Getting labeled as a high-risk merchant makes the already-challenging job of owning a business all the more difficult. If your business operates in an industry that’s considered high-risk, credit card processing companies may simply refuse to work with you. Even if a business has all their ducks in a row and plenty of legitimate customers who want to pay by credit card, concerns about higher levels of fraudulent activity remain.
What can you do? What are your options?
Luckily, there are steps you can take to help reduce and combat fraud, helping you get your business off the ground and possibly helping alleviate some of the negative misconceptions your industry may hold.
What Businesses Are Considered High Risk?
There are a number of different reasons a merchant might be classified as high risk. In some cases, it has to do with their specific marketing or sales tactics. It can also be the result of what a business, whether they operate offshore, or if they sell to certain countries. This classification can also be given for something as simple as a high number of card-not-present transactions or a very high average sale amount.
To give you some perspective, online gaming providers, auction sites, adult businesses, ticket sellers, international merchants, prepaid debit card companies, supplement makers and discount health providers can all get labeled as high risk because of their business practices.
How Can High-Risk Merchants Process Credit Cards and Combat Fraud?
Fraud is an issue that all merchants need to take seriously. More of this activity is moving online thanks to the effectiveness of EMV chip cards at discouraging in-person fraud. Even though fraud can be worrisome for merchants of any size, the good news is there are lots of ways to fight against it.
First, be proactive about online fraud by paying attention to failed transactions. While people may make a mistake the first time they try entering their card information, lots of failed attempts in a row are often a sign of fraud. You can configure your payment processing settings to limit the number of attempts.
Second, it’a a good idea to set up a filter for non-AVS match transactions. Restricting high-risk IPs can be a smart idea, as well as putting a system in place to manually approve larger sale transactions. Taking these steps can thwart fraudsters without causing any significant inconvenience for your real customers.
While high-risk merchants will want to follow those fraud prevention measures, doing so may not be enough to get approval from a traditional processor. That’s why there are a number of processing companies that specialize in working with high-risk merchants. You can read our Transfirst review to learn more about a processor that specializes in working with high-risk merchants.
You can learn about other processors we’ve covered that can help high-risk merchants by reading our Ignite Payments review, NCMS review and CCBill review.