According to industry estimates, the cryptocurrency market is projected to grow to US$12.10 billion by 2030 from US$4.40 billion in 2021. However, some of the best high-risk merchant accounts for cryptocurrency come with high transaction fees and low approval rates for merchants dealing in cryptocurrencies.
Why are Crypto Exchanges Considered High Risk?
Cryptocurrency Merchant Services are considered high-risk because of the following factors:
Still relatively new
The world was introduced to cryptocurrencies in 2009 but the concept is still unknown to millions of people in many countries of the world. Moreover, many banks and governments across the world aren’t sure of how to deal with cryptocurrencies and Cryptocurrency Merchant Services.
Highly volatile market
The world of cryptocurrencies is characterized by a highly volatile market. Bitcoin crashed from US$62.6k in April 2021 to US$29.7k in July 2021. In these times, many people filed chargebacks to get their purchases reversed to recover their hard-earned money. This high volatility of the cryptocurrency market leaves banks and credit card processors with no choice but to consider it as a high-risk business.
Anonymous form of transaction
For many, Cryptocurrency transactions still remain a secretive and anonymous form of transaction that cannot be fully trusted.
Concerns about money laundering
Cryptocurrencies have often been associated with money laundering. For instance, criminals laundered more than US$2.8 billion in 2019 through crypto exchanges. Banks and credit card processors find processing crypto payments to be highly risk which could lead them into never-ending legal troubles.
User risk
There is no way to cancel or reverse a cryptocurrency transaction after it has already been completed. According to some estimates, about one-fifth of all bitcoins have now become completely inaccessible due to lost passwords or incorrect sending addresses. This adds significantly to the risk quotient of cryptocurrencies.
Market Manipulation
There is no denying the fact that market manipulation remains a huge concern in the world of cryptocurrencies with influential organizations, individuals, and exchanges caught acting unethically at many times.
The Way Out
Businesses that deal in the purchase or sale of cryptocurrencies can approach a trusted high-risk merchant account processing provider with an impeccable reputation. Ideally, the processing provider should have years of experience in dealing with high-risk businesses such as cryptocurrency businesses. Also, it should offer a reliable, secure, and PCI-compliant payment platform to process card payments in a safe environment. Moreover, the provider should charge reasonable transaction and processing fees while facilitating seamless integration of the cryptocurrency business and other functionalities with the website or other apps.