High risk credit card processing. Everything you wanted to know
Finding a reputable high risk card payment processor can be challenging, but you’ll be surprised how having one will streamline your business processes. Working with a payment processor that knows the high risk industry inside out will improve your reputation and keep your money secure. Here’s what you should know about high risk payment processing.
When your sales go up, the risk of fraud gets higher. This is why you should ensure that your payment processing system is backed by superior security solutions that keep you away from cybercriminals. It’s especially important if you’re a high risk merchant.
Who is a high risk merchant?
Payment processing card associations define some online business models and industries as risky. Several factors can put your business into a high risk category, but the main reasons can refer to your chargeback ratio, returns, or payment processing history.
What are typical high risk verticals or business models? They are industries such as travel, adult entertainment, advanced bookings, forex, telemarketing, pharmacy, gaming, and gambling to name a few.
As companies considered as high risk run businesses that are more prompt to chargebacks than regular merchants, their activity and transaction patterns require in-depth analyses. Before a payment platform decides whether to work with a certain company, it estimates how likely the business will be to generate chargebacks and what might be their origin.
It is common for payment processors to apply a rolling reserve to the merchant account. The rolling reserve can potentially be used by the acquiring bank to offset chargebacks. Reserve is an additional layer of protection for the bank against unexpected activities on the merchant’s side.
This is why it’s so important to work with a high risk payment processor that has know-how and experience with this specialized market, as well as top security.
What characterizes a high risk payment processor?
A high risk credit card processor accepts liability for increased risk. The risk is calculated differently from regular merchants, so it requires having complex processes in place. This, of course, needs to come with higher involvement in fraud management.
So, when you look for a high risk payment processor, choose one that has a dedicated team that monitors every transaction and AI-based system that notifies them as soon as suspicious activity emerges.
Wondering what you need to do to get a high risk merchant account? Find out here: High-risk merchant account — what it is and how it works.
For instance, SecurionPay’s system allows you to set your filters both manually and automatically so that you are always in charge of what happens with your transactions at any time of the day, week, or month. You have a set of tools that can be customized to meet all your business needs.
The thing is to help merchants diversify risk and minimize the number of fraudulent transactions to keep the account healthy and operational in the long term. It’s important to always stay on the safe side below the thresholds set by card schemes.
It’s noticeable that some of the businesses — mostly the high risk ones — generate more chargebacks than others. However, a lot depends on the payment processing systems they use. That’s why payment providers should focus on solutions that minimize fraud exposure and prevent high risk merchants from terminating their accounts because of too many chargebacks.
High-risk merchants need fraud-proof solutions with machine learning based processes and filters that adjust to specific business models and origins of traffic. This is way more effective than static filters. SecurionPay security settings decrease the number of false declines (valid transactions that were incorrectly rejected) which could be more expensive than fraud itself.
What about the fees for high risk merchants?
High fees for high risk businesses were set as a standard many years ago when the companies that offer the same fees today had just started. However, over the last decade technology has massively changed, so now we have flexible solutions for high risk merchants that don’t have to cost that much.
Of course, technology costs money, but there’s no justification for being overcharged.
It might be surprising that a 15% commission rate or even higher fees stick to the dated approach, an obsolete setup with redirections and aggregated accounts that hurt the conversion rate.
Note that direct high risk merchant accounts give businesses flexibility and control over their transactions. It costs three-times less than the systems with redirections to external payment pages and includes dedicated in-house support and highly effective security solutions.
What to consider when looking for a high risk payment processor
There are many high risk credit card processors out there, so it’s not that easy to choose one that will meet all your business needs.
Avoid pricey contracts with legacy payment processors that lack know-how and innovative technology. Your goal should be to minimize friction in your high risk business, so conduct in-depth research before you decide which high risk credit card processor you’ll work with.
High risk merchants not supported by SecurionPay
- Health and wellness products
- ISP and hosting services
- Credit repair
- Money Transfer
- Banned / illegal goods and services
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