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Table of Contents

Lead Story

Authenticate to be positive


Industry Update

CFPB sues ISOs, acquirer over client scams

Singtel, Trustwave merger to focus on global digital security

EMV migration matrix an asset, chip and PIN a deterrent

Target data breach price tag $252 million and counting


Card Forum: Issuers' advice could benefit ISOs

All eyes in Washington on payments

Apple Pay progress report

The art of questioning


The war on cash

Dale S. Laszig
DSL Direct LLC


Street SmartsSM:
Tradeshows and conferences: A good use of your time and money?

Jeffrey I. Shavitz
Charge Card Systems Inc.

Dispelling misconceptions about 'high risk'

Chris O'Donnell
Instabill Corp.

Help merchants mitigate shoppers' fears of data theft

Hugh Sinclair

Four tips for maintaining strong customer relationships

Michael Gavin

Company Profile

Mercantile Processing Inc.

New Products

Lead management tailored for ISOs, MLSs

Lead Tracking Systems
Lead Tracking Systems LLC

Portable and stationary POS solutions

Android-compatible POS Solutions
UP Solution Inc.


March Awareness


Readers Speak

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

April 27, 2015  •  Issue 15:04:02

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Dispelling misconceptions about 'high risk'

By Chris O'Donnell

Our newest e-commerce merchant was adamant. "Your company bills itself as a high-risk payment processor," the e-mail said. "Absolutely nothing public." We had recently launched a website dedicated to 300-word featurettes on our merchant customers. Some merchants were happy to participate; others didn't return my calls.

The aforementioned merchant, who had previously been shut down by a major bank, was enthusiastic when I interviewed him. But when I informed him his story would soon go live, he made it clear that, even though he was processing with us, he no longer wanted his story on our website. He despised the tag "high risk," even though it was the proper label for his business. I wanted to explain to him that high risk means startups, subscriptions, high volume and high ticket – not just adult content and gambling – but he wasn't in the right frame of mind for listening.

Merchant accounts 101

Merchants, specifically startups, are usually full of energy and drive when launching an e-commerce business and can overlook the variables involved in accepting payments. Then it hits them, and they ask, "What do you mean I am considered high risk?" And third-party processors are forced to educate them. Level of risk is not just based on industry type.

Sure, industries such as adult/emotional content and online gambling are high risk because banks are leery of associations with them. Alas, however, travel, magazine subscription, technical support and nutraceutical businesses – because of their traditionally high chargeback rates – are also among the industries deemed high risk.

What does high risk really mean?

If a payment processor, banker and credit card employee were asked to define what makes a business high risk, their criteria would likely be the same, though each would have a unique order of importance. Determining a merchant's risk factor hinges upon the processor, bank and credit card issuer protecting themselves financially. And the variables are many.

The three might agree the top criteria would be the industry type. Adult/emotional content and online gambling, which are stigmatized, and tobacco and e-cigarettes, which have health concerns, make banks nervous. Other factors can cause high-risk classifications, too, even for merchants with pristine financial histories, for example:

Managing the high-risk label

Weathering the high-risk tag comes down to cohesion between the merchant and third-party processor: the merchant operating legally and legitimately, and the processor educating and monitoring the merchant. It is a delicate balance, but one that can be achieved with due diligence.

Chris O'Donnell is a Senior Copywriter for the Instabill Corp. in Portsmouth, N.H. Instabill is a full service provider of merchant accounts to e-commerce, MO/TO and POS businesses. A resident of coastal New England, O'Donnell is also a contributor to The Daily News (Newburyport, Mass.) and Newburyport magazine.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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