What Makes A Sale 'High Risk' When It Comes To Payment Processors?

For example, we have several adult and so-called 'non-adult' processing accounts currently at a few different processing companies, in both adult and non-adult but even after all these years of working online, im still not understanding how one product, site or service can be deemed 'high risk' when another one isnt, even if it is generating a sales lead the same way as a 'high risk' purchase.

Does anyone happen to know what criteria the processing companies, or Visa/Mastercard/Amex, etc use to decide if something is or isnt 'high risk' when it comes to online sales?

Regards,

Lee

Supposedly selling a tangible item is lower risk than an intangible membership because you can theoretically repossess a tangible item for non-payment.

After 15 years of paying third party processors like CCBill to take the risk of processing these high risk accounts I think it's time to question why we're still paying out 15% of the entire adult industry to merely cross-check a sale against their blacklist.

Hi Lee, The card associations assign codes to each type of transaction therefore high risk or broken down further, adult get catagorized under one code while non-adult/lower risk transactions are broken down into many other catagories.

To be more general, high risk or adult transactions, have historically brought with them a higher rate of fraud and chargebacks thus they are deemed high risk.

Paul thanks for the info, in laymans terms though, what makes an order for Acai products lower risk than for a porn site membership though?

Thats more what i was getting at, how do they decide that a non-porn product, deserves a lower percentage rate vs. a porn product, is there a set criteria anywhere or even a list of what does/doesnt make the grade as 'high risk'?

Regards,

Lee

Quote:

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Originally Posted by Lee

Paul thanks for the info, in laymans terms though, what makes an order for Acai products lower risk than for a porn site membership though?

Thats more what i was getting at, how do they decide that a non-porn product, deserves a lower percentage rate vs. a porn product, is there a set criteria anywhere or even a list of what does/doesnt make the grade as 'high risk'?

Regards,

Lee

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You would have to ask Mastercard and Visa really or the bank that your merchant account is through if that's the case. They both have their own lists of merchant catagory codes and I don't have them on me but you can locate them on the respective sites.

I'd imagine (so take it for what it's worth) that a big part of the equation is aggregate charge back ratio.

The banks and card companies get a much bigger picture when they're processing for 2,000 companies selling the same thing.

I'm sure they have some kind of long Einstein type of formulation with all the return and non return data of similar products or classes of products that they have used and kept track of since people sold rocks.

Whatever it is, it's to cover their butts and make sure they guarantee a profit of some kind from each and every transaction they process.

And I am sure that even if this formulation does not exist, they would tell you it did to explain their product discrimination.

Lets face it...

CC card companies can charge more BECAUSE it's porn. I'm sure gambling sites suffer the same or say psychic sites, etc...

"SIN" businesses will be targeted for higher fees, etc...and the CC card companies know that even so, folks will still use their services.

$0.02