August 29th, 2014 by Elma Jane
High risk credit card processing is electronic payment processing for businesses deemed as HIGH RISK by the MERCHANT SERVICES INDUSTRY
The high risk segment of payment processing has become more important as banks and ISO’s have begun to tighten up their credit restrictions and underwriting policies. Businesses are classified as high risk primarily because of their product or service and the way they go to market. In merchant services, risk is related to CHARGEBACKS or customer disputes.
The more likely a business to have chargebacks, the higher risk the business. For instance, online businesses selling a weight loss product through a free trial offer, is more likely to have chargebacks than a retail store selling the same weight loss product.
Merchants are often unaware their business falls into the high risk category when they first start shopping for a merchant account. Getting a high risk merchant account can be difficult.
These providers have more stringent requirements and the application process is longer compared to traditional merchant account providers.
High risk businesses should expect to pay higher rates and fees for payment processing services. As a general rule of thumb, merchants should count on paying at least more than a traditional merchant account. Most high risk merchant accounts also require a contract of at least 18 months, whereas low risk providers offer accounts without cancellation fees or contracts.
ROLLING RESERVES are also a big part of high risk credit card processing. Most high risk merchants have some sort of rolling reserve placed on the account, especially new accounts without any processing history. A Reserve refers to an account where a percentage of the funds from transactions are held in reserve to cover against any chargebacks or fees that the processor may not be able to collect from the merchant. This is similar to a security deposit, but merchants don’t have to pay it up front. Reserves are a pain point for many small high risk merchants, but they are definitely necessary and without them, processors would not accept any high risk merchants at all.
What Businesses Are High Risk?
As mentioned earlier, businesses are usually classified as high risk due to the product or service they offer, however merchants with severely damaged credit or a recent bankruptcy can also be considered high risk. Below are just of the few common high risk merchant categories:
Adult Websites
Cigars & Pipe Tobacco Online
Collection Agencies
Credit Repair
Debt Consolidation
E-Books & Software
Electronic Cigarettes
Firearms – Online
High Ticket & High Volume
Medical Marijuana Dispensaries
Multi Level Marketing & Business Opportunities
Nutraceuticals like weight loss supplements, cleansers etc.
Penny Auctions
Sports Betting Advice
Ticket Brokers – Online Tickets
TMF Merchants
Travel & Timeshare
Unfortunately this list is growing and some credit card processing companies even classify any start up Internet business, that doesn’t have extensive financials to be high risk. With the recent economic recession in the United States, there has been an increase in these start up Internet ventures. People are either looking to supplement their income or start their own business instead of looking for work.
How To Protect Your Business
Accepting credit cards is the single most important part of most online businesses. Unfortunately, many successful businesses go under after having their merchant account shut down. High risk merchants should always be cognizant of their merchant account and pay attention to chargeback percentages. Below are some tips for high risk merchants looking for payment processing solutions.
Be Upfront: Make sure your processor knows exactly what you sell and how you market the product/service. If they don’t accept your business type, keep shopping for a new merchant account provider. Many merchants will try to fly under the radar by not revealing all their products or fully disclose their marketing methods to the processor. This is a bad move, the processor will eventually find out the details about your business. This is usually from doing an audit on your transactions and contacting your customers.
Negotiate Every 3 Months: Credit card processing companies underwrite applications based on previous processing history. If there is no previous history, the account is riskier and the terms offered are usually more expensive and restrictive. You can always re-negotiate your rates, reserves and other contract terms with your current processor. Once they have 3 months of history to evaluate, they may be able to offer you a better deal. Three months of history is the magic number for most processors. If you applied without the previous history and were declined, there is a chance the same processor will approve your application if you provide 3 months of previous statements.
Prepare For The Worst: All high risk merchants should keep at least 2 active merchant accounts, from different providers. You never know when underwriting guidelines might change, or you may have an influx of chargebacks. Having a backup account or even multiple back up accounts is a good idea. Many high risk providers offer a load balancing gateway, which allows for multiple merchant accounts to be integrated into one payment gateway. This way you can spread transactions across multiple accounts, through one shopping cart/gateway.
