Financial Servicessecurity

Everything You Need to Know About High Risk Credit Card Processing

Everything You Need to Know About High Risk Credit Card Processing

When it comes to the task of finding a high risk credit card processing service that is highly reputable then it can be somewhat of a challenge. However, by using one, businesses really can streamline the processes that they have in place. It is especially helpful to use one that has experience and is well established within high risk sectors as that will help to improve the overall reputation of a business, as well as keeping money safe and secure. 

Whenever a business’ sales increase then the risk of experiencing fraud increases too but to a much greater extent. Because of this, it is important that businesses have a secure system in place for processing the payments that they receive. This is more true for those businesses that are deemed to be high risk. 

What Businesses are High Risk?

Businesses that operate within some certain sectors or online are often deemed to be considered high risk. There are a number of different factors at play for determining the risk level of any particular business. However, the three main reasons are a business’ history of payment processing, returns, and ratio of chargebacks. 

The sectors that are considered to be high risk for businesses to operate in include gambling, gaming, pharmaceuticals, telemarketing, forex trading, advanced booking, adult entertainment, and travel. Whilst this is by no means an extensive list of all of the sectors, it does include the main ones. 

Due to the fact that businesses operating within these sectors are considered to be high risk in comparison to those ones operating in different sectors, their financial transactions and activity are subject to much greater analysis and scrutiny. Prior to any card processing provider making a decision as to whether they will work with a business, they make an educated guess on how many chargebacks the said business may generate and where those will come from.

A common practice is to put in place something that is known as a rolling reserve. This is then used in order to offset and chargebacks that are incurred. It acts as an extra level of protection for when unexpected activity happens on a business’ account. 

For these reasons, it is highly important to work alongside a high risk payment processor with the experience and knowledge of this complex market, in addition to high security.

What is a High Risk Payment Processor?

These types of processors take on the liability for the greater risk that some businesses are subject to, especially those operating within certain sectors and online. The level of risk is determined in a different way from normal (low risk) businesses and as a result of this, there are various complex processes in place. As part of this, there is a much greater level of fraud management involved.

When looking for a high risk payment processor, businesses should go for one that has a team of dedicated analysts, along with AI technology, to look into each and every transaction that is made in order to identify any activity that seems suspicious. 

For example, there are some currently out there that allow businesses to put in place filters, both automatically and manually, for the purpose of always being in charge of their transactions, no matter when these happen. These tools can be easily customized in order to meet the needs of the business.

It is the job of a payment processor to minimize the number of transactions that are fraudulent and to diversify risk so that the account stays in good health and continues to be operational well into the future. One way a business can help with this is by staying well below the threshold that is in place by card schemes. Businesses can also help themselves by enlisting the help of the full service digital marketing agency that is SERP.

However, this is easier said than done, as those businesses that are deemed to be high risk also generate more chargebacks in comparison to more low risk businesses. That being said, a lot of this has to do with the system for processing payments that are in place. For this reason, it is important for payment providers to implement solutions that keep fraudulent activity to an absolute minimum or to prevent businesses from closing their accounts due to experiencing too high a number of chargebacks. 

Businesses that operate within high risk sectors or online require solutions that are fraud proof and that adjust to different business models. 

What to Look for in a High-Risk Payment Processor?

With there being a large number of processors out there it can be difficult to know which one to use. In order to make this decision easier, it helps to know what to look for in a high risk payment processor. Some of the factors are listed below:

  • Customer support – it is important to have some sort of customer support available for when there are inevitably some issues. Businesses should feel like they are being cared for whenever a payment issue or their website etc. arises. 
  • Clear pricing – it is important for a business to be aware of how much it is going to cost them to use a specific processor. All of this information should be clearly visible on their website. Where it is not available, it should start to ring alarm bells and businesses would do well to steer clear of them. It is important to be aware that the rates that a business has to pay can go down as revenue goes up.
  • Security – with high risk businesses being subject to a greater level of fraudulent activity and chargebacks, they need to be able to depend on a system that prevents these things from happening in the first place. Notifications in real time, fraud checks and anti fraud tools are all things that should be in place.
  • Flexibility – as all high risk businesses have different needs, it is important that there are different payment scenarios in place. 

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