Online Payment Processing: 3 Instances When Merchants Don’t Get Why They’re High Risk

Online Payment Processing: 3 Instances When Merchants Don’t Get Why They’re High Risk

Through providing online payment processing solutions for nearly two decades, we learned very early on that educating merchants is part and parcel of delivering quality services.

Not that we mind. It’s not uncommon for a merchant to be aghast at being classified as high risk – we see it as an opportunity to educate, not a conflict. Once we offer a sufficient explanation, it’s a small victory, another merchant who understands the risks from the banking side in offering online payment processing solutions.

“Most merchants don’t believe they should be classified high risk,” said Instabill Sales Manager Wendy Jacques. “They tend to find out when they contact us.

When merchants request a virtual terminal

Taking credit card payments over the phone used to be much more commonplace, until consumers and payments professionals fully understood the risks involved. Examples:

  • When a business is processing e-commerce transactions, the bank has a solid understanding of what the merchant is selling by logging on to the website. The risk involving a straight virtual terminal business lies in the fact that the bank cannot see, only trust in what the merchant is selling.
  • Let’s say a consumer verbally gives his/her credit card details to a merchant over the phone, and the merchant writes them on a scrap of paper. There is also risk both in what the merchant does with the consumer’s details; and in what actually happens to that piece of paper.

We’re big advocates of virtual terminals – we feel every business needs one, but only coupled with a fully functional website with online payment processing. Terminals sometimes freeze, websites malfunction. A virtual terminal, despite its risks, still allows a merchant to accept payments.

Online payment processing with subscriptions and recurring billing

Recurring billing and chargebacks, unfortunately, go hand-in-hand.

For example, a consumer might order a weekly magazine subscription or a recurring monthly supply of vitamins. Whatever the product, the consumer might become disenchanted, and contacts his/her credit card issuer to file a chargeback. We see it happen far too often, particularly in subscriptions and recurring billing.

We beg of recurring billing merchants to sharpen their communication and customer service skills to keep such instances at a minimum, but the fact remains that they are considered high risk. “A merchant could sell the best product in the world, but if they want recurring billing, that makes them high risk,” Ms. Jacques noted.

Affiliate or multilevel marketing

Instabill has long served as a payment processor for multilevel marketing and affiliate marketing businesses, which come with a handful of risks. The MLM model is based on building a network of submerchants to sell a particular product (such as Amway), growing the network to make profit. The submerchants pay a buy-in fee, then begin selling the product or service.

What often happens is the submerchant doesn’t make the kind of earnings s/he thought they would. Sometimes they feel betrayed by promises of huge profits, or regretful for buying in, then contact their credit card issuer to recover the buy-in fee.

Fair, competitive high risk merchant account fees with Instabill

In finding online payment processing solutions for high risk merchants, Instabill has the acquiring banking partners to get merchants processing and keep them processing, so that everybody wins. With a 10-minute conversation, Instabill merchant account managers can detail the best payment solutions and get the process started.

A free consultation can be had by calling 800-530-2444 Monday through Friday between 8 a.m. and 6 p.m. U.S. eastern time.

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