High Risk Merchants for PayTo

AP+ is temporarily restricting high-risk merchants from using PayTo.

The objective behind temporary process is to establish PayTo as a highly trusted payment channel while ensuring that risk-based decisions within financial institutions do not lead to further variability in the service Australians receive with PayTo. This measure is particularly relevant for high-risk businesses that operate in industries prone to chargebacks and fraud prevention challenges.

The primary risk to be controlled is fraudsters crediting liquid accounts, such as a bank account, which can either be re-directed quickly or converted to other liquid instruments. High-risk merchants, particularly those dealing with credit card and debit card transactions, often experience chargebacks, making them subject to stricter regulatory oversight.

High-risk merchants are not being excluded from banking services. All other NPP services remain unaffected to high-risk merchants, including Azupay’s PayOut and PayID-based solutions. However, due to the nature of high-risk industries, businesses may experience higher fees and specific restrictions in payment processing.

This restriction will be removed from July 2025 once PayTo industry-wide risk management has matured, allowing for more streamlined high-risk merchant account approval process.

Types of Merchants That Are Impacted

High-risk merchants are those in the following Merchant Category Codes (MCC):

· MCC 6211: Security Brokers and Dealers

· MCC 6530/6540: Remote Stored Value Load-Merchants

· MCC 4829: Wire Transfer Money Orders

· MCC 7995: Betting

Additionally, any merchant that enables an e-wallet, stored value facility, or any other liquid account for its customers is considered a high-risk merchant, regardless of the applicable MCC and would be required to comply with the temporary AP+ review and approval process.

Why Are High-Risk Merchants Restricted?

High-risk merchant accounts often face higher scrutiny from payment processors due to their increased exposure to disputes and fraud risks. Payment processing for these industries requires stricter compliance with regulatory requirements to ensure security and prevent fraudulent activities.

Many high-risk businesses require specialised payment processors that can handle their unique needs, including dispute management, refunds, and flexible pricing structures for their real time payment based transactions. Businesses in high-risk industries may also encounter limitations in accepting credit card and debit card transactions through mainstream payment processors.

While restrictions on high-risk merchant accounts are temporary, businesses should be prepared for ongoing regulatory changes and adjustments in payment processing policies. Partnering with the right payment processor can help mitigate risks associated with disputes and improve transaction security.