Credit Card Processing - What are the Options for a High Risk Business?
Businesses are considered high risk if they have a high charge back rate and accept card-less payments such as online payments, phone payments, etc. What are the credit card processing options for such businesses and how can they alleviate the risk?
Certain types of businesses are riskier than others such as telemarketers, online gambling and casino web sites, adult service providers, internet auctions, e-cash businesses, advance booking web sites, etc. Credit card processing agencies charge higher rates for their services to businesses with a high risk profile.
What makes a business high risk?
High risk businesses are the kind that:
* have a bad credit rating
* have high turnover
* have high customer dissatisfaction rates
* offer money-back guarantees
* have business processes that make them susceptible to credit card fraud
Can a high risk business have a credit card processing solution?
Just because a business is high risk does not mean a card processors will not consider it. Merchants need to shop around for agencies that work with high risk businesses. A high-risk business usually has to pay a much higher rate for a processing solution than other low risk businesses. The service provider looks into:
* length of time in business
* volume of charge backs
If the business has been running for some time, the vendor assumes that you are aware of fraud and can recognize a prospective threat. In addition, if charge backs are less, the processor assumes your business though high risk must be doing something right. Some credit processing firms keep a reserve amount to protect themselves from loss. The amount of reserve varies with the type of business and the risk involved.
How can a good credit and debit card processor make transactions safer?
If a business accepts online payments through an ecommerce application, it is a target for credit card fraud. Good internet payment processing companies have systems in place to detect suspicious activity and potentially costly fraudulent transactions. The transactions can be held back for manual approval. Many credit processing companies call customers or the business to check the genuineness of the transaction before processing it.
Many payment gateways have an Address Verification Service (AVS). The address submitted with an order is compared with that on file for the card holder. Doubtful orders are held back for manual review.
Many internet credit card processing companies offer advanced services such as IP address blocking, shipping address verification filters, IP shipping address mismatch filters, CCV handling filters, amount filters, etc. The more sophisticated and secure the credit or debit processing solution, higher is its cost.
All credit card processors are not open to working with high risk businesses, but there are many who will, albeit at a higher cost. Amongst high risk businesses, vendors give preference to those that have been in business for some time and show lower than average charge backs for that kind of business. A reliable and secure credit or debit processing solution reduces the risks of fraud and protects the business and its customers from loss.
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