Why Approval Rates Matter More in High-Risk Payments?
For merchants in high-risk industries — from nutraceuticals and gaming to crypto and adult content — every declined transaction is lost revenue. Approval rates can vary dramatically between providers: while a low-risk e-commerce store might see 95–98% approval, high-risk merchants often struggle to stay above 80%.
That 15–20% gap can be the difference between profit and loss. And it’s not always due to fraud or bad data — it often comes down to risk scoring, card issuer behaviour, and how transactions are routed through acquirers. Improving approval rates isn’t about tricking the system. It’s about working smarter within it: optimising your data, compliance, and partnerships so that banks and card schemes see your transactions as legitimate and low risk.
The Core Problem: How High-Risk Merchants Get Flagged
Card networks such as Visa, Mastercard, and Amex use automated systems to evaluate every payment request. Each transaction passes through multiple layers of checks — fraud scoring, issuer approval, and scheme compliance. For high-risk businesses, several issues increase the likelihood of declines, including high chargeback ratios (often above 0.9%), risky MCC codes, mismatched merchant descriptors, cross-border transactions, missing authentication, and poor routing between acquirers.
Many of these problems can be corrected. The key is understanding where the declines occur — at the gateway, acquirer, or issuer level — and addressing each layer systematically.
Step 1: Analyse Decline Codes
Start by reviewing decline reason codes from your processor or gateway dashboard. These reveal whether your issue lies in soft declines (temporary, such as insufficient funds or network errors), hard declines (permanent, such as stolen cards or restricted MCCs), or issuer declines caused by risk or fraud flags.
High-risk merchants often see a large number of issuer declines, especially for cross-border transactions or recurring payments. By classifying declines correctly, you can decide whether to retry, reroute, or adjust your setup. If your provider doesn’t share detailed decline data, it may be time to work with one that does.
Step 2: Use Intelligent Transaction Routing
One of the biggest levers for improving approval rates is smart routing — directing transactions through the acquirer most likely to approve them. For example, EU-issued cards routed via an EEA-licensed acquirer avoid unnecessary PSD2 scrutiny, while UK or US cards perform best with domestic acquirers.
Advanced PSPs and NBFIs use AI-driven routing that learns which issuer–acquirer combinations deliver higher acceptance. For high-risk merchants with global customers, this can raise approval rates by 5–10% without any change in product or pricing.
Step 3: Optimise Your Merchant Descriptor and Billing Logic
Confusing billing descriptors causes countless unnecessary declines. Issuers and fraud systems depend on descriptor familiarity to assess risk. Always use a consistent trading name across your website and descriptor, include a support phone number or URL, and avoid abbreviations.
Align your billing frequency with customer expectations. Predictable billing cycles, clear renewal terms, and upfront notifications reduce chargeback risk and false fraud flags.
Step 4: Strengthen 3D Secure (3DS2) and Authentication
Under PSD2 Strong Customer Authentication (SCA) rules in the UK and EU, 3D Secure 2 (3DS2) remains the best way to verify customers and assure issuers that the transaction is genuine. Some merchants disable 3DS to avoid friction, but this can backfire: unauthenticated payments are more likely to be declined.
Enable frictionless 3DS2 flows for trusted, low-value transactions, use whitelisting where permitted, and integrate fraud scoring tools to strike the right balance between security and user experience. Merchants adopting full 3DS2 compliance often see approval rates rise by 3–6 percentage points over time.
Step 5: Clean Your Data — BIN, Address, and Device
Issuers rely on data consistency to detect fraud. Even small mismatches can trigger declines. Ensure the BIN (first six digits of the card) matches your acquirer’s region, validate address and postcode fields for AVS checks, and capture device and browser fingerprints.
Accurate transaction metadata helps build trust with issuers’ automated risk systems. The cleaner your data, the higher your chances of approval.
Step 6: Build Trust with Acquirers
High-risk payments don’t need to mean high friction. The more your acquirer understands your business model, refund policies, and customer patterns, the more confident they are in approving your transactions. Be transparent about your operations, share chargeback metrics proactively, and provide sales forecasts.
Open communication allows acquirers to adjust their risk parameters over time — directly improving your approval rates and helping you avoid future freezes or reserves.
Step 7: Use Dynamic Retry and Recovery
Soft declines — those caused by temporary issues like insufficient funds — are often recoverable. Implement dynamic retry logic that automatically retries failed payments after a short delay. Avoid multiple immediate retries, which can look suspicious and trigger further blocks.
For subscription or recurring billing, use card updater tools to refresh expired or replaced cards automatically. Over time, this reduces decline rates and stabilises cash flow.
Step 8: Work with a Specialist High-Risk Provider
Not all processors handle high-risk payments effectively. Traditional acquirers tend to apply conservative approval filters, while specialist providers use adaptive risk scoring and multi-acquirer setups.
Choose partners offering access to multiple acquirers across regions, real-time fraud monitoring, recurring billing support, and transparent reporting. A good provider will work with you to balance conversion rates against compliance — not simply reject transactions by default.
Regional Examples: UK vs US
United Kingdom
UK merchants operating under the FCA’s PSD2 framework must apply SCA but can benefit from frictionless exemptions for trusted transactions and subscriptions. Using EEA-based acquirers (in Ireland, Lithuania, or Malta) can improve cross-border approval rates into the EU by as much as 7%.
United States
In the US, domestic routing and AVS checks remain crucial. Failing to collect ZIP code or CVV data leads to higher declines. Working with a US-based high-risk acquirer ensures better acceptance for restricted MCCs such as CBD, supplements, or coaching services.
Despite different regulatory systems, both regions reward one thing above all: clean, consistent data and a well-documented compliance record.
Measurable Results
High-risk merchants who systematically improve routing, authentication, and data hygiene typically achieve 5–10% higher approval rates within three to six months. Lower chargeback ratios, faster settlements, and higher customer lifetime value often follow.
A merchant processing £200,000 monthly could recover £10,000–£15,000 in previously declined payments simply by refining routing and authentication practices. These improvements require effort upfront but deliver compounding returns.
Conclusion
In high-risk payments processing, approval rates are not just a technical metric — they are a reflection of your credibility, compliance, and operational discipline. While declines are inevitable, most can be managed with the right structure and insight.
By understanding where your declines occur, optimising routing, and building transparent relationships with acquirers, you can shift from reactive firefighting to proactive growth. High-risk does not mean unbankable; it simply requires a smarter approach to data, security, and trust.
The goal isn’t to achieve perfect approval — it’s to make every legitimate transaction count. In 2025 and beyond, the merchants that combine strong compliance with intelligent processing will not only survive regulatory tightening but thrive under it.
If you’d like personalised guidance on increasing approval rates within high-risk processing, feel free to book a complimentary consultation with our team.
For additional industry insights, explore our latest article: “How PSPs Analyse Your Risk Before Onboarding?”
Disclaimer
Widelia and its affiliates do not provide tax, investment, legal, or accounting advice. Material on this page has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, investment, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Please consult https://widelia.com/disclaimer/ for more information.
