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How “High Risk” Merchants Can Improve Credit Card Transaction Security

Posted on 3 July, 2014
How "High Risk" Merchants Can Improve Credit Card Transaction Security

Source: Flickr CC

Certain types of businesses are at an increased risk of consumer credit card fraud, and these businesses pay higher fees for credit card processing. The location of the business, type of business conducted and the likelihood of credit card abuse all factor into the categorization of risk. Examples of a high-risk merchant include those who sell adult-oriented materials, convenience stores, and check-cashing companies. These types of merchants can take action to improve the security of credit card transactions and lower their costs of doing business.

Requiring Verification of Identity

One way that merchants can improve credit card transaction security is to require each customer to verify their identity. This could be the means of a driver’s license or by comparing signatures on the receipt and the back of the credit card. These steps take a minimal amount of time but can cut down on fraudulent transactions in high-crime areas and during suspicious transactions such as the purchase of gift cards, electronics, expensive phones and tobacco products.

Setting Up Merchant Accounts

Merchants can set up accounts with major credit card banks. High-risk merchant accounts require that certain security measures be in place, such as a secured data network. The card issuers then offer lower processing fees and may minimize or even eliminate charge-back fees associated with unauthorized credit card usage. A merchant account can also speed credit card transaction processing. It is not noticeable to the customer at the point of purchase. With online transactions, merchants can employ data encryption and secure networks to add to the security of each transaction.

Requiring Supplemental Information

In online transactions, merchants can require supplemental information from the customer. This could include the 3-digit security code on the back of the card, the cardholder’s billing ZIP code, or asking a series of questions. Some credit card issuers offer one-time-use credit card numbers for online purchases. Merchants could encourage their customers to use this option for their purchases.

Security Increases Profits

High-risk merchants that invest a little time and capital into credit card transaction history may ultimately see an increase in profits and business and a decrease in fees and penalties associated with credit card fraud. Chargebacks caused by unauthorized or unrecognized credit card users will also decrease as a result of these actions by merchants. Customers who shop at merchants that employ high-security measures on credit card transactions may have an increased level of confidence and return to that business. These safety measures can ensure repeat customers in person, and they can make online transactions more secure.

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Bad credit merchant account credit card processing services

Accept all major credit cards

Regardless of Credit History!