- Unusual Transactions: A surge in activity, especially from new or unverified accounts, is flagged.
- Suspicious Activity: Unapproved purchases or unusual locations can trigger account reviews.
Compliance with Laws and Regulations
Stripe must comply with various laws, such as:
- Anti-Money Laundering (AML): Monitoring transactions for money laundering risks.
- GDPR: Protecting customer data in the EU.
- Local Regulations: Compliance with specific country laws.
Failure to meet these requirements can lead to penalties or account termination.
Reputation Risk
Businesses with controversial products or negative media attention can harm a payment processor's reputation. Stripe aims to avoid associations with such businesses to maintain public trust and customer loyalty.
Terms of Service Violations
Violating Stripe’s terms, such as deceptive practices or failure to provide required documentation, can lead to account restrictions. Stripe enforces these rules to ensure secure and trustworthy service.
Categories of Restricted Businesses
Stripe avoids certain industries because of risks and legal issues. Adult content and gaming are big no-nos.
Adult Content and Services
Businesses involved in adult content or services often face restrictions due to the societal and legal challenges associated with such industries. These businesses may be targeted by regulatory authorities and are often subject to scrutiny related to age verification, consent, and content legality.
- Adult Entertainment: This includes websites, subscription services, and any business offering explicit video or imagery. Such services often face restrictions due to moral, cultural, and legal concerns in different regions. Some countries have strict regulations governing the dissemination of adult content, and payment processors avoid working with businesses that may potentially violate these laws. Many countries also impose age verification requirements for consumers to ensure content is only accessible to adults.
- Companion Services: While not explicitly illegal in many regions, companionship services often face difficulties with payment processors due to their association with adult services. Some jurisdictions have legalized forms of adult services, while others impose strict bans. Due to the stigma and potential legal issues, payment processors may avoid working with companionship agencies to mitigate their exposure to risks related to trafficking, exploitation, or other illegal activities.
- Explicit Content: This category includes businesses that sell explicit images, videos, or text content, as well as any site providing access to adult content that is not classified under general entertainment. Payment processors are hesitant to serve these businesses because they may be subject to additional scrutiny from regulators, or they could risk alienating customers or investors due to the stigma surrounding adult content.
Gaming and Betting
The gaming industry is heavily regulated, and businesses involved in gaming or betting often face challenges in obtaining payment processing services, especially online.
- Online Gaming and Sports Betting: These businesses, particularly those offering real-money gaming, are restricted in many countries due to local laws prohibiting or strictly regulating gaming activities. Even in jurisdictions where online gaming is allowed, payment processors may be wary of working with such businesses because of the potential for fraud, chargebacks, and other risks. Furthermore, platforms often require extensive licensing and oversight, making them a high-maintenance industry for payment processors.
- Fantasy Sports: While some fantasy sports services are legally recognized, others may operate in a gray area. Fantasy sports websites can sometimes resemble gaming platforms, making them vulnerable to the same restrictions as traditional gaming or sports betting sites. Legal gray areas may make it difficult for businesses in this sector to find a payment processor willing to engage with them.
- Cryptocurrency Betting: As cryptocurrency-based betting platforms operate in decentralized, unregulated environments, they pose unique risks for payment processors. Many jurisdictions do not recognize or regulate cryptocurrencies in the same way as traditional fiat currencies, making cryptocurrency betting platforms harder to monitor and control. This uncertainty can lead payment processors to avoid supporting cryptocurrency betting, particularly in markets with strict anti-money laundering (AML) laws.
Illegal Activities
Businesses that engage in illegal activities face automatic bans from payment processors, as these activities not only break the law but can expose the platform to significant legal and reputational risk.
- Counterfeit Items: Selling counterfeit or pirated goods is a clear violation of intellectual property laws and poses a risk to both the seller and the payment processor. Counterfeit products undermine legitimate businesses and create potential liabilities for payment processors. Products like fake designer clothing, electronics, or pharmaceuticals are often flagged by payment processors, leading to account restrictions.
- Drugs and Unauthorized Goods: Payment processors are prohibited from supporting businesses that sell illegal drugs, controlled substances, or any unauthorized items that violate local or international laws. This includes both physical products (e.g., illicit drugs, weapons) and digital goods (e.g., stolen or pirated content). These activities are considered high-risk, and facilitating payments for them can result in criminal charges for both the merchant and the payment processor.
Financial Services
Some financial services businesses, particularly those offering high-risk services, may be restricted by payment processors due to concerns about fraud, consumer protection, and regulatory compliance.
- Payday Loans: These services, which offer short-term loans at high interest rates, are often considered predatory in nature. They can trap borrowers in cycles of debt, and many jurisdictions have enacted laws regulating or banning payday lending. Payment processors typically avoid working with payday loan businesses due to the potential for consumer complaints, high chargeback rates, and regulatory scrutiny.
