As a leader in the payment solutions industry, iPayTotal has taken on the responsibility to provide accurate information to merchants and to the public regarding a topic that has been widely misunderstood.
“High-risk industries,” explains Sen Kugan, president of iPayTotal, “are industries that have the potential to attract fraudulent activity because of the nature of their businesses.”
Kugan goes on to explain that high-risk, though the word ‘risk’ instantly conjures up negative connotations, does not mean fraud or scam. There are indeed businesses around the globe that operate as confidence tricksters and scammers, with their chief aim in performing fraudulent actions.
However, when it comes to merchants that offer services or products deemed by banking institutions as high risk, it should never be confused with fraud — and here’s why:
High-risk merchants such as online casinos, Multi-level Marketing, Money transfer networks and pharmaceutical companies provide perfectly legal and useful services. The issue regarding fraud when such high-risk industries are mentioned has to do with how traditional banking institutions and even the public classify them.
Some of the reasons why high-risk merchants may be (falsely) seen as fraudulent practices is due to the following: —
- High chargeback ratios
In such industries, refunds or friendly fraud is common. When customers call their card companies to reverse transactions, the chargeback ratio for the merchant increases. This is risky because of the fees involved. Banks are reluctant to take on businesses with high chargeback ratios.
- High volume tickets
Online casinos, for example, may have many transactions, which raise concern for traditional banking institutions because it is often seen as similar to money laundering or some other illegal activity. However, in such industries, there are indeed high volumes, which are perfectly legal.
The nature of a business and its societal reputation may lead a company to be labelled as high risk. Such industries may include the adult entertainment industry; and although it is legal, traditional banks would not want their name associated with businesses of that sort.
- Recurring memberships
The problem with memberships such as dating sites is that when a user on the site either cannot find “love” or indeed does find love, they may want to cancel their subscription. When they do so, this can increase the chargeback ratio. This makes for an unstable economy for the business, which in turn causes such industries to be labelled as high risk.
“The main thing to keep in mind,” warns Kugan, “is that the only association ‘fraud’ should have within the high-risk industry is due to the “possibility” or the susceptibility of the industry for fraudsters to operate on such websites.”
Furthermore, and naturally so, fraud is considered illegal, whereas high-risk industries are completely legal.
“There are methods,” the president of iPayTotal suggests, “which can be used to help reduce the number of frauds on high-risk merchant accounts, as well as good measures for reducing chargeback ratios.”
Here is how iPayTotal is leading the fight against fraud for high-risk merchants: —
- iPayTotal uses state-of-the-art anti-fraud technology with 3D-integrated systems.
- iPayTotal has an award-winning payment gateway, which was designed in-house.
- iPayTotal specialises in managing high-risk merchant accounts.
- iPayTotal has various methods in assisting merchants in reducing their chargeback ratios, which include having a 24/7 customer support team in place, which dramatically reduces the need for customers to claim for refunds or commit ‘friendly fraud’.
“It’s paramount, in this day and age, for banking institutions and for the public to recognise that although a business may be considered high risk, it is not for the reasons they may have in mind; that there is indeed a difference between fraud and high risk,” Kugan concludes.
For more information about high-risk merchant accounts or to learn what distinguishes a high-risk merchant account from those fraudulent websites, contact iPayTotal today for all your queries.
iPayTotal is a premier UK payment solutions company, managing high-risk merchant accounts with the strictest code in following all protocols and procedures during their underwriting process, which ensures all merchants are legitimate traders.
Call iPayTotal today on +44 800 776 5988 or email email@example.com