Author: Casey Adcock

Merchant Services 101

Merchant accounts, payment processors, gateways, global payment processing … merchants know they need these essential services, but may not know exactly how they work or how to choose and sign-on with the right service providers for their specific type of business. This guide answers those basic questions, and also offers guidance on what to do if a financial services company suddenly freezes or terminates an account, leaving a business unable to access funds or process transactions.


What does a merchant need to accept payments online?

A payment processor, a payment gateway and a merchant account.

What is a payment processor?

A payment processor relays transaction information to and from the customer’s and merchant’s banks. Payment processors may also provide access to payment gateways and/or merchant accounts, along with other essential financial services and tools.

What is a merchant account?

A merchant account allows retailers (and other businesses) to accept payments from customers’ credit or debit cards. It’s basically a bank account that accepts credit/debit card transactions as deposits.

What is a payment gateway?

A payment gateway securely moves payment data through the entire payment chain.

How does the entire online payment process work?

1: Customer provides his or her payment card details.

2: Payment gateway routes the transaction details to the payment processor.

3: Payment Processor transmits the request to the payment card network.

4: Payment card network identifies the issuing bank, routes the transaction for verification and approval.

5: Payment card network sends “accepted” or “declined” response to the payment processor.

6: Payment processor sends accept/deny information to the Payment Gateway.

7: Sale is processed, or if declined, customer is given the option to use another payment method.

Amazingly, this all typically happens in a minute or less.

Can a merchant work with any payment processing service?

Merchants can apply to any payment processor that they choose. But financial service companies may choose not to work with a merchant whose business is considered high-risk. Merchants whose businesses involve offering the services/goods below will usually want to work with a payment processor that specializes in serving high-risk businesses, such as:

  • Adult Entertainment
  • CBD products
  • Collection Agencies
  • Fantasy Sports
  • Gaming
  • Multi-Level Marketing
  • Nutraceuticals
  • Online Dating
  • Start-Ups
  • Telemarketing
  • Travel
  • Vaping supplies

What should a merchant look for when choosing a payment processor?

Don’t lower expectations simply because a business is classified as high-risk. Merchants in high-risk industries need all the capabilities and data security protections that any online vendor requires, plus payment processing solutions that will minimize exposure to fraud and help mitigate potential problems typically associated with a high-risk industry. Look for a payment processor that offers chargeback reduction tools and fraud scrubbing. You will likely want offshore/global payment processing services also.

What is an Offshore Payment Processor?

Also called global payment processing, or an offshore merchant account, this service offering can process debit and credit card transactions outside of the U.S. Depending on business needs, merchants in high-risk industries, or those who want to sell overseas, may find that an offshore payment merchant account is their best option. That said, working with an in-country payment processor who offers offshore capabilities is often the safest way to obtain all the benefits of offshore merchant account with none of the potential drawbacks.

What is a chargeback, and why do merchants worry about them?

A chargeback means the customer has instructed his or her payment card company not to pay a specific transaction. The reasons can range from non-delivery of a product/service, unhappiness with the product/service, or unauthorized charges. If a merchant exceeds a set chargeback ratio – typically 2% of the month’s sales – his or her merchant account may be frozen or terminated. Note that the chargeback ratio is the number of chargebacks per month divided by the total number of monthly transactions – not the dollar amount of sales.

What happens when a merchant account is frozen or terminated?

The ecommerce business is dead, until and if the merchant finds another financial services firm willing to work with the business.

Are chargebacks the only reason a merchant account is terminated?

No, sometimes accounts are terminated if the financial services company doesn’t properly vet the business before activating their account. It’s important to read the terms of service and avoid applying for accounts with companies that do not perform transactions for high-risk industries, or for the goods/services a specific merchant offers. The account may be approved at first, but eventually it will be terminated. And it can be difficult to find a financial services firm that is willing to work with a business after its account has been terminated. It’s far safer to choose a payment processor who welcomes high-risk businesses.

How does a merchant find a trustworthy high-risk payment processor?

T1 Payments specializes in meeting the needs of high-risk merchants, providing a full suite of payment processing and payment gateway services, including global payment processing. T1 provides flat fee merchant accounts and offers comprehensive account monitoring, reporting and support to help high-risk merchants mitigate chargebacks, fraud and other business risks. And our customer support team members are the best in the business.

To find out more about our customizable payment solutions for high-risk merchants please visit or call 866-518-2216.

Selling Vaping Supplies and CBD Products Online

Offering vaping devices, liquids and other supplies along with CBD products in an online store seems to be a natural fit. Unfortunately, it may be hard to find payment processing service providers who agree with that assessment.

Some financial service companies – and shopping cart platforms – prefer not to work with ecommerce vendors who are selling vape supplies or CBD products. Combine both vaping and CBD in one store, and the complications are doubled.

To bypass this and other issues, some vendors have chosen to separate their CBD store from their vaping supplies store. This does allow for rapid response to a regulatory changes or terms of service that apply to only one category of products, but can make doing business far more difficult.

This article discusses the complications that ecommerce merchants must consider when selling both vaping supplies and CBD products, along with processes and solutions that address these issues.

Merchant accounts for CBD and vaping supplies

Why is it so hard to get a merchant account for an online store that sells both CBD and vaping products? Because any business that is part of an industry impacted by regulations that are rapidly evolving is considered high-risk by financial services firms. Vaping supplies are a perfect example of an industry that may be heavily impacted by regulatory demands in the near future. Financial firms are leery about getting involved with merchants whose business model may have to change rapidly.

