Why Do Start-Ups Require High-Risk Payment Gateways?

The young generation is opting for start-ups with new and innovative business ideas. Dedication and hard work are required to achieve success with these start-ups. One of the tough decisions is choosing the right payment gateway, which impacts customer growth.

High-risk payment gateways like PayPal, Passion, PaySpace, CCBill fees, PayLings, etc., are the best service providers ensuring a high success rate. Read on to know that start-ups get benefits from high-risk payment gateways.

Why Do Start-Ups Require High-Risk Payment Gateways?

What are Payment Gateways?

Whether a start-up or large-scale business, the merchants want to provide the customers with easy, safe, and quick payment options. Nowadays, many customers prefer to make their payments using credit cards, debit cards, UPI, etc.

So, choosing the right payment gateway for business has become a crucial decision for merchants. It plays a significant role in the growth and development of companies.

Payment gateways are software with which the merchants can receive credit card payments from their customers online. A payment gateway gathers the customer’s payment details and conveys them to the merchant acquiring bank & payment processor.

It also encrypts the payers’ sensitive payment and personal data and thus protects them from fraudsters or third parties.

How Does a Payment Gateway Function?

The payment processing between a merchant and a customer through the payment gateway takes place in the following stages:

  1. After making a purchase, a customer inserts their bank card details on the checkout page
  2. Then, the payment gateway helps in the encryption of the payment and personal information of the customer
  3. The encrypted data is then dispatched to the payment processor
  4. The payment processor implements the details of the transaction to the card-issuing bank
  5. The bank either rejects or accepts the payment and gives notification to the payment processor
  6. The merchant gets notified regarding the payment via the payment gateway

Types of Payment Gateways

Hosted Payment Gateways

In this type of payment, the payer gets redirected from the merchant’s website to the hosted payment page of the payment processor. After submitting the payment details, the payer is sent back to the merchant’s website to conclude the checkout.

In a hosted payment gateway, a third-party payment processor is involved in handling everything. The merchant does not manage or collect the payment details of the customer. This type of transaction is completely safe and PCI compliant.

Self-Hosted Payment Gateways

Third-party payment providers don’t exist in self-hosted payment gateways. The merchant gathers and keeps the customer’s payment details and conveys these to the payment processor.

The merchants have complete dominance over the payment process using self-hosted payment gateways. This payment gateway is more time-consuming and expensive than hosted payment gateways.

API Payment Gateways

The application programming interface of the payment processor is linked with the merchant. This type of gateway is known as the sub-category of self-hosted payment gateway.

The customers get their debit or credit card details at the checkout page and execute the payment while staying on the merchant’s website. The whole payment procedure lies in the merchant’s hands.

CCBill’s payment gateway is one of the best and most reliable API payment gateways. The start-ups that require a fast and efficient payment process can opt for an API payment gateway.

Local Bank Integration

In this gateway, the payer gets redirected to initiate the payment, which is set up and supported by the bank. After completing the payment, the payer returns to the merchant’s website.

Local bank integration gateways are easy to use and suitable for start-ups ready to accept online payments. But this type of gateway does not include refunds, and hence chances of chargebacks are higher.

How Do Start-Ups Benefit from High-Risk Payment Gateways?

Here are the top six reasons why start-ups do require high-risk payment gateways:

Quick and Secure Transactions

Merchants get payments 50 times faster than standard gateways with high-risk payment gateways. Faster and safe transactions provide the most satisfactory shopping experience to the customers. At high-risk payment gateways, the approval of payments takes only seconds, and payers need not wait for a long time.

The High Transaction Success Rate

A large amount of successful transactions is vital for start-up growth. An unsuccessful payment means a lost customer and harms the business growth.

Moreover, payment failure also leads to increased chargebacks, which ultimately cause business loss. A higher transaction success rate makes the customer rely on the merchant for more online purchases.

Fraud Detection and Prevention

Most high-risk payment gateways have advanced fraud detection tools to prevent cybercrime. Parameters like transaction data verification, IP tracking, & blacklisting of fraudsters help secure the customers’ payments.

This indirectly makes the start-ups more trustworthy to the customers and increases the business. Payment gateways like PaySpace,, PayKings, etc., include fraud detection & prevention tools.

Affordable Charges

The transaction fees of high-risk payment gateways are comparatively low, starting at 1.2% only. The extra charges depend on the transaction’s business types and volume. This helps the start-ups in savings and investing the money in their business.

Numerous Payment Methods

Lack of payment options is a significant drawback for start-ups or online businesses. If the customer fails to find a preferred payment option, he can cancel the purchase. This can increase the failure rate of the start-ups.

So, it is the responsibility of the start-ups to choose a high-risk payment gateway with numerous payment methods. PayPal is one of the top high-risk payment gateways with more than 300 payment options.

Chargeback Prevention

Chargebacks are one of the main reasons for business loss. Default payment systems, lack of refund, etc., increase the chances of chargebacks. So, the company or start-up must work with a payment gateway that can lower the reasons for chargebacks. PaySpace has a maximum of 90% chargeback cases resolved in favor of merchants.

Bottom Line

Many start-ups shut down within the initial few years. This happens because the payment providers cannot provide all the crucial functions for a smooth and secure payment process.

So, if you are planning for a start-up, you must choose a good payment gateway to achieve success. We hope this article will help you choose the right payment gateway for your new business.

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