Why card acquiring fails for high risk merchants in India, and what works instead

Every month we onboard merchants who arrive with the same story. They signed up with an international card acquirer that said it accepted their vertical, saw approval rates sit somewhere between 40 and 65 percent on Indian traffic, and then watched the account get frozen once volume became visible. This article explains why that happens and what the alternative looks like in practice.

The structural problem with cards in India

Indian consumers have cards, but the way those cards are set up works against cross border merchants. Most Indian issuers switch off international transactions by default. The cardholder has to enable them in the banking app, and many never do. On top of that, the Reserve Bank of India's rules on recurring payments and tokenisation added friction to card on file flows, and issuer risk engines treat any transaction routed through a foreign acquirer in a gambling or forex merchant category as suspicious.

The result is that a large share of card attempts fail before they reach the merchant's acquirer at all. The acquirer then reports an approval rate that looks like a technical problem when it is really a market structure problem.

Why the account gets frozen

High risk acquirers usually onboard Indian facing merchants under a descriptor and merchant category that does not match the real business. That works until the issuing banks and the card schemes notice patterns: many small deposits from Indian cards, high dispute rates on a merchant that supposedly sells something else, or payouts that do not match the stated activity. At that point the acquirer either freezes the funds while it investigates or terminates the merchant outright. The rolling reserve rarely comes back quickly.

Merchants treat this as bad luck. It is not. It is the predictable outcome of forcing a vertical the card schemes do not want through a channel they control.

What Indian customers actually use

The honest answer is that Indian customers do not want to pay with cards online anyway. UPI handles the overwhelming majority of retail digital payments in the country. A customer opens PhonePe, Google Pay or Paytm, scans or taps, confirms with a PIN and the money moves instantly. For larger amounts, IMPS and NEFT bank transfers from the customer's own banking app are the norm.

A payment page that offers UPI first and bank transfer second matches what the customer expects. A payment page that leads with a card form, for an Indian customer, signals a foreign site that might not work.

How local collection changes the numbers

When deposits move to UPI and bank transfer, three things change.

First, approval rates. There is no issuer risk engine deciding whether to let the transaction through. The customer either completes the UPI request or does not. Completed deposits typically land in the high eighties or above as a share of initiated attempts, with most of the remainder being customers who simply abandoned.

Second, disputes. UPI and bank transfers are push payments authorised by the customer in their own app. There is no chargeback mechanism of the kind that exists for cards, which removes the main lever that card schemes use to penalise high risk merchants.

Third, payouts. Withdrawals through IMPS reach the customer's bank account within minutes. For a sportsbook or a casino this turns the withdrawal experience from a source of support tickets into a reason customers come back.

What it takes to switch

Moving to local collection is not complicated, but it does require a provider that is actually approved for the vertical rather than one that tolerates it quietly. The provider needs settlement capacity in INR, payout rails through IMPS, and reconciliation that lets the merchant match every deposit to a customer and every payout to a request.

At BestPay24 this is the standard product for India. Merchants in betting, casino, forex, lottery, adult and digital goods are onboarded as the normal case. There is no setup fee and no prepayment. If you want to see current rates and settlement terms for your volume, message us on Telegram and a person will answer.