WHAT IS A FRIENDLY FRAUD?

The very first thought that hits our mind about friendly fraud is how can a fraud be friendly! Obviously a fraud can be everything but cannot be friendly.

It’s a universal fact that no one is perfect and we all commit mistakes in some point of our life. Friendly frauds are unintentional. They are committed without the intent to deceive, revenge or to gain something. Basically, chargeback or any dispute filed by customer by mistake is known as friendly fraud.

Following are the key reasons for happening of friendly frauds:

• Forgetfulness: When customer forgot that he made a purchase and misinterprets the situation.
• Unawareness: When someone else from the family has made the unknown purchase and the credit card holder is not aware of it and file a chargeback against the merchant.
• Recurring bill: When a customer frequently purchases a certain product from a merchant, recurring billing happen automatically and charges cardholder. So, in case customer forgot that he has agreed to recurring bills then he might lodge the file against merchant.
• Misunderstanding: Friendly fraud can also occur if the customer has not properly understood the return policy of merchant.
• Improper knowledge: Another main reason for friendly fraud is that people are not aware of the correct procedure. They file a chargeback instead of first approaching the merchant for refund.

How does friendly fraud happen?

To file a fraud claim, friendly fraudster has to first convince the bank that he should get his money back. To do so, a friendly fraudster can claim a variety of problems but the most common claim is that the transaction was unauthorized. They make legitimate transactions looks like a fraud by taking advantage of policies maintained by issuer like zero-liability, CNP (card not present) nature of eCommerce, and acts like Consumer Protection Regulations force issuers. All these things result in time consuming and heavy chargebacks.

What happens when chargebacks take place?

after understanding friendly frauds let’s move on to another big headache of merchants i.e. chargebacks!

Here three things are involved which are as follows.

• Merchant is at fault: It is also known as the Chargeback White Area. When customer is genuine in this case and unhappy with the services or product of the merchant because of any reason, the last option left with customer is to contact his bank or credit card company and issue a chargeback against merchant after trying to resolve the problem with a merchant. Key reasons for filling a chargeback are as follow

  1. Merchant deliberately not delivering product or service.
  2. Intentionally lying about the purchase made.

• Charging more than authorized.

1. Delivering wrong product.
2. Merchant using recurring billing incorrectly.

• Customer is playing a dirty tactic: In recent years many false cases of chargebacks are being reported and they are growing continuously. The cardholder intentionally make a legitimate transaction looks like a fraud with the intention of getting money while retaining the product and service provided. In the end customer gets everything and merchants suffers with great loss.
• Third party is involved: Sometimes neither the merchant nor customer is at fault but the third person is involved. By stealing bank account and credit card information third party commit criminal credit card fraud. Now the victim cardholder can contact issuing bank and report the fraudulent transaction and can seek for money return from the merchant by filling chargeback.

HOW TO SAVE YOURSELF FROM FRIENDLY FRAUD AND CHARGEBACKS?

It is near to impossible to get 100% security from chargebacks. In market many merchant account provider will claim full protection just to gain your trust. As a merchant you have to be very smart and think rationally. Following strategies should be use to prevent friendly fraud and chargebacks.

