Payment systems are important for everyone, from online stores to hotel and cloud platforms. Nowadays, most customers can pay without fear, and business owners can get rid of the headache of complying with payment system security protocols. And at the same time not to lose out on conversions.

The entrepreneur’s task is to take care of the service for the client and make the purchase convenient and safe. Choosing the best payment gateway is difficult for most business owners, especially so for high-risk companies. In this article, we’ll look at how the modern world of payments is changing and what options are available to these businesses.

Payment Systems Are Tightening The Screws

A high-risk business requires serious attention at all stages of its operation. Moreover, the classic banking system is very cautious with such companies and rarely opens an account, and if it does, then not for every business, but for the one which is potentially interesting to the bank. It takes a lot of time to open an account as banks accepting risky business are rather old-fashioned and the list of required documents and questions differs from the standard application.

Frequent problems of risky business:

Need an account to receive international payments to a bank account opened in the company’s name – but the bank refuses to open an account in the company’s name;Plan to accept cryptocurrencies, for example, to protect customers’ privacy. Cryptocurrency exchanges do not provide a fast and convenient exchange directly between customers and businesses, and banks avoid working with crypto processing.Businesses are considered risky and can’t pay employees fiat money. Businesses are willing to pay in cryptocurrency, but there is no convenient solution for converting them into fiat.Risky businesses have a European license, but they also have U.S. clients who want to pay in dollars. But it is hard to open an account in Europe to accept USD. This leads to difficulties in retaining customers.Third-party services are constantly needed to ensure normal functioning: international transfers, currency conversions, and cryptocurrency transfers to fiat. Everything requires additional commissions and time.

All these problems, combined with the unwillingness of payment systems to cooperate with high-risk businesses, require unconventional solutions from business owners. While Mastercard and Visa are introducing new rules for merchants with high risk, one of the best solutions for businesses is community-oriented or P2P payments.

P2P Payments. How Does It Work?

In recent years, P2P transactions have gained popularity as a convenient alternative to cash payments, and such services are growing rapidly. 

Short for peer-to-peer or person-to-person, P2P payments are money transfers from one person to another person. P2P transactions are mostly used to share expenses, pay rent, pay for occasional services, buy from private sellers in online marketplaces, or simply send money to family and friends.

Peer-to-peer money transfers go back to PayPal and became widespread thanks to solutions like Venmo. Today, all you need to use such a system is to have a bank account or bank card.

Once you choose a P2P app, you simply install it and sign up for an account using your email address and/or phone number. You will then need to connect your card or bank account to the app to start making payments.

Sending a payment is often a simple process that takes only a few seconds. You can usually find other users by their username, email, or phone number. Depending on which service you use, a P2P transfer can take anywhere from a few minutes to several days.

There is a wide variety of P2P payment apps available, some work only with individuals, and others are created especially for businesses. You should carefully research your options before choosing the right one for you.

Of course, not all businesses have the ability to use these payment systems. First of all, they often have limits on transactions, and second, this is a bad choice for B2B payments.

It seems that high-risk businesses, or at least part of them, are in a tough situation: they can not use traditional payment systems, on the account of banks refusing to work with them, and the modern solutions do not satisfy their needs. All that is left to do is to go back to something that has been working for thousands of years – cash payments. 

Cash Payments As Market Milestone

Cash payments can be used for selling goods, performed work, or services immediately after their sale or at the moment of signing a consignment note or an act of performed works. It should be noted that any business can make cash transactions, it is probably the only payment method that is available more widely.

Acceptance of cash means that you have money made immediately after the purchase. Card transactions often require a short waiting period – usually from 24 hours to two days – between the customer’s purchase and your access to the payment. With cash, you have immediate access and control over the money you earn without having to deal with a third-party entity or wait for the transaction to complete.

Additionally, with every credit card, there comes a transaction fee. Depending on 3rd party credit card processing, these usually range from 0.5% to 5.0% for purchases and can add up quickly over time. If you’re just starting out, these fees can be difficult to manage and reduce your profits. Also, don’t forget the cost of the equipment required to take card payments.

Which payment method a business chooses to settle depends entirely on its features and needs, but given the current state of the market and the banks’ attitudes toward high-risk businesses, you will soon have to make one choice or the other.