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The Rules Of The Game In High-Risk Credit Card Processing Are Different

Almost immediately after we shifted our focus at UniBul toward the high-risk part of the credit card processing industry several years ago, we realized that this was an entirely different kind of thing from the mainstream end of the payments spectrum. Everything was completely different and the rules that applied to, say a convenience store, had nothing in common with the ones bearing on, say, an adult website.

The biggest reason for the divergence, as ever in the credit card industry, was risk management and the resulting fraud and chargeback issues.

High-risk acquiring banks turned out to be so skittish that it was pretty much impossible to sign up any but the biggest, best capitalized and experienced merchants. And even then it wasn’t a sure thing.

There are many things that can scare an acquirer away, but assuming that the applicant business does everything in compliance with existing rules and regulations and is not on Visa’s and / or MasterCard’s black list, the biggest hurdle to overcome is the ability to consistently keep a low chargeback rate.

Acquirers can get themselves in a lot of trouble with the Associations if one of their merchants’ chargeback rate explodes, so they’d rather turn down a merchant they don’t trust 100 percent than take the risk.

And we quickly learned that they turn down a lot of completely legitimate and promising merchants.

And yet, for a couple of years we just kept doing what used to work for us in the low-risk end of the market, even though we weren’t getting any results.

We just kept banging our heads against the same wall, hoping against hope that our luck would finally turn. It didn’t happen. Instead, we found out that inertia was indeed a very powerful force.