• Try to resolve disputes: Always first try to resolve the dispute with the merchant. There are new features available in market like Visa Merchant Purchase Inquiry (VMPI) which helps merchant to respond in real time to the issuer. Issuer can now talk to the customer and clarify the confusion with the information given by the merchant.
• Analyse data: You cannot just change the mind of the customer but you can prevent friendly frauds and chargebacks by analyzing the history of such incidents. Look on to the major reasons behind the dispute. For instance, if customers were unhappy because of late deliveries or they are not satisfied with the product then work on your weak areas.
• Make a blacklist: According to an online report it has been found that friendly fraudsters and chargeback claimers are repeat offenders. If they have once got the full advantage then will likely to do it again. Make a record and add such customers who commit friendly fraud. In future if any blacklisted customer will try to shop with you can cancel their transaction. Remember few bucks are not more important than your market goodwill and heavy chargebacks.
• Include payment agreements: This simple change can be really fruitful, add a payment agreement to your checkout process. It will discourage fraudsters and will help you legally in case chargeback occurs.
• Install predictive device identification tools: “Prevention is better than cure”. Use predictive device to identify any suspicious activity. New software solutions are advancing every day. Although you should not completely rely on them as they really don’t predict accurately to CNP (card-not-present).
• Track the size of the order: If the size of order is big, use more security measures like keeping track of the order and shipping.
• Beware of outside country orders: Fraud percentage is higher on international orders than on within boundary purchases. Most of the merchants choose extreme route and eliminate international orders altogether. Security and scrutiny of international deliveries should be extra.
• Clear merchant descriptors: Make sure your business or store name is part of the descriptor. Sometimes when the merchant description is not clear, customer doesn’t recognize where the transaction statement in bank came from and then immediately disputes it. Your identity is important as it make charge identifiable.
• Authentic marketing: Do not show any product material which doesn’t match to the original product customer will receive. Write clear description of product, online ads. Set only realistic expectations for your customer because if later customer doesn’t get satisfied then you might have to pay a big cost for it. Never make you customer feel mislead or cheated.
• Great customer services: There are chances where you can prevent chargebacks and friendly frauds by providing excellent customer services. Reach out to your customer as soon as they try to contact you. Try your best to resolve an order error or an issue with the purchase. 24/7 quick service arrangements should be done by you.
• Fulfil orders on time: Try not to delay order more than usual. Shipping delay may create doubt to customer and then he may claim refund.
• Notify your customer: If you provide subscription and recurring billing facilities, make sure you notify your customer before you charge a customer’s card. Tell them exactly why they are being charged. Maintain a transparent relationship with your customer because one of the common reasons for friendly fraud and chargebacks is unforeseen recurring billing.
• Follow processor protocol: There is set protocol of every credit card processor. While swiping card in Card Present Purchase make sure to check the date of expiry and enter the security code. Whereas, in Card Not Present Purchases your credit card processor need to give permission for processing. To complete the transaction some extra formalities may have to be done like customer’s IP address, digital signature etc.
• Spot warning signs of fraud: If you have noticed any sign of fraud then check AVS, also ask for CVV, use VAU and fine-tune fraud filters. Be very alert check the billing and shipping address. You can even call the customer for the better understanding.
• Have trained employees: Your staff should be well trained and should know how to deal with both card-present and card-not-present purchases. Untrained worker will not be able to identify signs of frauds which can affect your business adversely.
• Fight back only when you are sure: Sometimes it is recommended to not fight every chargeback unless you are sure that you will win the case. You must not devote your time and resources on something not worthy. It will only make your hurt your relationships with your merchant account provider.
• Use a chargeback protection services: If you are a high risk business and prone to large number of chargebacks, chargeback prevention services is the solution. There are companies available in market which helps merchant to prevent and fight chargebacks. They provide with fraud protection tools. It will work as an extra layer of protection.
• Get the best payment processor: Last but the most important thing which you should take care of is to get an authentic and suitable merchant account for your business. As they provide you payment solution with fraud detection and security features. If your merchant account provider is not well experienced then your business at risk. Do all your research and then choose a merchant account provider who can understand your nature of business and risk associate with it. One of the leading merchant account providers in market is iPayTotal which helps you at every step with decades of working experience and professional workers.

With presence of mind and extra efforts you can totally protect your business from friendly fraud and chargeback. Keep the above mentioned measures in mind and you are ready to fight.

What is a high risk merchant account?

As experts in challenging and difficult-to-place merchants applying for payment processing, we’re here to get your business pre-qualified and approved with a high risk merchant account and the best UK, US and International banking solutions provided explicitly to your business needs.

High-Risk Business Categories

The first and most important thing to understand about high-risk businesses is that your processor will decide if you can be categorized as one of their high-risk categories when you apply for a merchant account. It is possible that you’re high-risk, or you’re not – there is no middle ground. Past that, it gets more complicated as each processor has their very own guidelines for deciding if you’re in the high-risk category. While some business types, for example, pornography or drug paraphernalia will quite often be put in the high-risk category, others could conceivably be, depending upon your processor. Some merchant services providers have exceptionally strict rules for deciding high-risk status, while others utilize increasingly loosened up criteria. In case you’re looking at a specific provider, Choose iPayToTal as we make credit card processing easy for all types of high risk businesses.

How a merchant services provider perceives a high-risk business can also differ generally. Most of the providers, especially those that attempt to offer merchant services at the lowest possible costs, essentially don’t acknowledge any high-risk businesses at all. This decreases their exposure to fraud and minimizes expenses for their current customers. Other providers will permit certain high-risk companies, however will charge you essentially higher rates and fees for your merchant account because of the elevated risk they’re accepting by giving you a merchant account. There’s also a third category of providers who have some expertise in setting high-risk businesses. While their rates and fees aren’t a good deal for non-high-risk merchants, they can often provide a merchant account to high-risk businesses that have been turned down by other providers.

Characteristics of High Risk businesses

While the correct criteria for deciding high-risk status vary from one provider then onto the next, the accompanying factors are normally used to decide if a business qualifies as high-risk:

• High chargeback or fraud rate: If your line of business has a history of a high rate of either chargebacks or outright fraud, you’ll likely to be considered high-risk, as well. This decision is usually based on the behavior pattern of your clients, not you personally.
• Offshore businesses running in the United States: If your business is headquartered abroad, yet you essentially sell to US clients, you may be flagged as high-risk. While the potential for fraud is a deciding factor here, lax banking regulations in your home country can also be a deciding variable.
• Products or services of questionable legitimateness: This factor is the one the vast majority connect with high-risk businesses. Distributing pornography or selling drug paraphernalia are the most evident models, however, there are numerous others also.
• Dubious sales and marketing practices: Is your business the sort that is frequently thought of as a scam? Assuming this is the case, the standard of guilt by affiliation is alive and well, and most providers will mark you as a high-risk business.
• Bad personal credit: While most criteria for deciding high-risk status center around your business, this one focuses on you, the entrepreneur. If for reasons unknown, you have a low personal credit rating, you’re bound to be put in the high-risk category by a few processors.
• High average ticket sales: If your business routinely acknowledges unusually high-cost buys by means of credit card, you could be viewed as high-risk. This factor fundamentally affects organizations, for example, furniture stores and companies who process a ton of B2B transactions. 

