Why High Risk Merchants Should Care About 'Project Catalyst'

Why High Risk Merchants Should Care About 'Project Catalyst'

To some high risk merchants and their payment processors, the Consumer Finance Protection Bureau is akin to the neighborhood bully who moved into town 5-6 years ago and started dictating new rules. It’s not a stretch to say, among high risk merchants and processors, it’s a popular school of thought.

But the Bureau’s latest initiative – Project Catalyst – is a very merchant-centric concept that might change that very thinking.

Beg, Borrow and Steal – It’s Encouraged!

All marketers love to copy, borrow and implement ideas to see if they might work in their space. Project Catalyst is based on the same theory: The sharing of consumer-friendly innovation so that other businesses may benefit.

We think it’s a terrific idea — the Bureau is on to something. It was one of the several topics the Bureau’s director, Richard Cordray, touched upon in his presentation Sunday, Oct. 23 at the Money 20/20 Conference and trade show in Las Vegas.

What is Project Catalyst?

Project Catalyst encourages merchants to ‘pitch a pilot,’ as the Bureau website says; to share an idea that could help other merchants, and to let the Bureau know about it. In turn, the Bureau asks merchants to answer three questions:

  • Who you are
  • How the merchant and the CFPB would work together
  • How the idea will foster innovation

If We May Add Some Suggestions…

Merchants are often pulled into so many different directions that it’s difficult to focus their attention to one specific area. We offer three areas that are particularly challenging:

1. How to Handle Chargebacks

One of the most prevalent issues of being a high risk merchant is chargeback prevention and mitigation. As a high risk payment processor, we come across merchants in many industries that hover dangerously near Visa’s chargeback threshold of 1 percent or 100 chargebacks per month, some falling victim and losing their merchant account. Universal suggestions on how best to deal with chargebacks are always welcome.

  • Is it manual reviews?
  • Is it hiring a third party chargeback prevention firm?
  • Is it educating your customers why a refund is always better than a chargeback?

Perhaps it’s a combination of the three.

2. Securing Transactions and Personal Information

It’s not possible to open The New York Times, CNN.com or any news source without reading of a data breach. In the age of the data breach, what is the best way to secure not just transactions, but sensitive personal data?

  • Is it outsourcing your payment platform?
  • By utilizing or mandating 3D Secure?
  • Or is it using SMS authentication?

3. Find the Best Payment Processor

Choosing the best payment processor is paramount to the success of any business, particularly e-commerce. What has worked for your business?

  • Maybe a processor who specializes in high and low risk solutions
  • A provider which bundles chargeback prevention and mitigation
  • Or one that has domestic and international banking solutions enabling multi-currency acceptance

What are the issues most important to you, those for which you would welcome any input? We encourage you to leave us a comment below.

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