Merchant Card Services & Fraud Prevention

With merchant expansion comes credit card fraud expansion, this is a sad truth.  Many e-commerce merchants sell to international clients, this alone increases the fraud probability ten-fold.  However, there are things you can do to protect yourself.

1. Beware of high risk countries. Some are famous for originating fraudulent credit card transactions.   Below are the top 5

Top 5 countries that cause Credit card purchase fraud
Top 5 countries that cause Credit card purchase fraud

Scrutinize every purchase transaction from the above countries, decline these purchases for any smallest thing that looks wrong.

2. Check the IP address.  This one is simple: if the IP address doesn’t match the Credit Card billing address, manually review this order.  If these don’t match, and IP address is from the High Risk country – Automatic Denial.  The risk is so great with these countries, that some merchants block IP address associated with them.IP address from the High Risk country3. Think about your product. Simple economics, if your product has negligible hard costs (digital goods) you will only loose a portion of your profit due to fraud.  However if you have a tangible product with fixed costs (manufacturing, storing, shipping) when fraud occurs – you lost your costs which quickly adds up.  There are numerous examples of companies going out of business due to large credit card fraud. Make sure to implement stricter fraud rules depending on your product.

Merchant Card Services & credit card Fraud Prevention

4. Fraud versus Chargebacks. Believe it or not Chargebacks can cause more damage to your merchant account in the long run than fraud alone.  If you shipped 10 items to a fraudulent address and you never got paid, that’s a big loss.  But if you keep getting hit with Chargebacks and they are growing to more than 1% of your sales, your merchant account will be terminated, plus you could end up on MATCH list.  This means that you will not be able to get a merchant card services account for 5 years.  Always be paranoid about your Chargebacks!

5. Red Flags of Fraud. Here’s a list of things you should always watch out for:

  • A customer placing multiple orders in a short time span and shipping to different addresses.
  • The order was placed late at night, especially between 2:00 and 4:00 am
  • Name and address contains spelling errors
  • The email address is a nondescript jumble of letters and numbers
  • The customer orders multiples of the same item
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8 important things to consider when opening a High Risk Merchant Account


High-Risk Merchant account payment processingSuccess of your Business depends on ability to sell – which means making it easy for your customers to buy. Cash isn’t easy and electronic wallets aren’t in yet, so accepting Credit Cards is your main venue. When you outgrow PayPal, Square and Stripe, here are the 8 most important items you will need to know about opening an account with a Merchant Service Provider.


1.  Be prepared to gather a lot of documentation. Your merchant processor will ask for:

  • Complete and signed application
  • URL – have your website up and running
  • Copy of D/L, passport
  • Utility bills
  • Credit history
  • Incorporation documents and/or other corporate docs
  • License and/or Legal Opinion (if applicable)
  • Business Plan
  • Recent bank statements, 3-6 months
  • Latest credit card processing statements 3-6 month
  • Warehouse fulfillment contract (if applicable)
  • Photos of your office/warehouse/location

2. You will have to post a Reserve. Reserve will be between 5-20% or 6 month rolling reserve.  This protects processor’s losses, the more comfortable your merchant provider is with you – based on the docs provided in #1 – the lower the reserve.

3. Sign a 2-3 year contract.  High-Risk merchant providers will want your commitment, a 2-3 year contract with a cancellation penalty is not out of the ordinary.  Penalty is normally called ETF – Early Termination Fee, read the agreement closely to understand what you are getting into.

4. Sign a personal guarantee.  High Risk means you pose more liability for the Merchant Service Provider, both Bank & Provider will want you to be on the hook as well.  Because the owners guarantee personally, posting a Reserve from the company will protect Guarantors by creating a financial cushion – Reserve isn’t always a bad thing.

5. Offshore versus Domestic.  Make sure you understand where the Acquiring Bank is located.  Offshore banks have their own pluses and minuses

  • Processing Credit Cards is a BIG PLUS. If all domestic processors decline you, go offshore
  • Cons:
    • declines can go up
    • foreign Corp set up – will cost $
    • deal with international laws
    • beware of third world country banks

6. Fees and Rates. High-Risk merchants will pay more than Low Risk guys.   The fees will reflect the liability created for Payment Providers but compare the fees through to make sure you stay competitive among High Risk rates.

7. Chargebacks.  If you don’t already, you will need a plan on how to manage Chargebacks.  Most likely you are a High Risk merchant because your industry is experiencing high percentage of chargebacks (above 1% is High).  There are tools to manage Chargebacks, a good description of how to go about it is HERE

8. IT Integration.  There are several ways to integrate with a Merchant Service Provider:

  • Hosted payment page. Easiest: simply redirect customers to a secure payment page
  • Inject a hosted payment page through iFrame. This allows you to keep customers on your website
  • Integrate through Processor’s API, will need an SDK file
  • Connect through shopping cart plug-in

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Next Steps:

1. Read What to look for when choosing a Merchant Service Provider
2. Click to Compare your rates on to see which Payment Provider gives you the best deal.
3. Get a free consultation for payment processing with AllRates analyst to discuss your particular needs for payment processing.


High Risk Merchant Account Aggregator Guide

This Merchant Account Aggregator Guide has everything you need to know about Payment Processing Aggregation.  Whether you are a High Risk Merchant or not, but need to understand Aggregators, you’re at the right place.