What If My Business Has Different Characteristics?

If the nature of your business falls under the high-risk categories, there is no compelling reason to stress. E-Commerce risk factors are diverse with each bank and there are custom solutions for most of the merchants. The above attributes are only rules to pursue while deciding your risk factor.

Other Things To Consider

Chargebacks in High Risk Merchant Accounts

Some of the common reasons behind chargebacks If you have been doing business for some time and have changed your past credit card processing service, at that point your business could be viewed as a high-risk business if you had such a large number of chargebacks with your past credit card processing service and put on a  “match” list for excessive chargebacks.

Here are some reasons why you may have encountered various chargebacks:

•  Customer didn’t identify the descriptor on their credit card statement.
• Customer encountered purchaser’s regret since it’s a big ticket purchase ($1,000 to $10,000).
•  Customers were not able to remember that they made a purchase.
•  Customers claim your products fall short of concerning publicized advantages.

What you can do about it

There are four things you can do to change your status as a high-risk merchant.

Dispute chargebacks

Generally, a chargeback is a client demanding that your business has unjustifiably charged them. React to these cases with some verification that the transaction was a valid one. For example, if a client demands that they didn’t start the transaction in any case, at that point you must show evidence that it was them. If the transaction was on the web, you can indicate records of the order or logs of the client’s IP address showing that they visited your site. If the transaction was in a physical store or office, show their signature on the credit card receipt. If you have a business where chargebacks are normal, state you make customized products and there is quite a while slip by between when a client puts in a request and when they get their stock, at that point, you should keep careful records of the transactions with the goal that you can question any cases. This is a typical issue for businesses that make suits, build furniture, or give travel services.

Find out why you’re receiving a higher than average chargeback

Sometimes the problem might be anything but difficult to address. It might be something as basic as the descriptor on your credit card does not match up with your business name. Accordingly, the clients don’t identify that they made a purchase from your business.

Get reclassified as a low-risk business

Sometimes banks will even acknowledge your business however request for a lot higher processing rate, demanding that they are taking on a risk. So as to be reclassified as a  low risk,   build up a positive history after over time, which is typically a six-month duration where you have a low rate of refunds and chargebacks,   normally below1% of your aggregate transactions.   

Find a trusted business partner

Some merchant account providers will work with high-risk merchant accounts while charging sensible rates. You may need to utilize these services in the event that you are classified as a high-risk merchant for no blame of your own. For example, you may simply be a start-up with no past credit history or a manufacturer of items that just suit the explicit needs of clients in another country.

Fees and Rates for high risk merchant account solutions

Merchant accounts for high-risk businesses unavoidably cost more than those for non-high-risk ones. Indeed, they, as a rule, cost significantly more. You’ll pay more in both account expenses and processing charges, and you’ll likely be stuck in longer contracts too.

While most non-high-risk businesses have some capacity to bargain the length of their agreement terms, the industry average is around three years for the underlying term, with an automatic renewal clause that broadens it for one-year time spans after that. These extensive contracts have been exceptionally disliked with merchants, and the trend inside the business is pushing more toward month-to-month agreements so you can drop your account whenever without acquiring a penalty. Sadly, high-risk merchants don’t have much (assuming any) negotiating power, so you can hope to be stuck with a contract running anywhere in the range of three to five years, again with an automatic renewal clause that broadens it beyond that initial time frame. Your agreement will also include an early termination fee that applies if you close your account before the end of your contract term. If that is not sufficiently awful, you may even have a liquidated damages provision in your agreement that raises the cost of breaking it much further.

While the processing business is commonly pushing more toward lower month to month and yearly account expenses, you won’t be so fortunate as a high-risk merchant. You can anticipate that at least some of your recurring fees, especially your essential month to month account charge, will be higher than what it would be for a  low risk business. This is all a reflection of the fact that your processor is taking on additional risk by supporting your merchant account.

Higher processing costs are additionally an unfortunate reality for high-risk merchants. While we normally prescribe an interchange-plus pricing plan for most organizations, you’re unmistakably more probably just to be offered a more expensive tiered pricing plan. Regardless of whether you are offered an interchange-plus plan, hope to pay both a higher rate markup and a higher per-transaction charge. While the genuine rates will differ broadly starting with one processor to the next, as an extremely broad guideline, you can hope to pay near twice as much as what a comparable non-high-risk business with a similar processing volume would pay. In case you’re offered rates that are much higher than this, you ought to presumably look somewhere else.