Merchants that are considering separating their CBD business from their vaping business, using two separate online stores, must make that business decision based on what makes sense within their region (states regulate these products differently) and their level of concern with regulations that might impact their business going forward. That said, creating two separate websites solely to meet a payment processor’s demands is unnecessary. As an example, T1 Payments enables merchants to process both CBD and vape supply transactions via one website.

Merchant account terminations and other problems

In general, merchants involved in an industry that is considered high-risk should work with payment processors who specialize in high-risk payment processing. Unfortunately, as many merchants have learned, it’s all too common to be approved for a merchant account only to discover that the account has been terminated within a month or two. The reason? The service provider failed to properly underwrite the merchant to determine what products they offer, and the new account has been terminated for violating their terms of service.

When an account has been terminated, it is extremely unlikely to be reinstated. That leaves the business owner with no way to process card payments, which is death to an online business. The merchant will need to find another payment processor very quickly.

Sometimes accounts will be placed on “Hold” or are “Frozen” instead of being terminated. Holds tend to be enforced when the payment processor feels that the ecommerce business is unstable – chargebacks are rising, or large transactions  are being posted.  A hold may be temporary or ongoing. During the hold, some of the payouts the merchant is due from the processor will be held in a separate account, pending investigation. Accounts on hold may still be able to accept transactions, although some types of transactions may be refused.

A freeze is a temporary halt on processing payment cards. This typically happens when a processor wants to do a full analysis of a business’ transactions. The processor may believe that the terms of a payment processing agreement have been violated or that the business may have been affected by regulatory changes. Merchants may be able to prove that the freeze should be lifted.

Reasons for sudden terminations, holds and freezes include regulatory changes, shifts in the types of businesses accepted by ecommerce platforms, and excessive chargebacks, fraud or suspicious activity associated with the merchant’s business. Suspicious activity can include anything that violates the terms of the agreement with the payment processor.

Choosing a payment processor

When choosing a payment processor for a CBD and vaping ecommerce business, merchants must check to see if the payments processor has experience in working with companies in both of these industries. It’s best if the payment processor is enthusiastic about working with high-risk online businesses, providing the expertise needed to deal effectively with ecommerce platforms, payment gateways, evolving challenges, regulatory demands, chargeback risk mitigation and data security issues.

T1 Payments successfully processes millions of transactions for CBD and vape supply merchants. To find out more about our customizable global payment solutions for high-risk merchants – including fast and flexible onboarding, active account monitoring for fraud, chargeback management and real-time reporting – please visit or call 866-518-2216.

Can A Vape Shop Still Succeed Online?

Selling vape devices and liquids online is both tempting and terrifying to merchants. The market demand is growing rapidly, but so are the regulations. Any time there is uncertainty about a business’s stability and sustainability, it’s typically classified as “high risk” by financial firms.

Owners of ecommerce businesses in high risk industries often struggle to find a payment processor who will work with them without charging insanely high fees. Besides finding fair rates, ecommerce merchants also need to partner with payment processors who understand the requirements of their particular business and offer the services and technology to support the particular needs of online vape shops.

This article details the opportunities and regulatory risks – on both the state and federal level – in this space and what an ecommerce merchant who offers vape supplies needs to know about complying with the law and doing business online.

The Online Vape Marketplace

Globally, the number of people who vape continues to rise steadily. The World Health Organization states that there were 35 million adults vaping in 2016, and market research group Euromonitor expects that number to grow by almost 55 million by 2021.

The market is currently at $22.6bn globally, and is poised to grow dramatically. Wells Fargo believes that the American market alone will grow to five and a half billion dollars by 2021. The biggest markets for vaping products are the United States, Japan and the UK.

Vape users buy devices, accessories and  liquids from dedicated shops online, as well as brick-and-mortar shops that carry a broad variety of merchandise. People who are new to vaping tend to prefer physical locations, so they can get assistance in figuring out what to buy and how to use it. More experienced vapers are comfortable with purchasing products online.

Risks and Regulations

Despite the market’s promising numbers, merchants selling vaping supplies online face specific risks, in particular complying with evolving, and sometimes complex, federal and state regulatory requirements.

Recently, the U.S. Food and Drug Administration (FDA) announced that teenage use of electronic cigarettes has reached “an epidemic proportion,” and told manufacturers of the most popular vaping devices that they have 60 days to prove they can keep their devices away from minors. If they can’t, the FDA may immediately ban flavored vaping liquids from the market.

Additionally, the FDA stated that it might press civil or criminal charges if companies are allowing bulk sales through their websites.

The FDA also said, in a statement, that it is sending warning letters to 1,100 retailers including 7-Eleven stores, Walgreens, Circle K convenience shops and Shell gas stations — and issuing fines, ranging from $279 to $11,182, for selling e-cigarettes to minors.

Owners of online vape shops need to watch this issue closely. They need to have solid age verification processes and ensure that they understand the age restrictions for each state they do business in. In many cases in the U.S. that age is 18, but some states have set the age limit higher:

Alabama – 19

Alaska- 19

California – 21

Hawaii -21

Maine – 21

Massachusetts – 21

New Jersey-  21

Oregon – 21

Additionally, Utah bans online sales of vaping products to anyone, no matter how old they are. And Pennsylvania has a 40% tax on all vaping products. Merchants need to ensure that they understand how tax laws work and what they need to do to comply with them. Since this varies according to where you do business, your best bet is to check with a financial expert with expertise in taxation and online businesses.

