With Regulatory Changes, 3 Predictions Impacting High Risk Credit Card Processing

With Regulatory Changes, 3 Predictions Impacting High Risk Credit Card Processing

Being a veteran of high risk credit card processing — Instabill opened its proverbial doors in 2001 — we’re interested in how certain law and regulatory changes will impact our industry.

A recent funny news item in Consumer Affairs grabbed our attention, and got the best of our collective (and creative) curiosity. The news item detailed how drunk online shopping costs American consumers more than $30 billion each year, based on a survey of 2,000 consumers who answered questions about their drinking and shopping behaviors specifically with e-commerce giant Amazon.

Nearly half of the 2,000 surveyed (46 percent to be exact) admitted to shopping online while under the influence of alcohol, particularly those who drank gin.

The news story got us thinking about the effects legalized marijuana — now in nine states and Washington, D.C. — will have on e-commerce, particularly the online food industry.

So, please indulge us on our predictions that could impact high risk credit card processing.

Legalized marijuana and e-commerce

Virtually everyone in the payments industry is waiting for a high risk credit card processing solution for marijuana sales. Related businesses to marijuana — paraphernalia, hemp and CBD – are surging at the moment. We’ll add another business type to the mix that we think will be deeply impacted, if not already, in the nine states (and Washington D.C.) where marijuana has been legalized: online food delivery.

Most everyone is well familiar with one of the effects marijuana has: a borderline insatiable need for food and drink. Keeping the drunk online shopping survey above in mind, in a few years’ time we’d be very curious to see the impact of online food delivery businesses in, for example, Colorado, California, Vermont or any of the recreationally legal states.

For most, a night out at the pubs usually means a quick stop at a local pizza joint or a nearby food truck before going home. Back in my college days, I knew a resident dormitory director who invested in a food truck and parked it outside a string of popular bars on Thursday, Friday and Saturday nights. He made more than double his salary as a dormitory director.

We’re fairly certain online food delivery businesses in the legal marijuana states will experience a significant uptick in business, if not already.

For bettor or worse, more online gambling

Quick…what are some of the effects alcohol has on the average twenty-something?

Invincibility. Fearlessness. A temporary (likely false) sense of courage.

We’re seeing more and more states warming to legalizing online gambling and sports betting. Though alcohol and gambling can be a dangerous combination for many consumers, we can see the industry, for better or worse, getting a boost from late night splurges, from male twenty-somethings believing they can defeat the slots or call the outcome of the next day’s BCS bowl game.

The bad news for high risk credit card processing merchants: higher chargeback, return rates

Back to our rant about drunk online shopping and online gambling for that matter…

Another impact of alcohol or marijuana is memory loss. Let’s say the twenty-something checks his credit card statement a few weeks after the night of heavy drinking, online blackjack or placing bets, only to find quite a few surprising charges.

What’s the most predictable response? Most likely, the twenty-something will file a chargeback, saying his card was stolen and used fraudulently to play blackjack or place bets. Similarly, the late-night online shopping spree would likely result in returns, or even chargebacks, for the online retailers.

Or worse, friendly fraud.

Chargebacks very much a part of high risk payment processing

A high risk credit card processing solution provider since 2001, Instabill not only matches merchants with the best acquiring banking solutions we know, we offer plenty of valuable content to help merchants prevent, mitigate an even reverse chargebacks. Our online guide, Instabill.org, is free chargeback prevention resource from which our merchants and partners can benefit.

We prefer to begin our credit card processing relationship with a conversation at 1-800-530-2444.

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