Finally, we always recommend that you audit your proposed contract altogether before joining with any processor. While this counsel is basic for any business, it’s significantly more important for high-risk merchants. The fine print in your agreement may contain the most critical signs that you’re going to work with a predatory “high-risk specialist” provider who will charge you considerably higher fees and rates than you’d regularly need to pay as a high-risk merchant.

We Specialize In:

High-Risk Merchant Accounts – High-Risk Credit Card Processing – High-Risk ACH Processing – High Volume Merchant Account

What To Look for in Your Merchant Account Provider

In any vendor/client relationship, vetting research is time well spent. By looking into each potential partner’s qualifications and experience, you can ensure your financial investment will not be misspent. Merchant services are an area of your business that should not be overlooked in this regard. In this post, we review questions to ask before hiring a merchant services provider. In addition, we cover certain qualifications that will help your business be more successful.

In any merchant/customer relationship, screening research is time well spent. By investigating every potential accomplice’s capabilities and experience, you can guarantee your financial investment won’t be wasted. Merchant services are a zone of your business that ought not to be ignored in such a manner. In this post, we survey things to ask before procuring a merchant services provider. Furthermore, we cover certain capabilities that will enable your business to be more successful.

Vetting a High Risk Merchant Account Provider: Characteristics to Prioritize

Reputation and Reliability. Your high risk merchant services could involve a large number of dollars, so your seller must have a reputation for security. The merchant provider’s capacity to deal with your credit card transactions by means of a safe payment framework is characteristic for the accomplishment of your business.  Reputation counts.    Make certain to request and catch up on references. Talk with past and current customers of every high risk merchant account provider you’re thinking about.

Experience. It benefits you to know how much experience the service provider has in the business.  Years of experience, for the most part, demonstrate top quality service and all around earned client trust.

Service Fees. It was once comprehended that merchant account providers would charge higher rate expenses for high-risk businesses.   The thinking was that they needed to compensate for potential misfortunes later on. Luckily, nowadays it is commonly accepted that merchant account service providers should work in light of a legitimate concern for the customer. While choosing a high risk merchant services provider, competitive service fees, and don’t hesitate to ask each provider why they are charging higher fees for certain services.

Security. Security is a genuine thought. You have a need to ensure that your online accounts and sales systems are secure, and you ought to have an arrangement in the event that something turns out badly. Make sure to discover what sort of security your merchant services provider uses.   Is information encoded? How does the merchant services provider handle stolen credit cards? These and different request can enable you to see how genuinely every potential accomplice takes security.

The Benefits of Working with Experts. iPayTotal is a pioneer in giving financial and business services to high-risk businesses,   with a special focus on the cannabis industry.   Our fundamental beliefs incorporate transparency, credibility, and legitimacy  —all sponsored up by our world-class support.

iPayTotal works with the best experienced and well-educated team, who have many years of experience in providing the best High Risk Merchant Account Solutions in the industry. Their main aim is to secure you from fraud services. We are dedicated to value your customers more than they demand. You can enjoy and benefits from our services. For more details regarding the company, you can follow our website portal at your convenience. Our highly skilled professionals will assist you throughout your process.

E cigarette products have been an industry that’s seen great and constant growth over the past 5-10 years. Physical, face to face transactions always carry less risk, so you will often find large option for payment solutions for your shop or retail outlet.Recent studies show that approximately 10 new brands of e-cigarettes are launched every month.

There is no doubt that this industry is smoking hot, and entrepreneurs are taking advantage of it. However, banks don’t make it easy for new businesses and smaller businesses in the e-cig industry to get credit card transactions processed. Traditional financial institutions consider electronic cigarette and related businesses high risk, making it tough for them to get fair, cost-effective payment solutions. This is when iPayTotal comes in with a solution as a responsible high-risk e-cig merchant account provider that serves businesses worldwide.

Why are E Cigs High Risk?

The banks manage and consider many facts while approving the payments for these high-risk industries. The government has introduced really strict rule and regulation that has affected the new and old E-Cigarette companies. Some countries have also banned the sale of E cigars while other companies have the strict rule to sell these products. There is mandatory tobacco tax charged on such products, due to this E-Cigarette is considered of high risk. At iPayTotal, we promise to give you a simple solution for all the problems.Since the inception and release into the US markets, the e cig industry has remained relatively unaffected by significant legislation to regulate and control the industry. Even if  there are few requirements by the card payment networks for compliance, some processors are becoming strict.

E-Cig Credit Card Processing

Merchants in the e Cig industry have certain requirements of their payment processor company to ensure the functionality and longevity of their merchant account services.  Since e Cigarettes and vaporizers fall into a grey area category for many payment processors it’s important for merchants to ensure that their chosen service provider can handle any potential risk and changes to the legal or payment networks and their ability to accept e cig transactions.

Credit card processing companies charge a processing fee which is usually a percentage which is calculated by the processing amount. The amount of that percentage is regulated and it needs to be kept reasonable for any merchant account provider to compete. That’s the good news. The bad news is that other fees, like monthly fees and transaction fees, are not regulated and sometimes they are even hidden from view.

