• What is a dispute?
    There are two categories of dispute. Firstly, they can arise when a cardholder says that he or she did not authorise a particular transaction. Secondly, a dispute can occur when a cardholder encounters issues with the goods and services purchased.

    What is fraud?
    Card information is stored in a number of formats. Card numbers – formally the Primary Account Number (PAN) – are often embossed or imprinted on the card, and a magnetic stripe on the back contains the data in machine-readable format. Fields can vary, but the most common include: Name of card holder; Card number; Expiration date; and Verification CVV code. In Europe and Canada, most cards are equipped with an EMV chip which requires a 4 to 6 digit PIN to be entered into the merchants terminal before payment will be authorized. However, a PIN isnt required for online transactions. In some European countries, if you dont have a card with a chip, you may be asked for photo-ID at the point of sale.

    Types of Merchants!
    ⇨ Low Risk - restaurants and most retailers (excluding apparel and jewelry), nationally recognized insurance sales
    ⇨ Medium Risk - health and beauty products, telecommunication services, tuition for schools or universities, attorneys (excluding bankruptcy), utility payments, political organizations
    ⇨ High Risk - money making products/services, charities, monthly memberships/subscription services, insurance, jewelry, software, advertising services Very difficult to underwrite - aggregation, online auctions, event ticket brokers, internet pharmacies, travel/tour/lodging, health/nutrition products offering guaranteed or miracle results. Typically prohibited by most providers - collection agencies, credit repair, firearms or weapons, bartering, bankruptcy, lifetime or multi-year memberships Aggregation: selling a product or service that a merchant does not own. This is one of the highest risk business models for credit card payments.



    What is a low-risk merchant?
    Note that every payment processor has its own set of guidelines, but there are some characteristics common for all the players on the market. General indicators for low-risk merchants are the following (but there are many other factors, and it’s based on compliance’s general evaluation):
    ⇨ Less than $20,000 processed monthly
    ⇨ Average credit card transaction is less than $500
    ⇨ The industry that a merchant operates in is considered low risk (these are, for instance, low risk-clothes and shoes, household goods, baby products)
    ⇨ Zero to low chargeback ratio
    ⇨ The country a business operates in is considered low risk (European Union countries, USA, Canada, Australia, Japan) Minimized returns.

    What is a high-risk merchant?
    The more chargebacks a business comes with, the higher the risk. Hence, the main factors that matter are industry reputation and processing history (it’s recommended to keep your chargeback ratio lower than 0.4% of your total transactions). Here are overall characteristics of a high risk merchant, but note that it widely differs based on a certain payment processor’s guideline:
    ⇨ More than $20,000 monthly sales volume
    ⇨ Average credit card transaction higher than $500
    ⇨ A business sells products and services to countries known for high levels of fraud
    ⇨ Bad credit history and excessive chargebacks

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