Posted in Best Practices for Merchants Tagged with: account, account providers, accounts, banks, card, chargebacks, contract, credit, credit card processing, credit restrictions, customer, customers, deposit, electronic payment, fees, financials, gateway, High risk credit card, High Ticket & High Volume, ISOs, low risk, marketing, merchant, merchant account, merchant services, multiple accounts, payment gateway, payment processing, processing services, processing solutions, processor, product, Rates, reserves, retail store, risk, ROLLING RESERVES, Security, security deposit, service, shopping cart, statements, terms, TMF Merchants, transactions, travel, underwriting
July 21st, 2014 by Elma Jane
European authorities dismantled a Romanian-dominated cybercrime network that used a host of tactics to steal more than EUR2 million. As a direct result of the excellent cooperation and outstanding work by police officers and prosecutors from Romania, France and other European countries, a key criminal network has been successfully taken down this week.
Hundreds of police in Romania and France, backed by the European Cybercrime Centre, carried out raids on 177 addresses, interrogating 115 people and detaining 65. Those held are suspected of participating in sophisticated electronic payment crimes, using malware to take over and gain access to computers used by money transfer services all over Europe. They are also accused of stealing card data through skimming, money laundering and drug trafficking.Proceeds of the crimes were invested in different types of property, deposited in bank accounts or transferred electronically, says the EC3. Large sums of money, luxury vehicles and IT equipment were seized during the raids.
Posted in Uncategorized Tagged with: accounts, bank, bank accounts, card, card data, cybercrime, data, electronic payment, host, Malware, money transfer, network, payment
September 10th, 2013 by Admin
Verizon annually releases it’s Data Breach Investigation Reports which probes data breaches in various industries and studies the nature of fraud reported by merchants and other agencies. In the past Verizon has worked with the U.S. Secret Service, now the information gathered on the electronic payment breaches have expanded to Police Central e-Crime Unit, Australian Federal Police, the Dutch National High Tech Crime Unit, and the Irish Reporting & Information Security Service in addition to the United States Secret Service.
One area that Verizon broke out and performed independent studies on was the healthcare industry. In 2010 the Health Information Technology for Economic and Clinical Health (HI TECH) Act included a provision to report healthcare and medical data breaches to a variety of outlets including the Secretary of Health and Human Services. Medical record protections keep the casual cyber criminal at bay but the majority of security data breaches are in large part targeted at information attackers can profit from. The data cybercriminals target most often includes health insurance data, personal and electronic payment transaction data. Hardware is another assett that is targeted both because of the data on the hardware and the cost of the hardware itself.
Remote data breaches on health care providers were typically carried out through some form of hacking or malware. That is consistent with other industries in the report and is considered the favorites among cybercriminal organizations. Exploiting of default or guessable credentials rang in at the top of the chart. Of those, point of sale payment systems and desktop computers were the highest targeted areas of the health care industry. Although electronic medical records and transcriptions stored on file and database servers were a target, those criminals were more likely interested in indentity theft and fraudulent loans than what was actually in any individuals medical records.
Point of sale payment terminals are the most targeted assett with POS servers and gateways as the second most targeted. Like all other sectors, professional criminals tend to follow the money trail and that ends up being at POS payment systems. So much so that even desktop computers and emails try to get malware onto medical systems to render security policies inneffective. To find out how to better protect medical and healthcare records from cybercriminals and data breaches read the reports here and here.
Posted in Best Practices for Merchants, Credit Card Security, Point of Sale Tagged with: Breach, breaches, electronic payment, gateways, healthcare, medical, point of sale, POS, Security, transactions, transcription
New legislation is working its way through congress to require e-commerce retailers and mail order telephone order business to collect local sales taxes on transactions. e-commerce web sites and mail order telephone order businesses that conduct over $1 million gross sales and sell products and services in states where they don’t maintain brick and mortar presences would be required to collect and pay local and state taxes in those states. Targeting remote retailers that engage in interstate commerce the most obvious being mail order and telephone order as well as e-commerce shopping cart sites. Read more of this article »
Posted in Electronic Payments Tagged with: brick and mortar, DSS, e-commerce, electronic payment, mail order, merchant, merchant account, PCI, shopping cart, tax, taxes, telephone order
Ingenico iCT220 Credit Card Reader
Built on the Telium2 software platform, the iCT220 from Ingenico offers an operating system providing a secure standardized architecture for next generation Point of Sale or POS credit card reader terminals. Telium2 reinforces electronic payment security and integrates added features such as deleting sensitive data and terminal cut off. Dual processor architecture increases digital transaction speed. It also accommodates a wide range of electronic payment types. Read more of this article »
Posted in Electronic Payments Tagged with: credit card, electronic payment, point of sale, POS, Processing, terminal