Merchants that decide to use a merchant accountwill have the option for direct integration into the acquiring bank, an important function for businesses because it can allow for better approval rates, faster authorizations, higher monthly volume caps and less restrictions.

Why Choose iPayTotal Solutions for Your business Credit Card Processing

iPayTotal has a team of experts and we also have partners with proven records when it comes to vape or e-cigarette sales. With everyone’s combined efforts, we assure you that both start-ups and existing companies will be nurtured. We provide tailored solutions, along with relevant recommendations so that you maintain compliance with industry standards.

The entertainment industry has experienced a high level of growth in recent years. This growth is expected to rise to a whopping $2.14 trillion by 2020 based on the findings and projections of Statista. Over the years online gaming merchant account rates have enjoyed a steady increase and are expected to grow in popularity among business owners and the need for online gaming merchant account instant approval. This has also increased the total number of individuals who have shown interest in the industry. By 2020, it is expected that the total traffic generated from online gaming is expected to rise from the 126PB recorded in 2016 to 568PB in 2020 thus showing that people are having a great time playing online games.

The levels of revenue generated on online gaming platforms are massive. The games are enjoying a high rate of patronage with several massively multiplayer online gaming that connects hundreds to thousands of people at once. It has successfully generated 19.9 billion in 2016 with North America and Asia Pacific taking the lead as the highest contributor.

With all the visible signs showing that online gaming and casino is a lucrative business, several other institutions are not ready to gamble with them due to fear. At the time of writing this article, the background, high rate chargeback ratios and potential legal issues due to ambiguous laws keep most financial institutions and gaming merchant account providers from playing active roles in the market.

For businesses to effectively process their credit card or run an online merchant account approval, business owners need to obtain an online gaming merchant account on account provider site like eMerchantBroker.com (EMB). These sites specialize in the provision of high-risk merchant account for online casinos, MMO, and social gaming. They also offer a customized payment processing solution for all companies interested in their services. Once your account is approved, you can go ahead to set your chargeback management tools and payment gateway

To get online merchant account instant approval, most merchants are advised to get in touch with the online gaming merchant account bank of their choice and file in their applications. Most of the merchant account for casino and online gaming gets approved 24 hours after a successful implementation. After approval, you can set up your online gaming merchant account by setting the chargeback tools, and payment gateways. You can also set up a fraud filter for all your online payments.

Type of merchant accounts for online gaming and gambling businesses

The taste and rules guiding the existence of merchant accounts differ from one region to the other. Most online gaming banks offer the following types of gaming accounts as options for their clients;

• Casinos
• Horse race betting
• In-play gambling
• Lotteries
• Massively multiplayer online gaming
• Mobile gambling
• Mobile gaming
• Online bingo
• Online Poker
• Social gaming

Please note that the acceptance of these accounts depends on the accepting account types and the existing businesses they undergo with the merchant account providers. Some

What do I need to create a casino and online gaming merchant account?

Creating an approved online gaming merchant account requires a high level of preparation from the high-risk merchant owner. Depending on the needs of your online gaming merchant account provider, when creating an online gaming and casino merchant account, it is important that you have the following documents ready.

• Most recent bank statement not later than 3 months.
• Most processing statements not later than 3 months (if applicable).
• A pre-printed voided check
• or bank letter.
• An EIN (Employer Identification Number) or SSN (Social Security Number)
• A valid, government-issued Identity Card such as a driver’s license
• Chargeback ratios must be under 2%

You may be required to fill out an online application form to facilitate your online gaming merchant account instant approval. The procedure for doing this is quite simple and can be carried out by almost everyone who can read and write. In addition to the online application and a secure, operational website, merchants also must have the following items ready

• A history of high chargeback (credit card transaction disputes) ratios
• Bank statements
• Credit card processing history
• Credit scores
• Negative bank account balances
• Unpaid bills and late payments

Once the right documents are provided, your account will be approved within the next 24 hours to 48 hours. These documents are often required by service providers and underwriters to ascertain the genuineness of the business undertaken by online gaming platforms applying for an instant online merchant account approval. Most often, these account providers may carry out some review to determine the factors which ensure credit card processors are not taking any unnecessary risks. Merchants who are considered to be high risk tend to serve as a greater financial burden than others.

Why are casinos and online gaming merchants regarded as high risk?

They are considered too risky by financial institutions

Online gaming and gambling is a game of luck plagued with several uncertainties which the banks are not ready to lose to. These businesses are prone to excessive chargebacks and refunds and may experience a higher volume turnover. The market is just unpredictable.

The business falls into the legal gray areas:

There are several laws prohibiting unlawful online gambling. It is unacceptable in some parts of the world. Since the law prevents gamblers from accepting wire transfers, they may require to process credit card payments for all their transactions.

It is plagued by several fraudulent activities

Online gambling is plagued with several fraudulent activities which make it unsafe for investment. There are always cases of friendly fraud when a customer disputes a transaction because they have changed their minds.

