Which of the following is a key feature of a "high-risk merchant"?

The identification of a "high-risk merchant" primarily revolves around established parameters for risk and fraud, making the second option the correct choice. High-risk merchants are typically engaged in industries or business practices that are more prone to fraud, chargebacks, and regulatory scrutiny. As such, they are assessed against specific criteria that highlight their potential for risk. These criteria can include the nature of their products or services, their target market, historical data regarding chargebacks, and other behavioral indicators.

This approach ensures that payment processors, banks, and other financial institutions can effectively manage and mitigate potential losses associated with high-risk merchants. Being classified as high-risk can lead to higher transaction fees and additional scrutiny to protect both the merchant and the payment processor from fraud and chargeback-related losses. Thus, the emphasis on established parameters for risk assessment is a critical aspect of identifying high-risk merchants in the payment processing landscape.