Category: Credit Card Processing

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 t1payments.com or call 866-518-2216.

Shopify and High Risk Payment Processing

High Risk Businesses, Payment Processors and Shopify

Your online store is finally open for business. You photographed your merchandise, wrote the copy, designed the site, learned the technology. Now your hard work is going to start paying off. Things are looking good, you’re excited – and then you suddenly find out that you can’t accept payments via Shopify.
Chances are good that this has recently happened to you if your business is considered “high-risk” and your payment processor uses the NMI gateway, which is true of the majority of high risk payment processors.

What to do? The good news is that T1 Payments will be able to provide a solution that will allow you to stay fully integrated with Shopify’s platform and continue processing payments for your high-risk store. Call T1 Payment’s merchant support at 866-518-2216 x3003 for more information.
Your other options include using one of the low risk gateways that Shopify accepts, but don’t count on that working for long. The payments industry is very efficient about knowing what businesses are high-risk.

What Is High-Risk Payment Processing?

Payment processors and payment gateways consider some types of businesses and industries to be high risk. This is determined by a high average (or high likelihood of) chargebacks or returns within a specific type of industry, or a merchant’s unique payment processing history.
If your business falls into the high-risk category, many payment service providers will not provide you with a merchant account. And to accept payments online, you need a merchant account.
The solution is to work with a payment processor who accepts high risk clients, and provides a suitable payment gateway.
Wondering what the difference is between a payment processor and a payment gateway? A payment processor such as T1 Payments transmits data between the merchant (that’s you); the bank that issued your customer’s payment card and your bank.  A payment gateway securely authorizes online payments. Without these services, your ecommerce business is dead.

A Shopify Solution For High Risk Businesses

Since Shopify has removed NMI from its list of accepted gateways, payment processors using NMI – and, again, that’s the gateway of choice for many high-risk processors – can no longer execute transactions for their customers using Shopify.
T1 Payments’ solution means that businesses who use Shopify as their ecommerce platform will be able to continue doing business, without having to find a new ecommerce site that hosts high risk businesses and without having to rebuild their ecommerce website from scratch on the new platform.
T1 Payments will help you keep your ecommerce business going so the only thing you need to worry about is making your business grow. For more information speak to someone on our dedicated support team at 866-518-2216.

Payment Processor vs. Payment Gateway

ecommerce transaction

Payment Processor vs. Payment Gateway

Being a business owner, you’ve most likely heard the terms payment processor and payment gateway and wondered what the difference is. Each one differs in its role but is still vital in accepting payments online.

A payment gateway authorizes payments for e-commerce websites in a secure way. It acts as an online sales terminal for your business. When you sign up for a merchant account, a payment gateway may or may not be offered to you.

What is a payment processor? Basically, the payment processor, such as T1 Payments executes the transaction by transmitting data between the merchant: the issuing bank (i.e., the bank that issued your customer’s credit care); and the acquiring bank (i.e., your bank).
T1 Payments is an all-in-one provider, meaning we have our own payment gateway that is available to our merchant account holders. Using a payment gateway to securely process payments can reduce errors, soften reconciliation and speed up transaction processing. It’s the best choice for your ecommerce websites.

So, now you know that your e-commerce site needs to process payments and that’ll mean you’ll need a payment gateway as well. Some providers go through a third-party payment gateway leaving you to deal a shady third-party company when a problem arises. T1 Payments makes it simple by providing everything you need from a single provider with some of the lowest payment processing rates, 24/7 customer service, and PCI-compliant processing.

Who is Viewed as a High-Risk Vendor

Just the usage of the words “high-risk vendor” or “high-risk business” has a tendency to cause many to think the merchant is in the habit of selling problematic or suspicious products.  While some industries may get flagged as a high-risk vendor for the previous mentioned reasons, this is not necessarily the case for the many of the  companies deemed “high-risk.” For most of the companies listed as high-risk, their products or services they sell are legitimate and genuine, and are not all that controversial.
Why companies are labeled as high-risk includes a lot of factors that most people don’t know about. Let’s take a look at who is viewed as a high-risk vendor and how they are labeled this way.

