Banks categorise online payment as high risk because, as opposed to traditional bricks and mortar businesses, cardholder and card details cannot be physically verified. In store, the seller has the advantage of being with the customer; online other verification methods have to be relied upon, with perceived fraud threat higher.
However, not all online credit card processing is the same. With the explosion in popularity of online shopping, credit card companies have invested in verification systems which have brought many e-commerce businesses into a similar category as the physically present circumstances.
CVC, the security code in the signature strip on the rear of the card, was one of the first security measures introduced to ensure the customer has the card with them.
With the increase in online payments 3D Secure was developed and is supported by both Visa and Mastercard. Under this system, the cardholder sets up a password to verify their identity.
Measures such as these have made helped make online shopping a more secure environment for customers and the merchants alike. Yet, as in the ‘real’ world, there are certain industries which are more susceptible to fraudulent activity and considered highest risk in an online merchant accounts.
Not all acquiring banks support high risk merchant account business, which has become a highly specialised area for banks and payment gateway providers. These accounts are personalised to match the business and process methods. Merchants and banks actively monitor transaction volumes, techniques for attracting new customers, and the type of customers which these businesses attract. This allows identification of potential areas for loss through either fraud or chargebacks, with limits imposed to protect all parties involved in the transaction.
High Risk Credit card processing is not a new activity, but with each new technology or platform introduced for selling goods and services, those intent on fraud will look for further ways to exploit the system. The goal for the payment processing industry is to stay ahead and respond so that the genuine merchants and customers can enjoy a satisfying and profitable relationship.
For more information on how North Payments can help you to stay ahead of fraud and reduce costs associated with high risk merchant accounts contact us today.