Merchant Aggregator versus Direct MIDs

A MID (Merchant ID) is given by the Acquiring Bank.  When merchants receive their own MID they work directly with a Payment Provider/Bank.  This is important because in this scenario it is the Bank that decides to accept or decline the merchant.  It shouldn’t be a reprise but Banks stay on a conservative side.

In the case of Merchant Aggregation, it’s the Aggregator that gets a MID from an Acquiring Bank and then collects several merchants under this MID umbrella.  This means that the merchant is largely invisible to the Bank and the Aggregator is the one doing due diligence, ultimately deciding to accept or decline.

High Risk Merchant Account Aggregator Guide

Types of merchant processing Aggregators:

Behemoth Aggregators: PayPal, Square, Stripe, Amazon Payments, etc.  These board very large number of merchants every day, they are easy to work with: you can open an account and start credit card processing the same day.  Behemoth aggregators were created for startups, and small to medium size businesses that don’t have large volumes.

High Risk Aggregators: this type of aggregator is created specifically to hide very High Risk merchants behind their umbrella MID.

Guidance for High Risk Merchants:

If you are a small, under $200k annual volume merchant, you can fly under the radar of Stripe and the like.  I’ve known high risk guys happily processing with PayPal or Stripe for years, it’s fairly easy to slip through the cracks and stay processing.

However if you:

  • the business, or the owners will not pass the initial due diligence review
  • have been placed on a TMF/MATCH list
  • or you are so blatantly High Risk that you are ‘Radioactive’

then you still have a chance to get credit card processing through a High Risk Aggregator.


Keep in mind that Aggregators charge higher rates.  Behemoths offer flat fee or at least very well documented tiered pricing. Yes, they will charge more, but they won’t rip you off.    High Risk Aggregators – merchant beware, they know they are your last resort and they will take advantage of it by charging the highest credit card processing rates.  Because they CAN….

Things to keep in mind before signing with a High Risk Aggregator:

  • How long they’ve been in business and does it look like they will stick around
  • Reputation (check the reviews)
  • Try to find out who and where their Banks are
  • Test their customer service
  • Which credit cards they take.  How about alternative payments?
  • Ask about IT integration
  • Negotiate your rate

AllRates works with a few Aggregators in the industry.  Go ahead and submit the form, we will let you know if we can help.

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Next Steps:

2. Compare credit card rates on to see which Payment Provider gives you the best deal.
3. Get a free payment processing consultation with AllRates analyst to discuss your particular needs.


Should you as a business and a merchant start accepting Bitcoin?

Should business or merchant accept Bitcoin

If you are researching reasons to start accepting Bitcoin at your business then you probably heard of it and have a basic idea of what Bitcoin is.  If not, here’s a Wikipedia definition 

Here are 13 reasons for merchants to accept Bitcoin:

  1. Bitcoin is legal
  2. Bitcoin price is skyrocketing.  If you sold a purse for 1 Bitcoin last month – today it’s worth 1.5
  3. Processing fees are low. Small merchants that don’t want to pay Credit Card fees, can save
  4. The whole Bitcoin network is secure.  Blockchain is major technological innovation
  5. A lot of buzz around Bitcoin, you can get free marketing just from announcing you accept cryptocurrency
  6. It’s possible for Bitcoin to go away but cryptocurrency is here to stay.  You ignored it for years but it’s reaching the mainstream, don’t get left behind
  7. Large retailers are embracing Bitcoin.  Amazon, Overstock
  8. Some High Risk merchants might not be able to get Credit Card processing due to nature of the business – Bitcoin may be your only option
  9. There are whole business types where customers prefer to pay with Bitcoin.  Various IT industries, luxury items, adult
  10. Government cannot freeze or seize your Bitcoin funds
  11. Governments are moving away from Cash and it will eventually go away
  12. Customers are asking you to accept Bitcoin
  13. Competitors are offering it
  14. Lincoln, Caesar, Napoleon, Cleopatra and many others didn’t use Bitcoin and now they are dead.  Not using Bitcoin is killing people (joking, couldn’t resist 🙂


Here are 5 reason not to accept Bitcoin

  • Even though Bitcoin network is secure, your e- wallet is not.  Watch it like a hawk
  • Customers are anonymous, because of this Bitcoin has become part of criminal landscape
  • Bitcoin could be a bubble, if it bursts and you didn’t exchange it to USD – you’d lose a lot of value
  • IRS considers it an asset and requires you to report gains/losses
  • Most exchanges have limits on withdrawals/deposits
    • declines can go up
    • foreign Corp set up – will cost $
    • deal with international laws
    • beware of third world country banks


Conventional processing of credit and debit cards is the backbone of U.S. retail and is not going away anytime soon.  However with time there is a possibility of seeing a larger portion of the economy shift to virtual currency.   To be clear, most payments are already electronic but the switch from Credit Cards to Bitcoin will involve huge costs and will not happen overnight

Your decision should be mostly based on:

  • Your customers (are they asking for it)?
  • Your industry (are competitors doing it)?
  • Your understanding of Bitcoin (start small until you really get it)
  • Your technical capabilities (do your research first, there are lot of hackers out there)

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Next Steps:

2. Compare credit card rates on to see which Payment Provider gives you the best deal.
3. Get a free consultation with AllRates analyst to discuss your particular needs for payment processing HERE


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