Processing transactions across the risk spectrum

Because high-risk merchants comprise a territory most processors, ISOs and merchant level salespeople avoid, those that do target this group tend to find more opportunities, less competition and higher retention rates than the norm, according to Garima Shah, Head of U.S. Sales for eMerchantPay Corp.

"For ISOs, the best thing about boarding high-risk e-commerce merchants is that most of these merchants are looking for a home," she said. "They are not the ones being solicited a hundred times to switch their processor. In certain industries, I think, people stay away from certain merchants because ... there's a fear of the unknown."

eMerchantPay is a global processor specializing in merchants typically categorized as high risk; it oversees online transactions across the globe done in a multitude of currencies and payment methods. The company, which launched in Europe in 2002, realized what Shah described as a sort of holy grail opportunity at the beginning of 2012: through relationships with Wells Fargo & Co. and First Data Corp., it expanded its sales and operations into the United States.

"Our big focus in the United States is to be a one-stop shop processor for U.S. ISOs," Shah said. "There is definitely a need for a company that can process transactions across the risk spectrum." A lot of companies work with low-risk, brick-and-mortar merchants and don't understand high-risk merchants or the e-commerce space, she added.

"There are no U.S banks that board these types of merchants," Shah pointed out. "They have to go to Europe, and it feels like they're going into a black hole where people may not understand the United States. They don't know who to talk to or maybe what the rules are. We have a United States bank. ... [T]hey're dealing face to face with us, in the United States, dealing with one entity."

Unparalleled underwriting

Shah said eMerchantPay has a sophisticated underwriting process and that its ISOs are indemnified against insolvency. "If we were to board a merchant that was [insolvent], if they close shop, we're on the hook," she said. She pointed out that because eMerchantPay performs its own underwriting and risk monitoring, and because it has close relationships with its partner banks, it has a high degree of control over the fate of its merchants. Without this, a bank could shut down a merchant's account without even alerting eMerchantPay or the merchant beforehand.

"The way we do it, they're dealing with one entity for approval, for taking the application, for monitoring the risk and all the way through," Shah said, adding that if an acquiring bank takes issue with a particular merchant, it will typically consult eMerchantPay first and allow it to shore up any areas deemed risky, so merchants receive a heads-up about potential problems rather than just being unexpectedly shut down. "We can always negotiate for [instituting] better conditions for our merchants rather than closing them down," she added.

Shah said the underwriting process for high-risk merchants takes a little longer and is more complex than for the average merchant, but she noted that eMerchantPay's expertise and familiarity with high-risk merchants mitigates this. "A lot of low-risk merchants sign applications and are up and running within 24 hours," she said. "With this, we are going to understand more deeply things like their website, the terms and conditions, what kind of volume they're bringing in."

The complexity of the underwriting process depends largely on the level of risk. Shah said that just because a merchant is assigned to a high-risk category doesn't necessarily mean it is high-risk unless it has a history of being so or bears some other ominous hallmark.

"A lot of processors hear, 'high risk,' and they get scared away, but not all merchants categorized that way are [problematic]," Shah said. "If they're high-risk because of a history of chargebacks, that's one thing, but if the merchant just happens to be in a high-risk category, the risk might be a lot lower than a service provider would perceive it to be."

Fierce fraud fighting

Shah pointed out that the company has strong, comprehensive fraud-fighting tools, including thorough fraud-scrubbing measures and an encrypted Secure Sockets Layer gateway for securing cardholder data. The company's fraud-scrubbing service includes:

• 3D secure payer authentication (authenticated cardholder through entry of a user name and password)
• Address Verification Service (compares address provided by payer to that on file with the cardholder)
• Bank identification number and country confirmation (matches the country where the card was issued with the country of the payer's billing address)
• Card Verification Value/Card Verification Value 2 (requires entry of the three- or four-digit card number that data thieves commonly fail to obtain)
• Device identification and malware detection (identification through ThreatMetrix of proxy servers and other disguises used by fraudsters)
• Internet Protocol (IP) address geolocation authentication (compares location of computer to payer's billing information)
• Velocity checking (prevents repetitive transactions coming from the same IP address)

Other fraud-fighting tools eMerchantPay employs are blacklists, telephone authentication and tokenized purchasing, among others. "There are so many fraud-scrubbing tools on our site and our gateway that protect not just us, but the merchants, from fraud," Shah said. "And we are bound by strict [international] money-laundering regulations as well."

Shah added that eMerchantPay processes numerous types of conventional and alternative payments, and its anti-fraud measures are employed with all of them. She also stated that fraud-scrubbing is done quickly and performed in real time.

Multiple payment types, currencies

Among the payment alternatives supported by eMerchantPay are automated clearing house debits, recurring billing, Check 21 payments, prepaid cards, virtual currency and other types of payments that are tailored to e-commerce merchants, Shah said.

The company also works with international payment providers (Sofort Banking, for example) and supports alternative credit-, bank transfer- and prepaid-based payments used around the world. Among them are Alipay, UnionPay, cashU, Giropay, Boku and Italcred. All told, eMerchantPay supports well over 50 payment types, according to the company's website.

"The idea is to increase the conversion ratio because there are a lot of countries where people do not use credit cards, but pay with other methods," Shah said. "In the end, it's more convenient to the customer because they show up with the payment instrument better known to them and which they trust."

The company also processes in 150 types of currency, handling both intra-nation and cross-border transactions spanning the world. In addition, one of the company's new tools is eMPpay, a hosted, aggregated solution for startup enterprises and small merchants that lack or can't afford the infrastructure to support a payment processing platform themselves. The service allows merchants to build their own branded payment account on eMerchantPay's platform.

"eMPpay is a hosted payment solution that facilitates payments for low-risk e-commerce merchants looking to process transactions from all over the world, done through an aggregated solution, with each merchant still receiving a unique merchant ID, settlements and statements," Shah said.

Close, flexible relationships

Merchants who use eMPpay receive a spectrum of value-added services that include 24/7 phone billing support for cardholders, acceptance of local payment methods, multicurrency accounts, risk management, fraud scrubbing and transaction reporting.

Shah added that although both international and high-risk processing can be a complicated business, the company works closely with its ISO partners to train agents and assist them in serving their merchants - a particularly important process for international merchants navigating the rules and regulations of multiple countries.

eMerchantPay also allows ISOs to choose their level of engagement - anywhere from fully hands-on to simply boarding merchants and turning them over to eMerchantPay.

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