If Merchants sell products to consumers outside of the U.S., they must to be familiar with the laws regarding vaping in each country they are shipping to. Vaping or sales of vaping products is banned or restricted in Brazil, Israel, Mexico, Panama, Thailand, Norway, Saudi Arabia, Turkey and France. But laws change, and restrictions vary – merchants must check the current regulations in any country prior to selling product for specifics.

Most shopping cart platforms should allow you to filter and block sales from states and countries that you can’t or currently don’t do business in. And while age verification currently puts the obligation on the consumer to verify that he or she is of legal age in their state/country of residence, the requirements may change soon.

The FDA is also looking at bulk sales of vaping products. Right now, the focus is on sales through specific manufacturer’s websites, but merchants should start thinking about how to prepare for bulk sales going forward.

Staying Compliant

About half of the companies targeted by the FDA in their first enforcement action are online merchants. It is safe to assume that the FDA is testing vaping websites to see how age verification is handled. It’s unlikely that the typical pop-up asking for a user to self-identify as legally able to purchase vaping products will be sufficient for much longer. Merchants may want to look into age verification services, which check online data bases to verify the age of residents at a specific address.

Merchants should also routinely self-check their age verification processes to ensure they are functioning properly.

Check the state laws as well. Some states, at the moment, have stricter laws regarding age verification than the FDA requires. For example, in some states merchants may need to capture and store an image of the buyer’s photo ID. Merchants can do their own research on this, or invest a little time and money to consult an attorney.

Merchants  should also ensure that their site displays all applicable disclaimers, along with this notice: WARNING: This product contains nicotine. Nicotine is an addictive chemical.

Payment Processing for Online Vape Sales

Many financial service providers don’t like doing business with industries that are in the midst of heightened regulatory activity. They fear that sudden changes to the law will increase the risk of chargebacks and fraud. New vape shop ecommerce business are likely to have a difficult time getting approved for merchant accounts, and even established businesses may find that their accounts are frozen or cancelled.

Now is the time to look for a Payment Processor, such as T1 Payments, who specializes in delivering solutions for online vape stores and other high-risk businesses.  Merchants should look for Payment Processor that offers:

Flexible underwriting: This is the vetting procedure financial services firms use to determine a merchant’s risk level. Merchants should look for a Payment Processor who specifically works with high-risk accounts, as their underwriting process will be better able to determine your vape store’s real business risks and potentials.

Fraud protection: online payments are inherently riskier no matter what type of goods or services you sell. In store, an ID can be checked and consumers will probably use a chip-enabled payment card. Online sales offer limited protections. Thankfully, there are fraud protection solutions specifically designed for ecommerce which utilize “fraud scrubbing” and filtering to spot and screen suspicious transactions.

Chargeback reduction: Tech solutions can’t prevent all chargebacks, but can significantly reduce them by monitoring for transaction errors, fraudulent patterns, and other issues that often result in chargebacks and regulatory concerns.

Complete solutions: A Payment Processor should provide access to a comprehensive service offering so you don’t have to piece together a solution. You should be able to access your account data securely online, and ideally without having to purchase additional software.

T1 Payments specializes in meeting the needs of high-risk merchants, providing a full suite of Payment Processing and Payment Gateway services that integrate with over 175 different shopping carts. To find out more about our customizable global payment solutions for high-risk merchants please visit or call 866-518-2216.

Merchant Account for Travel Companies

Merchant Account for Travel Companies

Businesses that provide travel services are ranked among the highest-risk businesses. Why? One of the reasons is that any problems or disappointments that a traveler may encounter can result in a chargeback.
And we all know that travel is rarely an entirely hassle-free experience. It never has been. The word travel itself is derived from old words meaning “instrument of torture,” “to torment” and “trouble.”

Intrepid wanderers assume that they will face some challenges on their journeys (and may even relish the idea of roughing it). Business travelers just power on through bad airport experiences and ugly hotel rooms. But folks who have been saving up for their once-in-a-lifetime vacation, or got a great deal on their trip, expect to experience perfection. Anything less, and chargebacks are likely to follow – and the most obvious target is your travel business.

And then there’s fraud. The online travel industry has been hit by an increasing number of fraudulent charges from criminals who have learned how to profitably exploit security loopholes in transportation and hotel bookings. The total cost of fraud in the travel industry is expected to exceed $25 billion globally by 2020. Online Travel Agents are predicted to be the worst hit, with estimated loss of nearly $11 billion globally.

How “high-risk” affects your business now
An industry that is associated with a significant percentage of chargebacks and fraud is considered to be a high-risk industry. The risk level climbs even higher when you factor in conducting business in countries outside of the U.S, processing payments in more than one currency, and – in many cases – selling services weeks or months before they are delivered. While these activities all make perfect sense in the context of the travel business, financial firms see them as huge red “danger” flags.

Its also important to know that a chargeback is different than a refund. A chargeback indicates that the customer feels they did not receive what they paid for, and therefore they refuse to pay for it. When a payment is made by credit card, the customer is assumed to be right. The merchant then has to prove when it comes to travel expectations. One person’s idea of an ocean view (“Yes, you can sort of see the ocean if you stand on a chair, dangle out the window and squint really hard”) is another person’s description of a trip gone horribly wrong.

Battling fraud and chargebacks
Whatever the reason – be it outright fraud or disappointment – chargebacks cost merchants money and – potentially – can ruin a business. If your chargeback rate exceeds 2% of your transactions, your merchant account will almost certainly be frozen or terminated. That means you can’t process payments by credit or debit card until your account is restored from its frozen state, or (if you’ve been terminated) you manage to find a Payment Processor who will work with you. Most will refuse to do so, once you have an account termination on your record.

