Recurring Payments for High Risk Merchants

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Recurring Billing Enhances Cash Flow

Recurring payments are popular for subscription billing models for online entertainment, internet services, downloads, and digital goods sold by high risk merchants.

Recurring billing creates a predicable revenue stream for high risk merchants.  And expands the life cycle of customers over a longer period of time than single transactions allow.  Once recurring billing is established, customers get used to seeing the payment on their monthly statement and continue to pay month after month.

Consumers are increasing comfortable with recurring billing, largely due to the recent growth of online bill payments for household bills.  Aite Group forecasts that over 5.6 billion bills will be paid online in 2012, growing to over 6.3 billion in 2013.  Consumers already enjoy the convenience of recurring monthly payments for utilities, rent and other household bills.

6 Tips to Increasing Revenues from Recurring Payments

  • Give customers a good reason to opt for recurring payments. To quickly obtain the benefits of recurring payments to your bottom line profits, motivate your customers to sign up by offering a discount or other incentive.
  • Simplify the sign up process. Make sure the procedure is easy to understand.  Let the customer know when the billing will occur.
  • Make it easy for customers to cancel recurring billing. Let customers how to cancel and make the process as effortless as possible to reduce customer frustration. This will help keep chargebacks low, while increasing customer satisfaction.
  • During the first cycle of recurring billing, advise the consumer in advance of the payment being debited. Some merchants will continue sending notification of billing every month. Other merchants will simply send an email the first month confirming the on-going billing along with information on how to cancel.  Once recurring billing is in place, consumers get used to seeing on a monthly statement and monthly notices may no longer be necessary.
  • Accept alternative payments, such as echecks in addition to credit cards. Millions of Americans regularly pay for goods & services online with electronic checks.  
  • Keep recurring billing safe by using tokenization within your payment gateway.  Instead of keeping card numbers on file, the gateway encrypts transactions and sends a token to complete the transaction.  This eliminates the need  for you to keep card records on file.


Recurring billing stabilizes cash flow by providing you predictable revenue streams. 

High risk merchants selling digital content, adult entertainment, and streaming media commonly have recurring billing models.  Recurring payments for tangible products are also on the rise. 

Recurring payments are an affordable and convenient way for shoppers to buy from you. And increase the lifetime value of customers to your business. 

Are you interested in boosting sales & profits with recurring billing?

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How High Risk Merchants Protect Against Fraud

Protecting against fraud is vitally important for high risk merchants

Here are 15 fraud prevention techniques that have proven to be effective.

  • Use current authorizations.  Get a new authorization if the original expires before shipment.  For instance, if a product is on back order, obtain a new authorization prior to shipping to be sure the card is still approved.
  • Enable address verification systems (AVS).  AVS matches the billing address to the address on file for the card.
  • Require card verification codes to verify the card is valid.  The card verification number is the 3 or 4 digit number that appears on the back of the card.
  • Manual review of large orders.  If an order is significantly higher than your normal transaction amount, examine the order for inconsistent information such as mismatched information in different fields or misspellings on cities or states.   For especially large orders, verify orders with the cardholder.  Watch for orders where overnight delivery is demanded since most internet shoppers will not pay extra for a rush shipment.
  • Make sure internal security procedures are maintained on a consistent basis.  Use the latest encryption and firewalls technologies and keep them up to date.
  • Use a descriptor that is easily recognized by customers.  This will help keep chargebacks low because buyers will recognize the transactions.
  • Put fraud-warnings on your site to let customers know that fraudsters will be prosecuted.  Warning buttons or images on your site help discourage fraudulent activity as cybercriminals move on to easier targets.
  • Track delivery of shippable products.  Use shippers that allow for easy tracking, delivery and receipt of packages.  Watch for many orders being sent to the same address as fraudsters often send to “drop addresses” before reshipping goods  out of the country.
  • Encourage customer registration in order to obtain information which can be used in the future to validate a buyer’s identity.  Build profiles of positive transactions which will make it easier to identify fraudulent ones.
  • Build a negative database of information such as names, addresses, IP addresses, phone numbers, etc that have been associated with cases of fraud.  Some payment processors and gateways allow the sharing of negative databases among merchants.  If your processor gives you this option, take advantage of it.
  • For large orders, ask the buyer for the name and phone number of the card issuing bank.  Buyers that don’t know the name of the bank could be using a card which was stolen
  • Implement IP tracing software.  IP software verifies that the address of the buyer’s computer is within 500 miles of the the ship to address.  Combine this with device fingerprinting technology for added protection.
  • Pay special attention to international transactions.  International buyers represent a good opportunity for high risk merchants to increase market share.  But there are areas of world that are associated with very high incidents of fraudulent transactions and it is often wise to block buyers from these countries.
  • Rules based detection software help control fraud.  Rule sets can be based an endless variety of parameters, including locations, past buying patterns, velocity levels, and so forth that can be combined to give a score on the chance of fraud within a given transaction.  Statistical modeling software can be added for additional protection.
  • The card brand websites and the Department of Justice have good information on their sites on how to prevent fraudulent transactions.  Well worth a visit.


Protecting your business against fraudulent transactions is vital to your success.  Guard against fraud by enabling your fraud-fighting tools on your high risk gateway. And implement the the tips in the article to keep your payment processing safe.

Are you a high risk merchant that wants to protect your business against fraud?

Contact today