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Table of Contents

Lead Story

Getting real about payments

Patti Murphy


Industry Update

EMV liability shift challenged in federal court

TSYS, Ethoca unite against CNP fraud

CFPB fines Dwolla over data security lapses

The high cost of omnichannel retail


Prepare now for tax season 2017

Taking your business to the next level - Part 2

Acquirer Earnings Roundup: March 2016

Mobile bill pay on fast track


POS for all seasons

Dale S. Laszig
DSL Direct LLC

Resolutions + neutraceuticals = chargebacks

Monica Eaton-Cardone
Chargebacks 911


Street SmartsSM:
Notes on the path less traveled

Jeffrey I. Shavitz
TrafficJamming LLC

What to do when a processor stops paying

Adam Atlas
Attorney at Law

Chargebacks, fraud in high-risk merchant accounts

Matt O'Shea
National Bank Services

Company Profile


New Products

Database security, enterprise scale

HexaTier 4.0

Flexible, reliable, secure card reader authenticator

MagTek Inc.


Keep it neat and clean


Readers Speak

Letter from the Editors

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

March 28, 2016  •  Issue 16:03:02

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Chargebacks, fraud in high-risk merchant accounts

By Matt O'Shea

High-risk merchant accounts. When you hear those words, your mind may automatically head toward business types like adult entertainment, casinos and online gambling, e-cigarette sales, or gun stores. However, in reality numerous business types, for some reason or another, are classified as potential high-risk accounts. These include check cashing businesses, credit counseling services, electronics sales, financial planning specialists, travel agencies and more. As a merchant level salesperson or ISO, there are significant benefits associated with having an established partner that can help you service high-risk merchant accounts that cross your path. While the earnings model is different – typically you're earning 150 to 200 basis points versus the traditional 80 to 90 percent residual splits, the opportunity is definitely there.

Smart partnering

If you're not able to place or refer high-risk merchants today, your first step is finding an experienced partner who specializes in high-risk merchant accounts. As I mentioned in "The high-risk merchant opportunity," The Green Sheet, Jan. 25, 2016, issue 16:01:02, a lot more detail is required for these account types, so evaluating and selecting the right partner is critical. Another important reminder pertaining to your selection and evaluation of a high-risk merchant account partner is centered on chargebacks and fraudulent transactions. High-risk merchant accounts are typically card-not-present accounts. As such, they have a tendency to be targets for fraudulent transactions, which are then followed by chargebacks. As you evaluate potential partners or processors, be sure to ask what percentage and number of "bad" transactions they manage, specifically what their thresholds are for fraud and chargebacks.

Secondary resources

You may even want to do ancillary research, on behalf of your merchant customers, to find a secondary third-party company that specializes in managing fraud and chargebacks directly for merchants. The last thing you want is for your customer to be approved for a high-risk merchant account, but then be shut off due to high volumes of fraud and chargebacks in the first three months. Having a secondary resource is a great value-add for any high-risk merchant customer you suspect may be at even higher-risk. A simple referral or even the fact that you're addressing this potential concern upfront will likely be a key differentiator in your service delivery versus the competition.

Risky roll call

Matt O'Shea is Executive Vice President of National Bank Services. He can be reached by email at or by phone at 800-353-6686, ext. 2888.

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

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