High-risk merchant
A merchant whose industry or track record leads the acquirer to expect more chargebacks, fraud or regulatory trouble than usual.
The risk is rarely moral; it is financial. An acquirer is on the hook for a merchant's chargebacks if the merchant disappears, so anything that makes disputes likelier raises the risk: delivery long after purchase as with travel firms, subscriptions customers forgot about, online gambling, dating services, supplements sold on free trials. The card networks flag several of these industries through the merchant category code, 7995 for betting being one, and require acquirers to register and monitor them separately.
Landing in that bucket costs money: a higher merchant discount rate, a rolling reserve that withholds part of revenue for months, and usually an acquirer that specialises in high risk. Handle it badly and the next stop is a chargeback monitoring programme and eventually the MATCH list, after which accepting cards at all becomes difficult.