Which Businesses are Considered High-Risk?

The most notable type of merchants in this category are adult bookstores, hemp oil vendors, and online gaming; just to name a few. But that’s not all the businesses that encompass the category of “high-risk”
Other businesses include:

  • Collection Agencies
  • E-Commerce
  • Multi-Level Marketing Companies
  • Telemarketing
  • Nutraceuticals
  • Travel Agencies
  • Fantasy Sports
  • Start Ups

What Makes a Business High-Risk?

Of course there are many more companies that fall under the umbrella high-risk vendors; however, the ones mentioned above are industries that are most well known.
So what do all these companies have in common which has them labeled as “high-risk.” Well, many of them have a tendency to attract customers online who purchase merchandise with stolen credit cards, or the business has a high number of “chargebacks” due to poor customer satisfaction ratings or because of a high potential for fraud. Almost all business that accept credit cards have had chargebacks due to theft or fraud; however, some of the industries already mentioned tend to have a higher rate of chargebacks than most.
Another factor that may make a company be considered “high-risk” is if the company has a history of bad credit or has been late paying their bills. This may make it harder for the business to get payment processor, or a loan from a bank.

The Two Factor Test

Two factors that most financial institutions take into account when determining a vendor as high risk are:

  1. The company operates within a high-risk industry (i.e. adult bookstores, online gaming, etc.)
  2. The risk of economic/monetary loss or failure (i.e. start up companies)

These factors are used by most banks and other financial institutions or payment processors when determining if a company is high-risk.
Yet, these factors are not able to encompass all business and industries, but they provide a solid foundation as how to judge certain companies and merchants as high-risk.

What to Expect if your Business is Considered High-Risk?

Although, many people have false ideas as to what a high-risk merchant is, it isn’t necessarily an end-all if your business is considered one.
When considering a payment processor, high-risk businesses will expect higher fees. Some of these fees include higher processing rates and account fees, a long-term contract, and possibly an early termination fee for ending the contract.

How We Can Help

Here, at T1 Payments, we provide a lot of benefits to our subscribers, unlike other payment processors. Some of these include chargeback management, encrypted and secure payment processing, risk and fraud management tools, accepting payments with lower limitations, and much, much more.

 

White-Glove Service Can Stamp Out Credit Card Fraud

It’s widely known in the industry that the second the credit card information leaves the customer, the chances of fraud increases dramatically. But what if white-glove service from your payment processor can actually serve to lower those chances?

Here at T1 Payments, we believe that we’re changing the game: by relying on our team team, and not outsourcing any elements of customer service.

Our president and CEO, Donald Kasdon, says that this is so important to our long-term success – and to the success of our customers: “Being able to talk to a real, live member of the team is a differentiator in the credit card industry. Just think of the ads for Discover that show examples of people being treated like people. Having a live member of the T1 team on the phone with you to discuss account status is not something other companies would consider doing, but it’s a way of life for us.”

Here’s an example. We all know how potentially painful chargebacks can be. At T1 Payments, a member of the team personally looks at every single chargeback.

Kasdon has more to add: “If you have a veteran of the industry, someone who has been in your shoes and has decades of experience looking through transactions, their intimate knowledge of your account can be a real plus. It’s not something we would ever outsource.”
We could automate these things, but we know that the human element plays a very important role in stopping fraudulent transactions, and that keeps more money in your pocket as a business owner.

Kasdon continued, “The attention to service continues with our approach to technology. We don’t cut corners, and that means that our customer service team needs to build relationships with the technology providers that are so important to this industry. Then, we share that knowledge with our customers, ensuring as seamless a process as possible.”

Building relationships with customers and staying on a first-name basis with customers is vital to the success of the T1 Payments business – and we think it sets us apart in the industry.