Increasing sales of high ticket items, which are generally priced above $1000, is always encouraging. A boost in selling volume is a sure sign your business is growing quickly and reaching valuable customers. But the risks you face increase alongside your sales.

High ticket items from eCommerce merchants catch attention online. Cyber criminals frequently target high ticket merchants. Exposing you to increased risk of fraud.  

Banks and traditional financial institutions are well aware of this. Most of these institutions classify items priced higher than $1000 as high ticket, while some set the bar at $500. Companies selling such items are commonly considered ‘high-risk merchants’.

These companies find it challenging to obtain card processing capacity to operate & grow. Payment processors require extensive verification and compliance-related documents to approve a high risk account. 

This means that any business selling luxury goods, household appliances, jewelry, furniture, automobiles, travel and other high ticket items will face similar issues when applying for merchant accounts.

Still, more & more customers regularly buy high ticket goods & services online.  70% of Americans say they shop online regularly. Data shows that the average amount spent is $114 per order, a figure which has grown steadily over the years and is only expected to keep rising as shopping for high ticket items extends online.  

Regardless of what your business sells, your customers are looking for it on the web. Customers have credit cards and online payment wallets to pay for your products.  But if an acquiring bank deems your business too risky to accept card payments, you’re out of luck.

There are ways you can tackle the risks involved with high ticket sales. Here’s what you need to know about securing high ticket transactions.

Chargebacks and Fraud

Credit card fraud resulted in the loss of over $3 billion for America’s economy in 2014. The Kansas City Fed found that while consumers found it more convenient to pay by cards, the businesses selling to them were ill-equipped to handle the transactions safely.

Businesses and entrepreneurs are engaged in a never-ending battle with payment fraudsters. You can keep an eye on the rate of fraud throughout the country through this map.  

Risk management firm Chargebacks911 found that chargeback rates were unacceptably high in a number of US cities. Chargebacks in key cities like New York and Miami crossed the 1% threshold set by Visa and Mastercard.

The rate of so-called ‘friendly chargebacks’ are on the rise. Cybercriminals contact your team over the phone or through email, pay with a credit card and later claim the item was never received. They can then claim a refund, leaving the merchant, processor, and the acquiring bank to cover the resulting loss. It’s called the ‘chargeback game’ within the industry.  

Statistics like these help explain why your business is classed as a high risk venture if it accepts high ticket sales. Most merchants simply accept such risks as a cost of doing business in the United States.  But the risks can be minimized and there are ways you can protect yourself.

High Risk Merchant Accounts

High risk payment processors offer special services for companies classified as high risk merchants. These companies have implemented the secure infrastructures necessary tp tackle fraud and chargebacks.

High risk merchants also frequently establish more than one account to help keep chargebacks within the ratios required by the card brands.  Diversification of accounts allows you to reduce risk and protect your access to processing. 

High tickets sales can be spread out over multiple acquiring banks, which helps to reduce the overall risk of processing through a single acquirer.

Benefits of High Risk Processing

There are a number of benefits to high ticket merchants to work with a high risk processor.   

Processing platforms are easy to use. And can be customized with a wide variety of rules and filters to safeguard you against fraud.

Support is available round the clock. Integration to your website is through an API.  MOTO transactions are processed through a virtual terminal.  

Conclusion

High ticket sales are excellent and are a sign of healthy growth for your business. Customers are increasingly spending money online and are much more willing to pay for high ticket items with cards. Credit cards are now used to buy everything from luxury jewelry to new cars.  

But the increasing amounts of money spent through cards has managed to attract the wrong sort of attention. The rate of fraud and chargebacks has increased exponentially, putting you, your business and your customers at risk.

The best way to tackle this is to apply for a merchant account for high risk business. These accounts offer tools to mitigate the risk and prevent chargebacks. And protect your operations with Level 1 PCI processing.

How are you securing your high ticket credit card sales?

Contact our payment processing specialists today

 

 Whether it’s due to customer dissatisfaction, ‘friendly fraud’ or outright fraud, being faced with a credit card chargeback is an inevitable part of a ecommerce. 

If it has happened to you, take some comfort from the fact that you are far from alone. A a recent study from Juniper Research shows online transaction fraud is part of a worrying – and fast growing – trend.

According to the research, in 2015 online fraud was said to be costing more than $10 billion a year. By 2020, these figures are predicted to rise to a staggering $25.6 billion annually, which, say the study authors, is equivalent to $4 out of every $1,000 online transactions.

The study shows that while banking and airline companies were taking heavy losses, it was e retailers that are predicted to bear the brunt of fraudulent transactions by 2020, with losses predicted to total $16.6 billion a year.