Most gambling games are based offshore:

Keeping a tab on the activities of online gaming platforms is quite impossible since they operate outside the country.

Conclusion

Online gaming is generating huge levels of revenue, and you can benefit from it too. Kindly connect with our team of professionals if you have any questions regarding on how to open an approved online gaming merchant account. We will love to hear from you

The foreign exchange is a vast market. On average, a turnover of over $5 trillion is traded in the market every day. When different currencies trade, a considerable impact is experienced in the cash flows, investments, and tradings of different countries. The selling of currencies attracts different participates. Banks, insurance companies, and individuals all seek a share of the liquid market. The interest is basically because of the high potential for high returns in foreign exchange markets. But with huge potential comes the high possibility of risks for the investors.

For years, forex trading companies have struggled to find reliable payment processing solutions for their business. They are always on the look for payment gateways that are safe and acceptable for their large transactions. With every minute proving crucial for all their debit and credit card payments, finding a reliable payment processor is of utmost importance.

Most payment processors have a great concern for the volatility of the forex market. Forex trading has a high potential for fraud. There is also the concern of significant losses in the case of substantial differences in the market margins.

As these merchant account providers struggle to adapt to changes in the forex market, traders are struggling to find the best forex payment processing solution for their business. They need to have a better understanding of both their businesses to succeed. Understanding the risks of forex trading is beneficial for productive cooperation between payment processing solutions and forex traders.

The Foreign Exchange Risk

The foreign exchange risk arises from the changes in the value of currencies. Since the forex market transacts with different national currencies, a change in the supply and demand always results in a shift. The massive variations occur in the appreciation or depreciation of the value of the outstanding transactions. Every foreign exchange shift is a risk to the investor, the international market, and businesses involved.

Because of the risks posed by forex tradings, most merchant account providers stay away from the trade. They avoid the risks of loss by choosing to operate with low-risk forex traders. A trader who transacts high values is deemed high risk. If the trader has an active contract with a processor, the processor takes precautionary measures by canceling the contract or withholding large sums for reserve accounts.

With the reserve, the high risk merchant account provider is confident of minimal losses. The forex credit card payment solutions require three types of reserves; the rolling reserve, up-front reserve, and fixed reserve account. The reserves, together with the best forex payment gateway, secure the forex trading companies from foreign exchange risks.

The Leverage risks

Some forex trading companies use borrowed funds to operate. They aim to increase profits by building up and controlling large transactions. As much as the funds are a potential for tremendous growth, they can also be the cause of the companies downfall. The forex market is volatile, and without good experience, a trader can lose as much as he gains.

A payment processor understands how much risk leverage is for the company. Before offering payment processing solutions, high risk payment processors consider the strength of financial records, the number of business years, expertise, chargebacks, and rates of fraud of a forex trading company. If the records and leverage are at a point of high risk, then applying for a merchant account becomes a struggle.

However, high risk payment processing solutions for forex trading specialize in the merchant account. They see the possibility of high returns and embrace the most high risk forex traders. For security purposes, the payment processors set transaction limits and follow up on the daily outcomes of forex tradings. They study market changes and are keen on when to allow leverage of up to 100:1 to its traders.

Interest Rate Risk

Forex trading companies borrow funds in exchange for interest to their borrowers. Since they are not in control of the interest rates market, a fluctuating change can affect the decision of most tradings in the market.

Central banks control interest rates according to the growth and stability of a country’s economy. Some of the decisions are predictable, while others are unexpected. For a forex trader, understanding how to predict the changes in interest rates can prevent losses. But for unforeseen changes due to political or sudden national announcements, high risk payment solutions can be applied.

Payment processors are aware of the effects of sudden interest changes actions. A payment processing solution for forex trading will set up a merchant account designed to deal with such eventualities. The charges are higher for high risk customers but the risks are worth the price. The opposite can be said for low-risk clients who receive lower prices for transactions with a forex payment processing solution.

Operational Risks

The operating systems, internal processes, and individuals involved in running the company are a major risk to forex trades. It is through a company’s’ operations that fraud and chargebacks occur. For example, miscommunication with a trader can lead to loss of money. If after the loss the trader chooses to recover the money, they will dispute the transaction by issuing a chargeback.

Chargebacks, if received in high volume, are a significant challenge for forex trading companies. Every chargeback implies a refund, or money returned to the customer for unsatisfactory services. If not well managed, chargebacks can put the forex trading company out of business.

Forex merchant account providers understand the risks of chargebacks. Before offering payment processing solutions for forex accounts, they review the chargeback history to determine the level of risk. If the chances are high, payment processors charge higher as insurance for expected losses.

A payment provider that is not equipped to deal with high risk merchants will avoid credit card processing with high-risk trading companies. They will consider the risks of fraudulent activities and opt for safety in low-risk customers. For some of these companies, their operating system is not designed to detect the slightest of suspicious activities. Due to the challenges of the operating systems, the forex trading companies avoid the risk of offering credit processing solutions.

