As a reseller, you may encounter merchants who are considered high risk. These businesses may be in industries that are susceptible to fraud, or they may have a history of chargebacks. Either way, working with high-risk merchants can be tricky, and it’s important to choose the right payment processing partner.
Merchants that process payments for high-risk products and services are often categorized as such due to the increased likelihood of fraud. This can make it difficult to find a payment processing partner that is willing and able to work with you. However, by understanding what makes a merchant high risk, how fraud takes place, and the points to consider when choosing a processing partner, you can increase your chances of finding a successful partnership.
What Makes a Merchant High Risk?
There is no one-size-fits-all answer to this question, as the risk level of a merchant can vary depending on the product or service they offer. However, there are some common factors that can make a merchant high risk. Some of the most common reasons a business may be labeled as high risk include:
- The product or service they offer is illegal in some states or countries.
- The company has a history of processing chargebacks.
- They are located in a high-risk region, such as Africa or the Middle East.
- They deal with a high volume of fraud or chargebacks
There are a few factors that can make a merchant at high risk. First, they may be in an industry that is prone to fraud, such as online gaming or adult entertainment. Second, they may have a history of chargebacks. Finally, they may be processing large sums of money.
How Does Fraud Take Place?
Fraud can take many different forms and can be perpetrated by both consumers and businesses. Some of the most common types of fraud include:
- Credit Card Fraud: This occurs when someone uses a stolen or counterfeit credit card to make purchases online or in person.
- Chargebacks: A chargeback occurs when a customer disputes a charge with their credit card issuer. This can be due to fraud, but it can also be due to simple misunderstandings.
- Identity Theft: This is when someone steals another person’s personal information to commit fraud.
- CNP Fraud: This is a type of fraud that occurs when a consumer makes a purchase online without ever seeing or touching the product.
- Friendly Fraud: Friendly fraud occurs when a customer makes a purchase and then requests a refund, even though they have not actually returned the product or services.
- Credential Stuffing: Credential stuffing is a type of fraud that occurs when criminals use stolen login credentials to access accounts and make unauthorized purchases.
Points to Consider When Choosing a Processing Partner
When you’re looking for a high-risk payment processing partner, there are a few things you’ll want to keep in mind.
- What types of products and services does the processor offer? Having a company that can provide more than one processing product gives you flexibility to find the right one..
- What are the rates and fees? Rates and fees will vary from payment processing company to another.
- What is the processor’s reputation? You’ll want to be sure that the processor has a good reputation.
- What is the processor’s experience? You’ll want to make sure that the processor has experience working with businesses in your industry. This will help to ensure that they understand the unique risks and challenges associated with your type of business.
- What security measures do the processor have in place? You’ll also want to make sure that the processor has a robust fraud prevention system in place. This will help to protect you from chargebacks and other types of fraud.
- What customer service and support options are available? Make sure the processor is known for providing quality customer service.
By keeping these things in mind, you can ensure that you find a high-risk payment processing partner. That is right for your business.
When you’re looking for a high-risk payment processing partner, there are a few things you’ll want to keep in mind. First, it’s important to choose a company that offers products and services that fit your needs.
You’ll also want to compare rates and fees to find the best deal. It’s also important to choose a processor with a good reputation and experience working with businesses in your industry.
Finally, you’ll want to make sure that the processor has a robust fraud prevention system in place. This will help protect you from chargebacks and other types of fraud. By keeping these things in mind, you can ensure that you find a high-risk payment processing partner that is right for your business.
What to Do if You Are Labeled as High Risk
If you label as high risk, there are a few things you can do to try to improve your chances of finding a processing partner.
- Improve your credit score: If you have a poor credit score, this can make it difficult to find a processor that is willing to work with you.
- Reduce the amount of chargebacks: Chargebacks can be costly and they can damage your reputation.
- Have a plan in place for fraud prevention: A good fraud prevention plan will help to protect your business from chargebacks and other types of fraud.
- Be upfront about your business: When you’re looking for a processor, be upfront about your business.
- Be willing to pay higher rates and fees: Because you’re considered high risk, you may have to pay higher rates and fees.
By taking these steps, you can improve your chances of finding a payment processing partner that is willing to work with you.
High risk businesses have a few options when it comes to payment processing. By understanding the risks and challenges associated with high-risk businesses, you can be sure to find a processor that is right for your business.
The Bottom Line
Working with high-risk merchants can be tricky, but it’s important to choose the right payment processing partner. When you’re looking for a processor, be sure to consider the company’s experience, reputation, and security measures. You should also prepare to pay higher rates and fees. If you take these steps, you can find a processor that is right for your business.
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