[PeterisP]

If a merchant type has 90% good merchants and 10% bad merchants, then that's too many bad merchants - this means that you either have to treat all of them as very risky; or adopt pain-in-the-ass filtering to make it more like 99+% good / <1% bad if it can be done; or charge a totally uncompetitive 10% extra fee from each payment to cover your risks.

It's not enough for you to be good. If an unreasonably large proportion of merchants in your segment are bad, then you can't be trusted to be good unless there are easily distinguishable factors that differentiate you, or the volumes are high enough to warrant the expense of doing a proper audit of your business, as the some examples Stripe describes.

[eonw]

or learn to do proper due diligence and stop blanket blocking what could be very profitable clients.

[PeterisP]

Proper due diligence is expensive, it may easily be a smart business decision to choose a blanket ban on a minority of segments and leave the due diligence to businesses who can specialize on doing that cheaply and accurately.

The article explicitly gives multiple examples where they have accepted businesses from those risky categories after proper due diligence. However, it's quite likely that for Stripe it makes sense to do so only for businesses above a certain size or influence, not for everyone in the category who applies.

[deftnerd]

If proper due diligence is expensive, let the merchant pay the fee for it.