What To Do

Research about the categories of risky businesses. A forex trading company needs to understand if they are a low, medium, or high risk merchant. Their judgment on the risk category may not be final, but it will prepare them for eventualities when they finally apply for a forex merchant account.

If a trader falls under the high risk forex trading merchant, they need not worry. Researching on the expected rates of service can help budget on costs. The rates for high risk clients are known to be higher, but with proper planning, the prices are manageable. Forex trading companies should educate themselves on the pros and cons of payment processing solutions. They need a personal understanding of the benefits of reserve accounts and offshore merchant accounts.

To top it up, they need to be honest about the kind of business that requires a payment processing solution for forex trading. It might be tempting to lie about your transaction history and business endeavors. But since merchant providers have the expertise to run high risk forex merchant accounts, the truth will finally reveal. Protecting the forex trading company from account freezes should be of utmost importance to every trader. By delivering correct information, the forex trading company will prevent the freezing of their accounts.

Getting a payment gateway is essential for the convenience and reliability of forex trading services. Payment gateways are a fast way to complete forex trading payments. Since forex traders transact with multiple currencies, the best payment gateways give a secure means of completing transactions. Payment gateways are a useful tool for payment processing solutions when negotiating with various payment methods.

Conclusion

Forex trading companies indeed struggle for payment processing solutions. Operating a forex account is no simple feat. If you are looking for credit card processing solutions, and you are a high risk forex trading company, the struggle could be more. Payment processing solutions for forex trading are those that understand the risks of the trade. The answers should involve a payment gateway that is secure for forex traders.

Since the lack of regulation is a significant concern, a reliable payment processing solution for forex trading should address the issue. Payment processors need to understand the problems concerning licenses, fraud, money laundering, and underwritings in the forex market. With vast expertise, processors can resolve and give advice where necessary.

Why IPAYTOTAL

Ipaytotal is an expert in high risk payment processing solutions for forex trading companies. They understand the risk of forex trading and offer complete solutions for the traders. They know the effects of chargebacks and high transaction cost to forex merchants. Because of that, ipaytotal has designed a payment solution for individual forex traders. They have a credit card processing solution for forex trading in the domestic and offshore accounts.

A payment processing solution from ipaytotal comes with a full-fledged payment gateway which secures your system. Suspicious activities can quickly be flagged with in-built fraud detection and system monitoring tools. Take advantage of the payment gateway solution for forex trading, which can be integrated into your website, software, and cashier system.

WHAT IS A FRIENDLY FRAUD?

The very first thought that hits our mind about friendly fraud is how can a fraud be friendly! Obviously a fraud can be everything but cannot be friendly.

It’s a universal fact that no one is perfect and we all commit mistakes in some point of our life. Friendly frauds are unintentional. They are committed without the intent to deceive, revenge or to gain something. Basically, chargeback or any dispute filed by customer by mistake is known as friendly fraud.

Following are the key reasons for happening of friendly frauds:

• Forgetfulness: When customer forgot that he made a purchase and misinterprets the situation.
• Unawareness: When someone else from the family has made the unknown purchase and the credit card holder is not aware of it and file a chargeback against the merchant.
• Recurring bill: When a customer frequently purchases a certain product from a merchant, recurring billing happen automatically and charges cardholder. So, in case customer forgot that he has agreed to recurring bills then he might lodge the file against merchant.
• Misunderstanding: Friendly fraud can also occur if the customer has not properly understood the return policy of merchant.
• Improper knowledge: Another main reason for friendly fraud is that people are not aware of the correct procedure. They file a chargeback instead of first approaching the merchant for refund.

How does friendly fraud happen?

To file a fraud claim, friendly fraudster has to first convince the bank that he should get his money back. To do so, a friendly fraudster can claim a variety of problems but the most common claim is that the transaction was unauthorized. They make legitimate transactions looks like a fraud by taking advantage of policies maintained by issuer like zero-liability, CNP (card not present) nature of eCommerce, and acts like Consumer Protection Regulations force issuers. All these things result in time consuming and heavy chargebacks.

What happens when chargebacks take place?

after understanding friendly frauds let’s move on to another big headache of merchants i.e. chargebacks!

Here three things are involved which are as follows.

• Merchant is at fault: It is also known as the Chargeback White Area. When customer is genuine in this case and unhappy with the services or product of the merchant because of any reason, the last option left with customer is to contact his bank or credit card company and issue a chargeback against merchant after trying to resolve the problem with a merchant. Key reasons for filling a chargeback are as follow

  1. Merchant deliberately not delivering product or service.
  2. Intentionally lying about the purchase made.

• Charging more than authorized.

1. Delivering wrong product.
2. Merchant using recurring billing incorrectly.

• Customer is playing a dirty tactic: In recent years many false cases of chargebacks are being reported and they are growing continuously. The cardholder intentionally make a legitimate transaction looks like a fraud with the intention of getting money while retaining the product and service provided. In the end customer gets everything and merchants suffers with great loss.
• Third party is involved: Sometimes neither the merchant nor customer is at fault but the third person is involved. By stealing bank account and credit card information third party commit criminal credit card fraud. Now the victim cardholder can contact issuing bank and report the fraudulent transaction and can seek for money return from the merchant by filling chargeback.