Here’s the good news: T1 Payments won’t immediately disqualify you even if your merchant account was terminated. We specialize in working with high-risk businesses, and we understand the particular challenges they face. We don’t write you off just because you experienced problems that are all too typical in high-risk industries such as travel; whether you’re a travel agent or tour operator, sell vacation packages or timeshares, or provide lodgings, tickets or deals and services for incentive, rewards or membership programs.
Our experience with high-risk industries allows us to offer solutions and guidance that help you mitigate risks. We offer fraud scrubbing technology, and chargeback monitoring, along with flat-fee merchant accounts to help your business (and you!) grow and prosper.
To find out more about T1Payment’s customizable global payment solutions for high-risk merchants please visit or call 866-518-2216.

Merchant Accounts for Adult Businesses

Merchant Accounts for Adult Businesses
If your business involves “adult-only” services and goods, you’re automatically branded as a high-risk merchant by any company that provides financial services. Why? Because your industry is plagued by chargebacks, and banks really hate chargebacks.
And there are so many reasons for adult business customers to file chargebacks. It could be that your business didn’t fulfill their impossible dreams. Or they might need a little plausible deniability (“Honey, the computer must have got hacked! I’ll call the credit card company right now!). Maybe they missed the fact that they were signing up for a subscription. Perhaps they just regret the whole thing. Or maybe they are deliberately trying to defraud you.
There are a multitude of reasons that might inspire someone to deny they ever used your services, and if more than 2% of your customers decide to institute chargebacks – you run the risk of immediately losing your ability to process credit cards.

Risky Business
Adult businesses experience sudden terminations of their merchant accounts, as well as freezes and holds on their funds more often than many other businesses. While this can happen if a third-party processor provides an account and only later realizes that you provide adult services, it’s more typically due to regulatory changes that impact the legal status of adult businesses, consumer complaints or chargebacks and suspicious activity associated with the merchant’s business.
What is suspicious activity? It could be anything that violates the terms of your agreement with the payment processor. For example, if you have an online dating business and decide to branch out to escort services – your account could be terminated. Financial services might be comfortable with one type of adult business, but spooked by other types – either due to heightened risk or concern about a particular subset of the adult industry, which typically includes:

  • Adult bookstores
  • Adult membership sites
  • Escorts
  • Massage services
  • Novelties and toys
  • Online dating
  • Streaming adult videos

Suspicious activity can also mean fraud on the business owner’s side, such as failure to deliver services or goods as promised, overcharges, deceptive billing practices and other issues.

High Risk Payment Processing

It’s not hard to find a payment processor who specializes in high risk businesses – a quick Google search will reveal dozens. But you may struggle to find a high-risk payment processor who doesn’t charge insanely high fees for substandard services. No matter how risky your business model may be, you deserve to be treated like a valued customer.
That respect starts with onboarding. Be wary of payment aggregators who approve your account before they do their underwriting (a review of your business, management practices, financial history, and legality). In this scenario, you’ll be in business for a few months (at best) before your account is frozen with no warning. It’s far better for your business – and your sanity – to work with a payment processor like T1 Payments who specializes in high risk businesses and offers flexible underwriting that greatly increases your chances of approval and your peace of mind.

Mitigating Your Risks
Once approved for a merchant account, you’ll want to keep that account in good standing. A key area to address for adult businesses is chargebacks. You can mitigate the risk of chargebacks by:

  • Accurately describing your goods/services
  • Having a clear refund policy
  • Providing an easy way for customers to cancel accounts/request refunds
  • Detailing any recurring charges
  • Delivering products on time
  • Letting customers know what company name will appear on their payment card statements.
  • Excellent customer support
  • A secure website that protects customer privacy

Typically, customers will try to solve a problem directly with the merchant before filing a chargeback. Make it easy for your customers to resolve the problem, and many chargebacks can be avoided.
Unfortunately, though, a merchant can do everything right and still get hit with chargebacks. That’s why you want to work with a payment processor that offers chargeback protection services. For example, T1 Payments works with two chargeback protection solution services – Ethoca and Verifi to reduce chargebacks and help merchants resolve payment card transaction disputes directly. T1 Payments also offers another layer of protection with Fraud scrubbing technology, which can quickly spot and stop suspicious transactions that could result in security problems and/or financial loss for our merchants.
T1 Payments specializes in meeting the needs of high-risk merchants, with over two decades of expertise and a full suite of payment processing services and solutions, including Payment Gateway services that integrate with over 175 different shopping carts. Our flat fee merchant accounts and customizable global payment solutions help your business grow and prosper. To find out more about T1 Payment’s services for high-risk online merchants please visit please visit or call 866-518-2216.

How Credit Repair Companies Can Reduce Chargebacks

How Credit Repair Companies Can Reduce Chargebacks

Chargebacks are the curse of credit repair services. Understanding and managing the chargeback ratio is essential for any credit repair company that wants to stay in business. Here’s what you need to know;

What is a chargeback ratio?

A chargeback ratio is the number of chargebacks per month divided by the total number of monthly transactions. It’s not about the dollar amount of a chargeback, and it doesn’t matter if a business disputes chargebacks and wins. As soon as your customer files a dispute, the chargeback is applied to your account.

