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Insights and Expertise

The illusion of simplicity: Why alternative

payment methods rule high-risk industries

option. What remains hidden at first is the silent cost that
these shortcuts introduce into the business model.

High risk
High-risk sectors include operations that already create
higher exposure from a financial supervision perspec-
tive. This does not automatically point to wrongdoing, but
rather highlights the opportunity within the model for
abuse such as criminal activities or tax evasion.

Their risk can be multi-faceted: misuse of funds, client
anonymity, poor traceability, high dispute or even miss-
ing documentation. These are the core elements that raise
concerns for financial institutions, payment providers, ac-
quirers and their banks.

By Viktoria Soltesz Crypto
PSP Angels Crypto enters this already sensitive equation with an en-
he popularity of alternative payment methods tirely different risk profile. Since this payment method is
across high-risk industries came from the dif- not regulated in every country equally there is a huge op-
ference in regulatory pressure between pay- portunity for regulatory arbitrage and abuse of the system.
T ment channels. Certain methods require strict Several banks and payment institutions are also afraid to
onboarding, monitoring and transactional controls, while deal with an asset that is illegal in many countries.
others function under far looser expectations.
Within the blockchain there is an opportunity where
Card networks transactions move through pseudonymous wallets, with-
out strong identity checks, which allows tax evasion or
Card networks such as Visa and Mastercard operate under even criminal activities. While crypto offers speed, global
global scrutiny, which means their acceptance standards access and attractive conversion terms, it also removes the
must reflect the reputational risk they carry. These card structure and liability framework that traditional finance
schemes strictly reject any business model where the rep- depends on.
utation can be at stake, which remains highly subjective,
meaning that even with a fully legal setup, rejection can Crypto as a payment method
still happen.
Adding crypto to a setup that already raises flags creates
This decision has little to do with the actual business ac- far more pressure than most businesses expect. I have
tivity and everything to do with the structure surround- seen merchant operations lose reliable providers, acquir-
ing it. ers and even long-standing bank accounts after introduc-
ing crypto without a strategic plan. Most financial institu-
As more merchants within high-risk sectors face increased tions cannot maintain exposure when fund flow structure,
restrictions from traditional card networks, the shift to- customer background and transaction control fall outside
ward alternative payment methods became inevitable. their internal risk acceptance levels.
E-wallets, vouchers, local transfer methods, crypto-based
tools and open banking-based solutions started replacing If a business is operating in a high-risk sphere, adding
cards, mostly because these methods eliminate the fric- high-risk payment methods only increases the risk from
tion caused by traditional compliance procedures. a payment and banking perspective. More often than not
payments and banking providers react to this increased
Onboarding becomes faster, documentation requirements level of risk with higher fees, worse terms and conditions,
feel lighter, and in many cases, approval comes without or even the total closure of the account.
much interaction. For businesses trying to scale quickly or
operate across multiple regions, this presents a tempting

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