HOW TO SAVE YOURSELF FROM FRIENDLY FRAUD AND CHARGEBACKS?

It is near to impossible to get 100% security from chargebacks. In market many merchant account provider will claim full protection just to gain your trust. As a merchant you have to be very smart and think rationally. Following strategies should be use to prevent friendly fraud and chargebacks.

• Try to resolve disputes: Always first try to resolve the dispute with the merchant. There are new features available in market like Visa Merchant Purchase Inquiry (VMPI) which helps merchant to respond in real time to the issuer. Issuer can now talk to the customer and clarify the confusion with the information given by the merchant.
• Analyse data: You cannot just change the mind of the customer but you can prevent friendly frauds and chargebacks by analyzing the history of such incidents. Look on to the major reasons behind the dispute. For instance, if customers were unhappy because of late deliveries or they are not satisfied with the product then work on your weak areas.
• Make a blacklist: According to an online report it has been found that friendly fraudsters and chargeback claimers are repeat offenders. If they have once got the full advantage then will likely to do it again. Make a record and add such customers who commit friendly fraud. In future if any blacklisted customer will try to shop with you can cancel their transaction. Remember few bucks are not more important than your market goodwill and heavy chargebacks.
• Include payment agreements: This simple change can be really fruitful, add a payment agreement to your checkout process. It will discourage fraudsters and will help you legally in case chargeback occurs.
• Install predictive device identification tools: “Prevention is better than cure”. Use predictive device to identify any suspicious activity. New software solutions are advancing every day. Although you should not completely rely on them as they really don’t predict accurately to CNP (card-not-present).
• Track the size of the order: If the size of order is big, use more security measures like keeping track of the order and shipping.
• Beware of outside country orders: Fraud percentage is higher on international orders than on within boundary purchases. Most of the merchants choose extreme route and eliminate international orders altogether. Security and scrutiny of international deliveries should be extra.
• Clear merchant descriptors: Make sure your business or store name is part of the descriptor. Sometimes when the merchant description is not clear, customer doesn’t recognize where the transaction statement in bank came from and then immediately disputes it. Your identity is important as it make charge identifiable.
• Authentic marketing: Do not show any product material which doesn’t match to the original product customer will receive. Write clear description of product, online ads. Set only realistic expectations for your customer because if later customer doesn’t get satisfied then you might have to pay a big cost for it. Never make you customer feel mislead or cheated.
• Great customer services: There are chances where you can prevent chargebacks and friendly frauds by providing excellent customer services. Reach out to your customer as soon as they try to contact you. Try your best to resolve an order error or an issue with the purchase. 24/7 quick service arrangements should be done by you.
• Fulfil orders on time: Try not to delay order more than usual. Shipping delay may create doubt to customer and then he may claim refund.
• Notify your customer: If you provide subscription and recurring billing facilities, make sure you notify your customer before you charge a customer’s card. Tell them exactly why they are being charged. Maintain a transparent relationship with your customer because one of the common reasons for friendly fraud and chargebacks is unforeseen recurring billing.
• Follow processor protocol: There is set protocol of every credit card processor. While swiping card in Card Present Purchase make sure to check the date of expiry and enter the security code. Whereas, in Card Not Present Purchases your credit card processor need to give permission for processing. To complete the transaction some extra formalities may have to be done like customer’s IP address, digital signature etc.
• Spot warning signs of fraud: If you have noticed any sign of fraud then check AVS, also ask for CVV, use VAU and fine-tune fraud filters. Be very alert check the billing and shipping address. You can even call the customer for the better understanding.
• Have trained employees: Your staff should be well trained and should know how to deal with both card-present and card-not-present purchases. Untrained worker will not be able to identify signs of frauds which can affect your business adversely.
• Fight back only when you are sure: Sometimes it is recommended to not fight every chargeback unless you are sure that you will win the case. You must not devote your time and resources on something not worthy. It will only make your hurt your relationships with your merchant account provider.
• Use a chargeback protection services: If you are a high risk business and prone to large number of chargebacks, chargeback prevention services is the solution. There are companies available in market which helps merchant to prevent and fight chargebacks. They provide with fraud protection tools. It will work as an extra layer of protection.
• Get the best payment processor: Last but the most important thing which you should take care of is to get an authentic and suitable merchant account for your business. As they provide you payment solution with fraud detection and security features. If your merchant account provider is not well experienced then your business at risk. Do all your research and then choose a merchant account provider who can understand your nature of business and risk associate with it. One of the leading merchant account providers in market is iPayTotal which helps you at every step with decades of working experience and professional workers.

With presence of mind and extra efforts you can totally protect your business from friendly fraud and chargeback. Keep the above mentioned measures in mind and you are ready to fight.