Why do chargebacks matter?
If your business goes over 2% in chargebacks a month, your merchant account may be frozen or terminated, and/or the funds in your merchant account may be temporarily placed on hold. And you’ll often find it difficult to get the account reinstated, or find another payment processor who is willing to work with you. This is because credit card companies can fine payment processors thousands of dollars if they allow you to continue processing transactions when your chargeback ratio exceeds 2%.
And excessive chargebacks often indicate that a company isn’t conducting their business properly. Happy customers don’t dispute charges; they try to work things out with the merchant first. For most consumers, chargebacks are a last resort. So, when a financial services firm sees excessive chargebacks, they assume a business is in deep trouble.  And while this is often true, a credit repair firm may do everything right and still be hit with a significant number of chargebacks.

Why so many chargebacks for credit repair firms?
Financial problems can be caused by circumstances outside of a person’s control, or by poor money management skills. Whatever the reason, someone who needs credit repair services obviously has bad credit and is extremely eager to repair it quickly – almost certainly so they can access more credit. So, when a significant percentage of your customers have or have had problems paying their bills it’s logical to assume that they may not be able to pay you, or they may choose not to pay you – which may result in chargebacks.
Your customers may also have a valid reason for disputing charges. Managing expectations is a big part of keeping chargebacks low in the credit repair business. Customers may assume that they’ll have an amazing credit score within a month or so, or may decide to dispute charges when their credit repair doesn’t result in a significant, sustainable change to their credit status. They may not understand the credit repair process. But promising more than you can deliver, or being less than transparent about what you can and can’t do, will almost certainly result in chargebacks.
Other issues that often result in chargebacks include ineffective or uncaring customer service, billing confusion (make sure that the charge is identifiable to your customers, avoid billing under a name they may not recognize) and difficult cancellation processes (make it easy for your customers to cancel their account using the communication method of their choice.) In general, offering a refund when a customer is obviously unhappy is a very effective way of reducing chargebacks. You can always reach out later and try to win the customer back.

How to Reduce Chargebacks
Apart from attending to the issues mentioned above – good customer service, clear communications, and a solid understanding of chargeback ratio and its impact on your company, there are several additional things you can do to protect your business.

  • Flat fee merchant account: since your chargeback ratio is determined by the number of transactions divided by the number of monthly transactions, you can give yourself an edge by growing your business. The math is simple, just two chargebacks a month can really hurt a business with 100 customers, but won’t be nearly as problematic for a company with 300 customers. And, since a flat fee account charges you a pre-determined flat monthly fee and a flat per-transaction fee instead of a percentage of your monthly sales volume you can grow your sales without paying a big financial penalty for your success.
  • Chargeback reduction:software solutions can’t eliminate all chargebacks, but can significantly reduce them by monitoring for transaction errors, potentially problematic patterns, and other issues that often result in chargebacks.
  • Fraud protection:Chargebacks are a far more frequent problem for credit repair companies than fraudulent transactions, but accepting payments electronically is inherently riskier than processing them in-person no matter what type of goods or services you sell. Fraud protection solutions help you spot and screen suspicious transactions.
  • Pick the right payment processor: Working with a high-risk payment processor gives you a real edge. High-risk refers to businesses in industries that are prone to a higher rate of chargebacks. The right high-risk payment processor will have experience in mitigating the risk of chargebacks, and managing other issues of specific concern to credit repair businesses.

T1 Payments specializes in meeting the needs of credit repair companies and other high-risk merchants, providing a full suite of payment processing and payment gateway services that integrate with over 175 different shopping carts. T1 Payments provides flat fee merchant accounts and offers comprehensive account monitoring, reporting and support to help high-risk merchants mitigate chargebacks, fraud and other business risks.
To find out more about our customizable global payment solutions for high-risk merchants please visit or call 866-518-2216.

What To Do If Your Merchant Account Is Terminated

Everything was going fine with your online business – until you suddenly discover that you can’t process any transactions. Or your sales records and bank statements don’t match, you know you should have a lot more money in your account.
What happened? It could be a tech glitch, or another problem. But chances are your merchant account has had a hold or freeze placed on it, or has been terminated. You probably figure this can’t possibly happen without some sort of prior warning from your payment processor, but some processors will act first and notify you afterward.

Understanding Holds, Freezes and Terminations

Holds: Payment processors can withholding money from your transactions and hold it in a separate fund. Typically, a processor does this to protect themselves from a perceived risk of excessive chargebacks or when it suspects fraud. Holds can be placed on specific transactions (typically ones for a large amount of money, or that trigger the fraud protection filters), or may be placed on a percentage of your overall sales. The hold may be temporary or ongoing.
Processing freeze: is a temporary halt on your ability to process payment cards. This typically happens when a processor wants to do a full analysis of your transactions, suspects you may not be abiding by the terms of your payment processing agreement, or wants to adjust the terms of your agreement. You’ll usually be given the chance to prove that the freeze should be lifted.
Termination: If your merchant account is closed (terminated) it’s unlikely that you’ll be able to convince the processor to reinstate you. Terminations typically happen when a payment processor believes you have violated the terms of your agreement, usually by misrepresenting your business.

The Risks of Running a High-Risk Business
High-risk businesses are subject to sudden terminations, freezes and holds more often that one would expect. Often, this is because a third-party processor provides a merchant account without thoroughly vetting the business, and later discovers it’s a high-risk business. The account is then terminated for violating terms, even if you didn’t misrepresent your business. And don’t make the mistake of signing up for a merchant account with a third-party processor that doesn’t do business with your industry – you may get away with it for a bit, but sooner or later your account will almost certainly be frozen or closed.
Other reasons for sudden terminations and freezes include regulatory changes (which are far more likely to affect high-risk businesses), shifts in the types of businesses accepted by ecommerce platforms, and chargebacks, fraud or suspicious activity associated with the merchant’s business.
Suspicious activity can include anything that violates the terms of your agreement with the payment processor. This could be making deposits for another merchant, or accepting payments for anything outside of the specific goods and services you stated on your account agreement.
Fraud involves things such as misuse of payment card information, failure to deliver merchandise, overcharging consumers, fraudulent transactions, and other unsavory activities. Some fraud is a deliberate attempt to deceive, and other types are caused by bad business practices or poor customer communications.