What is Causing the Rise in Online Fraud?

According to the online payment fraud: key virtual strategies & management 2016-2020 report, it’s the steps being taken to prevent off-line fraud that are contributing to this surge. As additional measures are introduced to make cardholder present fraud more difficult, fraudsters are turning their attention to internet retailers.

In addition, as internet shopping is becoming more popular, and an increasing number of people are turning to mobile transactions, this further increases the likelihood – and opportunity – for online fraud.

High risk merchants frequently have higher than average chargeback rates, which is one of the main reasons for a high risk classification. Still, standard and low risk companies also are hard hit by chargebacks, particularly “friendly fraud”.

Of course friendly fraud is not so friendly. Instead, savvy consumers know how to game the system in an attempt to get goods or services for free.

These consumers contact their card issuing bank to dispute a transaction.  The consumers know banks often side with their customers and there’s a good chance the bank will reverse the transactions in favor of the consumer.  And you lose.  

Reducing Your Risk for Chargebacks & Fraud

Although this increase is an obvious concern for internet retailers, there are measures that you can take to lower the risks. Such as:

• looking for inconsistencies. For instance, the credit card security code might be incorrect or there might be a different shipping and billing addresses; the billing address might be for the U.S., but the shipping might be for overseas.
• a customer who only gives a cell phone number. This isn’t too unusual, but if you’re not sure, make an effort to confirm the address or speak to the customer.
• placing a limit on the number of orders/credit card transactions that a customer can make in a specified period.
• conducting some follow up checks if somebody is ordering high quantities of expensive items or making multiple purchases on the same day, especially if they are from strange locations, or countries known to have a high risk of fraud.
• ensuring that your customer service is exemplary and setting out clear terms and conditions on your website. Make sure that your customers know that should there be a problem with a purchase, they can come to you, rather than letting them feel their only option is to go to their credit card company.
• making sure that all of your item descriptions are as accurate as possible and that images accurately represent the item that you are selling; where you can avoid stock pictures.
• ensuring that your buyers have a clear way of contacting you if they have a problem. On the shipping note, make what they should do should there be a issue with a purchase.

Fighting A Credit Card Chargeback

If this should happen to you, make sure you have the necessary information that you’re going to need you fight a chargeback. The measures you can take include:

• ensuring that you keep detailed records of transactions. This includes the date and time of the transaction, the amount of money that was spent, and what authorization information was obtained. This will help should a customer simply forget they brought an item from you.
• fighting a case you feel you can win. Some cases might not be considered worth fighting, however, If the transaction is worth a lot of money and you feel the chargeback is fraudulent then it might be a good idea to challenge it.
• providing information concerning a potential chargeback as soon as possible.
• speaking to your customer and seeing if you can come to a mutual agreement to prevent the chargeback.

Conclusion

Fraudulent transactions and chargebacks are part of business online.  As the research shows, fraudulent transactions will continue to increase for ecommerce merchants. in the coming years.

By taking some basic measures to lower your risks of fraud, and addressing any concerns you might have prior to an order, you can go some way to reducing the chance of it happening to you.

In addition, keeping good records, offering exemplary customer service and making your descriptions and terms and conditions as clear as possible, you can lower your risk of a chargeback.

What are you doing to reduce your chargebacks?  

Contact info@paynetsecure.net today 

 

With over 200 types of electronic payment systems in our global economy, it can be hard to keep up with the latest advancements. The industry of global payment systems represents a collection of technological advances in securing transactions, minimizing chargebacks, and confirming identities.

This collection is divided among different economies, with the US and UK being two of them, and are tested for merchant adherence, consumer adoption, and best practices. The cream of the crop make it to the top.  

Top 3 Advancements

Below are three technologies that have impacted payment processing on a a global scale.

1. Selfies Used For Security Purposes

Payment using a selfie is almost a reality for most shoppers in the North American market. The idea is to confirm transactions using facial-recognition software that will scan convectional features of your face, such as eyes, cheekbones and noses, and compare it to an original picture.

Facial recognition is party of the burgeoning field of biometrics. Increasing biometric markers are being used to verify identity. 

Currently, facial recognition, instead of passwords or pins, are being used by some banks, such as USAA, through their smartphone app. MasterCard is also working diligently to integrate their software ID Check into both online and POS payment processing, making it the most widely adopted new technology out of many global payment systems.

High risk merchants, particularly those selling high ticket items and financial services, are excited about using biometics to confirm identity to decrease risk of fraudulent transactions. Payment processors will eventually embrace the technology as another way to mitigate risk. 

