Fraud Protection for High Risk Merchants

The PayDiverse Walkthrough

Fraud Protection Processing Solutions

By nature, high-risk merchants face a greater risk of fraud. This is why many payment processors opt to work only with low-risk merchants. PayDiverse, however, has developed award-winning fraud protection and chargeback prevention solutions that allow us to offer high-risk merchants premium fraud prevention services that are unparalleled in our industry.

High-risk merchants in the industries we serve can rest assured knowing they are protected against fraud when they use PayDiverse to process credit and debit card payments. Our system has been designed with high-risk merchants in mind and we work hard to protect you, your customers and your bottom dollar from fraud and chargebacks.


Real-Time Fraud Detection

Our fraud prevention system was created for high-risk merchants and offers real-time fraud detection. We analyze hundreds of data points on every transaction using behavioral analytics, machine learning models, elastic order linking and advanced proxy detection methods. All of these tools are fully integrated into our payment gateway and assist merchants in identifying fraud as it’s happening. Our fraud protection tools are simple to set up and use. With these tools, merchants are able to:

  • Configure filters and rules to detect fraud and suspicious transactions
  • Identify transactions that have been processed using a stolen card
  • Block any activity that is deemed suspicious
  • Automatically decline transactions that do not meet the pre-determined rules

Identifying fraudulent transactions in real time ensures that high-risk merchants can stop fraud in its tracks, saving money and time and giving them the upper hand in chargeback prevention.


Identifying Fraud

Even though PayDiverse provides industry-leading support and fraud prevention services to our high-risk merchants, it can be useful for merchants to know what to watch for. Some signs that a transaction may be fraudulent and requires further investigation are:

  • High-value transactions that stand out among the average dollar amount for a sale
  • Rush orders that seem unusual
  • Purchases processed from the same IP address using multiple card numbers
  • International cards or shipping addresses that seem unusual
  • Fake addresses or phone numbers being used to complete a purchase
  • Multiple transactions using the same card in a short time period
  • Multiple purchases made using the same address but different card numbers
  • Multiple purchases made using the same card number but different addresses
  • Transactions that attempt to overcharge the card and pay out a third party
  • Inconsistencies in information provided by the customer across multiple transactions

If any of these red flags appear in a transaction – or in any event that the merchant does not feel comfortable with processing a transaction for any reason – it is advised to contact the customer to confirm the order, and if necessary, contact the card issuer to confirm the details of the transaction and customer information. It may be wise to make it a rule to review any transaction over a certain dollar amount as well, as oftentimes fraudsters will attempt to make large purchases as quickly as possible before a stolen card is canceled.


Other Fraud Prevention Methods

In addition to using PayDiverse’s fraud prevention tools, which are fully integrated into our easy-to-use payment gateway, there are a few things that any merchant should be aware of to protect themselves from becoming an easy target for fraudsters:

  • Shred any documents containing private company information such as account numbers and passwords, unless needed for tax purposes or other record keeping purposes
  • Use strong passwords containing both upper and lower case letters, numbers and symbols that cannot be easily guessed and require employees to do the same
  • Keep software – especially antivirus and other security software – up to date
  • Never send sensitive information electronically
  • Always store passwords and pin numbers securely
  • Never leave a smartphone, tablet or laptop containing sensitive business information unlocked when not in use


Chargeback Prevention

Occasionally merchants will be forced by credit card issuers to process chargebacks – this is when a transaction is refunded to the customer, and it can happen for any number of reasons:

  • An ordered item has not arrived by the date promised
  • An incorrect item is shipped or the item is received damaged
  • Unauthorized use of a credit or debit card
  • Consumer fraud

Unfortunately, consumer fraud is one of the most common reasons for chargebacks, and it isn’t often caught by banks and credit card issuers. This occurs when a customer initiates a chargeback in an attempt to receive money back for items they have purchased in order to get away without paying for them. This event is all too common, and it is exactly the type of event that PayDiverse’s fraud protection and chargeback protection solutions are designed to protect you from.

In addition to helping our high-risk merchants identify fraudulent chargebacks and card use, we will use a minimum of four banking solutions for every merchant to process payments, both reducing their exposure and lowering their chargeback rate and preserving their reputation with their banks.


What Makes A Merchant High-Risk?

Merchants may be considered high-risk for any number of reasons, but the most likely reasons generally fall into the following categories:

  • Little or no credit card processing history
  • Poor or no credit history
  • Excessive history of chargebacks
  • Accepting multiple currencies or conducting business internationally
  • High dollar amount transactions (average in excess of $500)
  • High monthly sales (in excess of $20,000)
  • Sales patterns that fluctuate seasonally
  • You deal in e-commerce or conduct sales where the customer doesn’t need to be present to make a purchase
  • You offer a subscription or other service with recurring billing
  • Your business is in a high-risk industry or operates in a high-risk country


High-Risk Industries and High-Risk Countries

A merchant may have a near-perfect credit history, a low instance of chargebacks and consistent sales and still be considered high-risk simply due to their industry or countries they conduct business in. Industries that are considered high-risk include:

  • Adult entertainment
  • Antiques
  • Cigarettes/tobacco (including vaping and e-cigarettes)
  • Computers and computer accessories
  • Credit repair and debt consolidation services
  • Discount retailers
  • Document preparation
  • Downloadable and hard copy software
  • Electronics
  • Extended warranty plans
  • Financial services and financial aid
  • Firearms and ammunition
  • Jewelry (luxury and costume)
  • Furniture
  • Insurance providers
  • Magazine subscriptions
  • Moving services
  • Nutritional supplements
  • Pawn shops
  • Pets and pet supplies
  • Self-storage
  • Subscription services (including subscription boxes and memberships offing free trials)
  • Web design and search engine optimization

Some countries are considered high-risk due to their higher instances of fraud, lower levels of online security or increased access to stolen credit card information. These countries include:

  • Latvia
  • Egypt
  • Mexico
  • Ukraine
  • Hungary
  • Columbia
  • Philippines
  • Malaysia
  • Nigeria
  • Pakistan
  • Indonesia
  • Lebanon
  • Yugoslavia

Transactions originating in the countries listed above may warrant a confirmation call to the customer or credit or debit card issuer.


Getting Started With PayDiverse

If your business has been declared high-risk, get the fraud prevention and chargeback protection you need to stay in business for the long run. PayDiverse offers a simple sign up process. Use our secure and simple online form to apply, digitally sign your applications and submit your supporting documentation and we will get back to you within 24 hours to let you know if your high-risk merchant account has been approved. Upon approval, PayDiverse will have you up and running with our payment gateway, which has our fraud protection solutions fully integrated, within 48 hours.

Diverse Payment Processing is Smart Processing

Fill out our free and quick merchant account application and let us match you with many banks that want your business.