How Chargebacks Can Kill Your Business

While there’s not much that you can do if a processor decides not to do business with anyone in your industry, you do have some control over the most common reasons for merchant account closures: excessive chargebacks. Usually, payment processors expect to see a chargeback ratio of 1% or less. This figure is arrived at by dividing the total number of chargebacks by the total volume processed during a month.
This is a problem for high-risk businesses, which is any business in an industry that has a higher-than-usual number of charge-backs. High-risk industries include CBD sales, online gaming, online dating, telemarketing, pharmaceuticals, adult products and services, travel services, Bitcoin trading, e-cigarette/vaping devices and products, timeshares, and others. If your processor doesn’t understand the particular needs of high-risk businesses, you may suddenly be facing a financial disaster when your account is terminated with no warning.

What To Do If Your Merchant Account Is Terminated
If your account is terminated, you’ll need to find a new payment processor fast. Unfortunately, this will likely be a challenge, as you’ll almost certainly be listed in the terminated merchant file (TMF), also known as the MATCH (Member Alert to Control High-Risk) list, maintained by MasterCard and accessed by Visa and American Express. The purpose the list is to “identify a potentially high-risk merchant before entering into a merchant agreement.”
Choosing a payment processor like T1 Payments that specializes in high-risk businesses is your best defense against having your merchant account terminated or frozen unexpectedly. And even if your account with another processor has been terminated or frozen, T1 Payments may be able to help you get back to business fast and stay in business with services like chargeback prevention and fraud protection.
T1 Payments specializes in meeting the needs of high-risk merchants, providing a full suite of Payment Processing and Payment Gateway services. T1 provides flat fee merchant accounts and offers comprehensive account monitoring, reporting and support to help high-risk merchants mitigate chargebacks, fraud and other business risks. And our customer support team members are the best in the business.

To find out more about our customizable global payment solutions for high-risk merchants please visit or call 866-518-2216.

A Big Win for Sports Betting – T1 Payments and Fantasy Sports

A Big Win for Sports Betting – T1 Payments and Fantasy Sports
Sports betting in the United States has just been given the go-ahead by the U.S. Supreme Court, and states are now free to enter what has become a lucrative industry.
Experts predict that most bets will be placed online in the near future. That’s partly because doing business online or via apps ramps up the profit potential. And also, since many states will need to sort out legal issues before they can enter the marketplace, a significant opportunity exists for those who can offer betting services across state lines.
Additionally, states are expected to encourage mobile and online betting options, to divert gamers from making transactions with illegal bookmakers. The underground sports betting economy in the United States is now estimated to be worth at least $150 billion a year – much of it illegal. Legal sports betting in Nevada totaled nearly $5 billion last year.

Online Wagers – A Risky Business?
Online gaming is already considered a high-risk business, and that’s not likely to change with the SCOTUS ruling. Any business offering online sports wagers – and other types of gaming – will see significant benefits from working with a Payment Processor who has experience in high-risk payment space.
High-risk businesses have a higher-than-average chance of experiencing:

  • Chargebacks
  • Payment card fraud
  • Product returns/refunds
  • Out-of-country sales

There are other issues that can result in a business being classified as high risk, including the owner’s own financial history and how long the company has been in business. Since SCOTUS has just struck down the federal law, many financial firms will be struggling to understand how to offer payment services to businesses offering sports wager services online.
The competition in the sports wager space is expected to be fierce and fast. Even if a business could afford to wait to be approved by standard Payment Processors, high-risk businesses will typically get automatically rejected by the majority of financial instructions. Your best bet: work with a company like T1 Payments who specializes in offering financial services for high-risk businesses.
T1 Payments get high-risk businesses online fast, with a comprehensive service package that includes risk management, chargeback protection, and advanced fraud monitoring – that can quickly be tailored to meet any high-risk business’ specific needs.

What Happened? The Supreme Court Decision
On Monday, May 14, the U.S. Supreme Court, in a 6-3 ruling, struck down a federal law that banned states from regulating (and taxing) sports betting. The “Professional and Amateur Sports Protection Act” (PASPA) didn’t ban sports betting – it just didn’t let states do anything about controlling the practice. States that already had sports wagering processes in place (Nevada, Oregon, Delaware and Montana) were grandfathered in under PASPA.
New Jersey challenged PASPA, and won. From the SCOTUS opinion:
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA “regulate[s] state governments’ regulation” of their citizens. …. The Constitution gives Congress no such power. The judgment of the Third Circuit is reversed.”
It is now up to each individual state to regulate sports gambling as it sees fit, or for Congress to step in and standardize sports wagers across the country. It seems likely that states will rush to take the lead. It won’t happen overnight though; many states will need to update their constitutions before their law makers can legalize sports betting.
The New Jersey Division of Gaming Enforcement has said they can have their new regulations in place within 90 days, and will be able to offer sports betting at its racetracks and casinos – and almost certainly online- before the end of 2018. New Jersey’s Monmouth Park track says they can be ready to go within a few weeks. Other states that are likely to move forward very quickly include Connecticut, Delaware, Illinois, Mississippi, New York, Pennsylvania, Rhode Island and West Virginia.

