High-risk merchant accounts, distinguished by their susceptibility to fraudulent activities, face numerous problems. Besides the burdensome task of complying with strict regulations, they grapple with lower transaction approval rates, which inevitably impacts their profit margins. The underlying cause of these problems lies in the heightened risk of fraudulent transactions. This risk prompts financial institutions to exercise caution, resulting in lower approval rates to keep potential losses to a minimum. Additionally, the increased likelihood of chargebacks worsens the situation, leading to higher interchange fees imposed by payment processors.
Given these challenges, it becomes vital for businesses operating high risk industries like igaming to implement robust strategies aimed at risk mitigation. By improving their defenses against fraudulent activities and enhancing transaction security measures, merchants can bolster their chances of securing higher approval rates.
Why High Risk Businesses Struggle with Chargebacks
Becoming classified as a “low-risk” merchant by payment processing platforms requires you to fulfill strict criteria. However, for newer merchants or those operating in high-risk industries, meeting these criteria can pose significant challenges. As a consequence, such businesses often find themselves categorized as higher risk and seek high risk payment processing services, such as those provided by Pay.cc. This higher risk classification exposes businesses to high chargeback fees levied by payment processors. These fees serve as a form of financial safeguard for processors, compensating for the increased risk they assume when facilitating transactions for high-risk merchants.
Although altering their merchant account status may pose a challenge for high-risk merchants, there are two critical aspects within their control: transaction approval rates and fees. By directing some attention to these areas, businesses operating in high risk industries can mitigate the financial burdens associated with their classification.
Things that May Help Improve Transaction Approval Rates
Merchants have the opportunity to enhance their approval rates by minimizing instances of false declines, all while maintaining robust systems to prevent fraudulent charges. This delicate balance ensures that legitimate transactions are not unjustly rejected, thereby optimizing approval rates without compromising on fraud prevention measures. Here are some other things you can do to improve transaction approval rates:
Take Advantage of 3D Secure Verification
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Implementing 3D-Secure Verification, also known as 3DS, is a recommended strategy for merchants seeking to bolster transaction security and reduce the risk of chargebacks. This authentication method requires customers to provide supplementary data to verify their identity during the payment process. Widely adopted as a standard practice, 3DS not only safeguards user information but also shields merchants from preventable chargebacks.
Choose a Platform that Takes Measures to Prevent Fraud
Selecting a platform renowned for its minimal margin of error in identifying fraudulent charges is vital for merchants, particularly in the igaming sector. Certain platforms leverage a combination of artificial intelligence algorithms and human expertise to meticulously assess transactions before making decisions, maintaining the perfect balance between accuracy and efficiency.
Alternatively, some platforms offer assurance by guaranteeing approval rates, assuming responsibility for chargebacks themselves. This dual approach not only enhances transaction security but also instills confidence in merchants by mitigating the financial risks associated with fraudulent activities. Pay.cc is an igaming payment processing service that takes multiple measures to steer clear from fraud, making sure its customers are well-protected 24/7.
Incorporate Multiple Currencies
Incorporating multiple currencies for countries where a significant volume of igaming payments and other payments come from can notably boost approval rates for cross-border transactions. This strategy capitalizes on the principle that transactions are more likely to be approved when a card is charged in the same currency as the one in which it was issued. By offering a diverse range of currencies that align with the preferences of customers and the regions they hail from, merchants can enhance the likelihood of transaction approval, thereby fostering smoother payment processes in different parts of the globe.
Consider Utilizing Multiple Gateways
By employing dynamic routing, businesses operating in high risk sectors gain the flexibility to leverage multiple payment gateways, directing transactions to the gateway with the highest approval rates. This strategic approach allows merchants to optimize transaction approval by routing payments through the gateway that demonstrates superior performance for specific transaction types.
Remember, when evaluating regular or igaming payment gateway solutions for high-risk merchant accounts, it’s essential to prioritize those that consistently enhance approval rates for at least one transaction type. This ensures that merchants can maximize their chances of transaction approval and minimize the impact of inherent risks associated with their business operations.
Alternative Payment Methods Could be Helpful
Digital wallets offer enhanced security by encrypting data, providing an additional layer of protection against fraudulent transactions and declines. It is important for merchants to support alternative payment methods to ensure a seamless payment experience for their customers. By accommodating popular digital wallet options, merchants not only cater to the preferences of modern consumers but also reinforce the security of transactions.