2. Bitcoin Gains Notoriety

The notoriety of this eWallet technology comes from a debate over whether bitcoin is dead or not. Forbes magazine, a highly regarded business magazine, says that it is still very alive but faces scalability issues as it becomes more widely adopted.

Bitcoin works by providing mathematical proof that a transaction has occurred using a digital signature of sorts. It is described as being similar to single-use emails that are used to transfer money, even between friends and family. Bitcoin also works through a smartphone app.

Bitcoin processing is still considered high risk by merchant account providers.  Still, as global ecommerce expands, consumer demand for alternative payment methods may bring Bitcoin into the main stream.

3. Apple Pay Competes For Market Share

While Paypal is in every country and garners up to a 20 percent share of the market, other electronic payment systems are gaining popularity among users such as Apple product owners. With a brand name that garners respect, this technology could likely overtake its biggest competitors, especially considering the rising number of people who own Apple smartphones.

Apple Pay uses a wireless connection to connect to a contactless reader while simultaneously confirming your fingerprint on the iPhone app.

Whether these services make it in the US and UK economies is likely being analyzed heavily on a daily basis. The use of ID technologies requires expensive adaptations from merchants, and sometimes slows down payment processing for POS purchasing as customers learn to use the software.

Subscription, recurring billing and SaaS providers could implement eWallets and Pay-by-Selfie more easily due to the online nature of their business. Storing the original selfie upon account setup, for example, is conducive to online services’ ability to store such data pieces and apply software in an already digital environment.

Conclusion

The old fashioned credit card is still going to be the technology of choice for POS merchants. Even with chip processors meant to provide greater security and ease, the market is having trouble adopting the technology due to the need for equipment upgrades.

The real invention in payment processing is being driven from global ecommerce.  

Pay-by-Selfie is sure to catch on world-wide.  As are bitcoin payments. Biometrics for identity verification is here to stay, esp when linked with mobile devices so the buyer does not have to be physically present.  

The future is here today.

How can advancements in payment processing technology help your business?

Contact info@paynetsecure.net

 

 

Dealing with credit cards in the US is a bittersweet experience for most direct response companies. US shoppers are very likely to pay by credit card and accepting card payments is critical to the success of your business. On the other hand, there’s the risk of credit card chargebacks.

If you run a direct response marketing company, you’ve probably experienced this yourself . A certain proportion of your sales are likely to result in credit card chargebacks and it’s a loss that can catch you off-guard.

Visa and Mastercard set their chargeback thresholds at 1% throughout the US, but the rates could reach as high as 2.5% in some cities.  Furthermore, the Federal Reserve Bank of Kansas City found that 70 to 80 percent of these chargebacks are resolved as “merchant liability.”

Chargebacks can affect merchants in all industries.  Overall, merchants lose about $16 billion a year due to chargebacks. But the rates are higher for direct response businesses which is why many direct response companies are labeled high risk merchants. A high risk classification makes it more challenging to get access to a merchant account.

What can you do?

Some providers are still willing to take on high risk merchants and these providers can offer you access to a secure merchant account. These merchant accounts can help you reduce the rate of credit card chargebacks. They’ve been designed with added security that can detect fraud.

The account management tools provided should help you manage your clients, deal with disputes, handle returns and avoid chargebacks.

However, no business can get rid of chargebacks entirely, so here’s a few more tips on what you can do:

• Communicate: Stay in touch with your clients. The quicker your response, the more likely they are to tell you what the problem is before they file a chargeback request with their issuing bank. Always keep your communication lines open and speak to your clients on the phone, via email or even text. Keep them updated about delivery and chase up the order after a week or so.

• Build a Relationship: Earning trust is essential if you want to keep your customers satisfied. Build a relationship and make sure you solve problems for them wherever possible.

• Go The Extra Mile: Deliver quickly so that the customer doesn’t have too much time to change their mind about the purchase. Go the extra mile and keep in touch. Make sure you provide world class customer services online and over the phone, and clarify all the terms and conditions on your marketing material.

All this will go a long way towards preventing credit card chargebacks.

Conclusion

Credit cards are convenient, but the rates of chargebacks are remarkably high for the direct response marketing industry.

• Work with a high risk merchant provider who can help you control chargebacks.
• Communicate with your clients and go the extra mile to decrease chargeback risk.
• Use chargeback early warning systems to prevent chargebacks before they occur.
• Dispute chargebacks that you have a good chance of winning.
• Enable fraud fighting tools in your payment processing gateway

When you keep your chargebacks under control, you mitigate your risk and protect your payment processing accounts.  

How is your direct marketing company controlling charge-backs?  

Contact us today.