Fantasy Sports and T1 Payments

As the Payment Processor of choice for the online gaming industry, T1 Payments is perfectly positioned to assist customers in accelerating their profit potential now that sports betting has been legalized.
Our customers know that T1 Payments offers exceptionally flexible underwriting, fast approvals, and flat fee merchant accounts.  Our customers all gain easy access to all the most popular shopping cart solutions, a secure payment gateway, active account monitoring with fraud scrubs and real-time online reporting. Our customer care team is knowledgeable and motivated to solve problems and works hard to keep our customers well-positioned for success.
To find out more about our customizable global payment solutions for high-risk merchants, and how the SCOTUS ruling may open new online opportunities, please visit or call 866-518-2216.

CBD, Payment Processing, and PCI Compliance

CBD, Payment Processing, and PCI Compliance

Online vendors of CBD oil are accustomed to being classified as high-risk businesses. So, you’ll be happy to know that, when it comes to PCI DSS compliance, your small to medium-size ecommerce site is almost certainly considered “low risk.”
PCI DSS defines risk based on how many transactions a company processes. Which means that that all of the service providers that you work with – your payment processor, payment gateway, bank, ecommerce platform – are likely considered to be high risk. High-risk – which is “tier 1” on the PCI DSS compliance scale – translates to handling 1 million or more payment card transactions a year.
That said, anyone whose business involves payment cards (credit, debit and/or prepaid cards) is responsible for complying in some fashion – even if it’s only doing your due diligence when selecting service providers – with PCI DSS. Read on to find out what you need to do.

What Is PCI DSS?
PCI DSS stands for “Payment Card Industry Data Security Standard.” Typically, people just refer to the standard as PCI.
The standard itself is a set of 12 minimum best technical and operational practices for securing payment card data when it is captured, in transit, and at rest. This covers the entire sale cycle – you capture the data when a consumer provides his or her payment card information, that info then travels through various links in the payment services chain, and ultimately is stored “at rest” in a database or databases.
PCI DSS compliance is intended to help businesses prevent, identify and defend against security threats involving the use of data associated with payment cards. The PCI DSS was established and is updated as needed by the PCI Security Standards Council, which was founded in 2006 by American Express, Discover, JCB International, MasterCard and Visa Inc. The current version of the PCI DSS is v 3.2.

Do I need to comply with PCI?
Yes, any merchant that accepts payment cards needs to be in compliance with PCI DSS. If you don’t comply, you may be subject to fines and penalties – worst case scenario you can lose your ability to accept payment cards.
However, the compliance requirements vary according to the type and size of your business. A company that handles a lot of transactions, such as a Payment Processor, is required to comply with a much stricter standard. A merchant with a small, online store that processes less than a few thousand transactions a month has more basic responsibilities.
PCI DSS has four tiers of compliance. The amount of transactions a business processes typically determines the standards they need to comply with – the more transactions, the more you need to do to secure data. Here’s how Visa breaks it down:

  • Tier 1 processes over 6 million Visa transactions per year. But payment card providers may decide that any specific business, due to its perceived risks or after experiencing a data breach, falls under Level 1.
  • Tier 2 processes 1 million to 6 million Visa transactions per year.
  • Tier 3 processes 20,000 to 1 million Visa e-commerce transactions per year.
  • Tier 4 processes less than 20,000 Visa e-commerce transactions per year.


PCI DSS and CBD Merchants
In general, a small business selling CBD products will work with third-parties such as payment processors like T1 Payments, ecommerce web platforms and other service/solution providers to accept payment cards.  While you cannot absolve yourself of all responsibility for PCI Compliance when working with third parties, your primary duty is due diligence. In other words, you need to find out what level of PCI DSS your partners must comply with and determine, to the best of your ability, whether your partners are actually in compliance with PCI DSS.
Service providers can opt to have an annual onsite assessment conducted by qualified auditor, or may conduct an annual Self-Assessment. Choosing one method over another is not particularly indicative of the provider’s compliance. So how do you validate whether your partner really is compliant with PCI DSS?

Google to see if they have experienced any security breaches. If so, find out when it happened, why, and how the problem was remediated. If a provider has experienced multiple breaches, you might want to consider other options.

Talk to the sales rep or customer care person about PCI DSS compliance. Some providers may tell you that they go beyond compliance with PCI DSS and that’s a good thing to hear as PCI DSS is meant only to address a standard set of security protections.

Your best judgement is a good indicator of a provider’s compliance. Ask yourself these questions: Is the company well-established? Does it have solid relationships in the financial industry? Does its customer support and/or sales department respond easily and knowledgably to questions about PCI DSS or is there a very long pause? Do they seem to be irritated that you asked about compliance? Is PCI DSS compliance mentioned on the company’s website?

Bottom line: PCI DSS is part of your job description when you’re running an ecommerce business site. As a small business owner with partners handling payment card processing your business’ risk exposure is probably minimal, but you need to choose the right partners. Keep records of the questions you ask potential partners, and their answers to prove you did your due diligence. Chose established providers, and remember that the least expensive option may end up costing you the most in the long run.

T1 Payments specializes in meeting the needs of high-risk merchants, providing a full suite of Payment Processing, including advanced fraud scrubbing and other risk management tools, and Payment Gateway services that integrate with over 175 different shopping carts. T1 also provides flat fee merchant accounts, complies fully with PCI DSS (Level 1), and offers comprehensive account monitoring, reporting and support to help high-risk merchants avoid chargebacks, fraud and other business risks. To find out more about our customizable global payment solutions for high-risk merchants please visit or call 866-518-2216.