- Debt Collection: Debt collection services can face regulatory hurdles and are often subject to strict consumer protection laws. Payment processors may avoid debt collection businesses because of the potential for legal challenges, consumer complaints, and negative public perception.
- Credit Repair Services: These businesses help consumers improve their credit scores, but they are often scrutinized by regulators for potentially deceptive or misleading practices. Credit repair services must follow specific laws governing their operations, and violations can lead to legal action or restrictions from payment processors.
- Cryptocurrency Exchanges and ICOs: Cryptocurrency businesses that do not meet regulatory requirements or operate in unregulated markets are at risk of facing restrictions from payment processors. This includes initial coin offerings (ICOs) that lack proper legal oversight or fail to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.
Tobacco and Related Products
Tobacco-related businesses face increasing scrutiny due to public health concerns and regulations governing the sale and distribution of these products.
- Cigarettes and Cigars: The sale of tobacco products is highly regulated, and many payment processors choose to avoid businesses involved in the sale of cigarettes or cigars due to the legal and reputational risks associated with these products. This includes ensuring compliance with age verification laws and the growing movement toward tobacco-free environments.
- E-Cigarettes and Vaping Products: As the e-cigarette industry has grown, so have regulatory concerns regarding the safety and marketing of these products. In some regions, vaping products are subject to additional restrictions, including age limitations and product regulations. Payment processors may restrict businesses that sell e-cigarettes or vaping devices to avoid potential legal challenges and public health concerns.
Controlled or Regulated Goods
The sale of products that are heavily regulated or deemed dangerous is another category of businesses that may face payment processing restrictions.
- Firearms and Ammunition: The sale of firearms, ammunition, and related products is tightly regulated in many countries. Payment processors are often reluctant to engage with businesses in this industry because of the legal complexities involved, including background checks, licensing requirements, and international restrictions. The reputational risks associated with supporting such businesses are also significant.
- Prescription Drugs and Controlled Substances: The sale of prescription drugs or controlled substances without proper licensing is illegal in many regions. Even legal businesses that sell prescription medications must comply with strict regulations, including verifying prescriptions and maintaining licensing. Payment processors generally avoid businesses in this sector to ensure compliance with laws governing drug distribution.
Hate Speech and Violence
Businesses that promote hate speech, violence, or discrimination are typically restricted from using payment processors due to the potential for legal and reputational damage.
- Hate Speech: Payment processors, in alignment with anti-discrimination laws, generally prohibit businesses that promote hate speech or discriminatory content. This includes platforms or organizations that spread messages of racism, sexism, homophobia, or other forms of hate-based ideologies. Engaging in or facilitating hate speech can lead to social and legal backlash, prompting payment processors to refuse service to these businesses.
- Violence and Extremism: Any business or group promoting violence or extremist ideologies, such as organizations inciting terrorism or hate-driven violence, will be banned from payment processing services. Such businesses often violate international laws related to human rights and public safety, making them high-risk clients for payment processors.
Multi-Level Marketing (MLM) and Pyramid Schemes
Multi-level marketing businesses and pyramid schemes often raise concerns about the legitimacy of their business models and their potential for consumer exploitation.
- MLM: MLM companies operate on a structure where individuals recruit others into the business, often with the promise of earning commissions based on the recruitment of new participants. While not always illegal, MLM practices can be controversial due to their resemblance to pyramid schemes, which are prohibited in many jurisdictions.
- Pyramid Schemes: These illegal schemes involve recruiting participants who pay into the system, with the promise of receiving commissions for bringing in new recruits. The structure is unsustainable, and participants at the bottom of the pyramid often lose their investments. Payment processors avoid working with these businesses to prevent supporting fraudulent and exploitative activities.
Adult Services (Non-Content)
Services related to adult interaction but not explicitly related to content are still considered high-risk for payment processors due to potential legal and ethical challenges.
- Dating Services: Businesses offering adult dating services, including matchmaking, relationship advice, or companionship services, may be restricted by payment processors because of potential links to adult content or adult services. These businesses often face legal challenges related to age verification, consent, and regulation in different regions.
- Relationship Advice: While offering relationship counseling or advice is legal, some businesses in this sector might get restricted due to their association with adult content or services that cater to high-risk behaviors. Payment processors may take a conservative approach to mitigate reputational damage and ensure compliance with legal standards.
Unlicensed or Unregulated Products
Selling products that are not licensed or regulated by appropriate authorities can result in payment processor restrictions.
- Unlicensed Software: The sale of software that violates intellectual property laws, such as pirated software or illegal digital downloads, is prohibited by payment processors. This includes counterfeit software or services that infringe on copyrights, trademarks, or patents.
- Counterfeit Products: Selling fake or unauthorized versions of branded products can lead to significant legal liabilities, including lawsuits from original manufacturers. Payment processors are typically wary of businesses selling counterfeit goods, as they can face legal and reputational consequences for facilitating such transactions.
Health-Related Restrictions
Health-related businesses that deal with unapproved treatments or products, particularly those with unregulated claims, often face payment restrictions due to regulatory and safety concerns.
- Unapproved Supplements: The sale of health supplements that have not been approved by regulatory bodies, such as the FDA, can result in consumer harm and legal risks. Payment processors may restrict businesses selling unapproved or unregulated dietary supplements to protect themselves and their customers from fraudulent or harmful products.
- Body Modifications: Services that offer body modification procedures, such as tattooing, piercing, or more invasive surgeries, may also face restrictions if they lack proper licensing, certifications, or hygiene standards. Payment processors often avoid businesses in this sector due to potential health risks and regulatory concerns.
Category
Description
Adult Content and Services
- Adult Entertainment
- Companion Servic
- Explicit Content
Gaming and Betting
- Online Gaming and Sports Betting
- Fantasy Sports
- Cryptocurrency Betting
Illegal Activities
- Counterfeit Items
- Drugs and Unauthorized Goods
Financial Services
- Payday Loans
- Debt Collection
- Credit Repair Services
- Cryptocurrency Exchanges and ICOs
Tobacco and Related Products
- Cigarettes and Cigars
- E-Cigarettes and Vaping Products
Controlled or Regulated Goods
- Firearms and Ammunition
- Prescription Drugs and Controlled Substances
Hate Speech and Violence
- Hate Speech
- Violence and Extremism
Multi-Level Marketing (MLM) and Pyramid Schemes
- MLM
- Pyramid Schemes
Adult Services (Non-Content)
- Dating Services
- Relationship Advice
Unlicensed or Unregulated Products
- Unlicensed Software
- Counterfeit Products
Health-Related Restrictions
- Unapproved Supplements
- Body Modifications
Using High-Risk Merchant Accounts as an Alternative
Businesses in high-risk industries face challenges with traditional payment processing. High-risk merchant accounts offer a solution. They allow you to accept payments securely and reach more customers.
High-risk accounts have higher fees to cover risks like chargebacks and fraud. You might also need to pay annual fees to stay compliant, especially in industries like telemarketing and companionship services.
- High-risk merchant accounts support transactions in multiple currencies.
- They often provide enhanced fraud protection and security measures.
- Rolling reserves, which require holding a percentage of transactions to cover potential chargebacks, are frequently implemented.
- Settlement periods for high-risk accounts can be longer, affecting cash flow.
Look for one that offers payment solutions tailored to your industry. PayKings, for example, has strong fraud prevention tools and a high approval rate for high-risk accounts. Working with an experienced provider can give you access to advanced security features.
When looking at high-risk merchant services, show you're financially stable and have a plan to reduce chargebacks. Expect to pay more than standard accounts and try to negotiate better terms. With the right payment solutions, you can overcome the challenges of being classified as high risk.
Find Your High-Risk Merchant Account with PayWisor
If Stripe's rules block your business, PayWisor offers high-risk payment processors. They help businesses that traditional payment processors won't serve. This way, your business can keep running smoothly.
PayWisor knows the special hurdles high-risk industries face. They provide services made just for these businesses, like adult content and e-cigarettes. They also use top-notch fraud prevention to protect your business from chargebacks and legal trouble.
Talk to our payment expert and get unbiased advice on finding the best high-risk merchant account for your business.
Conclusion
Stripe’s restrictions on certain high-risk industries highlight the importance of understanding payment processing rules and finding suitable alternatives. If your business falls into one of the prohibited categories, options like high-risk merchant accounts can help you maintain secure and legal transactions. Though these solutions may involve higher fees and more strict requirements, they provide the necessary support for industries such as adult content, gaming, and cannabis.
Providers like PayWisor specialize in catering to high-risk businesses, offering tailored solutions with enhanced fraud protection and compliance support. Exploring these alternatives ensures your business can continue to operate smoothly despite payment platform restrictions.
FAQ
How can I find out if my business is at risk of being restricted by Stripe?
You can review Stripe’s prohibited business list and Terms of Service to check if your business falls into any of the restricted categories. If you're unsure, it's a good idea to contact Stripe directly to ensure compliance.
What are the consequences if my business is restricted by Stripe?
If your business is restricted, you may face suspension or termination of your Stripe account, preventing you from processing payments. This could disrupt your operations and affect your reputation with customers.
What documentation is needed to apply for a high-risk merchant account?
You'll need to show your ID and business registration. You'll also need financial statements and details about your business. This helps set up a high-risk merchant account.