Fraud Scrubbing for High-Risk Businesses

Fraud Scrubbing for High-Risk Businesses

Fraud scrubbing is a technological solution intended to greatly reduce merchants’ risks of payment card fraud. Having a fraud scrubbing solution in place is especially important for high-risk businesses, as these companies have a higher-than-average chance of experiencing payment fraud and so-called “friendly” fraud (also known as chargeback fraud). By using a fraud scrubbing solution, suspicious activity and dubious transactions can be detected and blocked before they are processed.

How Does Fraud Scrubbing Work?
Fraud scrubbing technology uses rule-based filtering to quickly spot and stop potentially problematic transactions. The configuration of the rules is simple, “If A occurs, do Z.” As an example:
“If shipping address does not match billing address, flag transaction.”
“If transaction originates from (specified) IP address range, block transaction.”
Fraud scrubbing programs make these rules easier to configure by providing dropdown menus with options to select from for each rule.
The pre-set rules are based on patterns typically seen in fraudulent payments. These patterns include:

Anomalies: Exceptionally large orders, rapid-repeat transactions, users who consistently enter the wrong PIN numbers or Credit Card Identification Number (CCN) codes – anything that deviates from expected activity and might result in substantial losses may be flagged for review.
Activity: If a payment card being used for multiple online transactions within a very short period of time, it will probably be flagged as a security risk. It’s typical for criminals using stolen or otherwise compromised payment cards to try and use the card quickly before it’s reported as lost or stolen. Of course, the consumer may legitimately be doing a lot of shopping at once for holiday presents, and transaction velocity checking filters can be adjusted to reflect expected increased activity at certain times of the year.
Blacklists: Some patterns point to extremely obvious problems, but it takes fraud scrubbing filtering to spot them. If the payment card number, consumer’s name or other details associated with a transaction have already been flagged as high-risk, a fraud scrubbing check of blacklist databases will halt the transaction. This could include card data that is believed to have been compromised in a security breach, or transactions coming from countries with a significant history of international transaction fraud.
IP: does the consumer’s current IP address indicate that they are located in a different country than the one associated with their payment card? The consumer may be shopping online while travelling, but it’s also quite possible that their payment card has been stolen or cloned.
Trends: These rules address activities that fraudsters typically enagage in. As an example, criminals often test stolen payment cards by charging small amounts, both to see if the card is valid and if it is being monitored by the issuing bank or cardholder.

Verification: does the shipment address match the billing address associated with the payment card? While people may want shipments sent to their office or another convenient location, mismatches between payment address and shipping address can indicate the use of a compromised payment card.

Configuring Fraud Scrubbers
Fraud scrubbing technology features a set of rules that define what should happen if something occurs. As shown in the examples above, some actions that may appear fraudulent can actually be totally innocent. You don’t want to block customers from purchasing items, nor do you want to make it easy for criminals to defraud you. So, the default rules can be configured to fit an individual business’ needs.
For example:

  • You have three or four customers who place extremely large orders regularly. You can place their names – or even specific credit card numbers – on an exceptions list.
  • You can raise or lower transaction limits based on the level of risk you’re willing to accept.
  • You can opt to be conservative and “block” suspicious activities entirely, or you can adjust the filters to “flag for review.”

You can also screen for innocent mistakes that can result in chargebacks. For example, you can alert users who have placed multiple, identical articles in their carts, or who have attempted to purchase multiple subscriptions. In these cases, the fraud scrubber may be set to flag for review, or may trigger an error warning and ask the consumer to manually confirm the purchase. Different options are available depending on the fraud scrubbing solution and the ecommerce platform that’s being used.
Fraud scrubbers can also be configured to decline problematic transactions before authorization (prior sending the transaction to the acquiring bank for processing) and after authorization (prior to shipping product).

Choosing a Fraud Scrubbing Solution
High-risk businesses, and new e-commerce merchants, may initially need help to configure a fraud scrubber properly. It’s best to utilize a fraud scrubbing solution that is offered by your Payment Processor, who should be experienced in both mitigating potential problems for high-risk businesses and willing to work with you to figure out your needs.
You should be able to view fraud scrubbing activity, and act on items flagged for review, though an easily accessible but secure dashboard accessible through your browser.  You should also be able to update and reconfigure your filtering through the dashboard, including the filters that determine actions based on customer history interactions, IP addresses, email addresses, transaction count and transaction amount, and velocity checks.
Any fraud-scrubbing solution should be updated regularly for it to be effective, and to keep you one step ahead of intentional fraud. Talk to your Payment Provider to determine whether a fully-automated solution is the best choice for your business, or what level of customization will best fit your needs.
The right fraud scrubbing solution, properly configured, will block the majority of fraudulent transactions in real time, and enable you to scrutinize potentially problematic activity to determine whether it is genuine or fraudulent.
T1 Payments specializes in meeting the needs of high-risk merchants, providing a full suite of Payment Processing, including advanced fraud scrubbing and other risk management tools, and Payment Gateway services that integrate with over 175 different shopping carts. T1 also provides flat fee merchant accounts, complies fully with PCI, and offers comprehensive account monitoring, reporting and support to help high-risk merchants avoid chargebacks, fraud and other business risks. To find out more about our customizable global payment solutions for high-risk merchants please visit or call 866-518-2216.