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High risk eComm merchant processors (29)

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Anyone know any high risk merchant processors that're alright with up to 2% CB rate? We deal in the eComm space.

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That's a pretty high chargeback rate. Why??

Have you tried EasyPay Direct?

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I’m not sure if anything over 1% is really possible. You’ll be put onto a monitoring program quickly and any shortcomings in your business model will get exposed in the monthly reporting.

With the chargeback costs, it doesn’t even seem like a financially viable operation unless your straight up scamming.

The money and attention would be better spent on improving customer service and shipping times.

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Just preparing for the worst, i.e. > 1% CB rate. Thanks for the Easypay suggestion. @taormina

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High risk fees are $40-$45 per chargeback then the fee to fight it. So if you selling low cost good like most ecomm guys, you would have to develop a guru course a few months later

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Something to consider would be using a chargeback monitoring service, that listens on bank networks for incoming chargebacks and refunds users before it’s settled. Costs about $50 for every chargeback, even if it’s not successful

https://chargebacks911.com/chargeback-alerts/

You should also consider using 3DS / 3DS 2 which requires the user to authorise the payment with a pin code, app click etc. Makes it much harder for customers to claim it’s a fraudulent transaction.

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Thanks for the tips! In your experience how much have the CB alerts program reduced the chargeback ratio by?

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So much misinformation on this thread. First of all there are a lot of merchants that can deal with upwards of 2 percent. Actually stripe even allows processing up to 2 percent just fine if you are doing volume. I know this because they did it for me twice. Second of all, high risk is not considered 2 percent nor is that even that bad. High risk I would say is something around the 4-7 percent range. Finding 2 percent processors is quite easy just reach out to a few big ones, and get a rep to help you locate a few. Typically they will require holding x amount from you but the fees should be relatively the same.

As for cb alerts, def sign up but use any one but chargebacks911. They got kicked off verifi alerts as a partner due to shady business practices and they lie to their customers.

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Hey thanks man. If you don't mind sharing, what alert program do you use?

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Vidivo,

Yeah, and Stripe also shut me down after doing $17M on one account with a .06% charge back rate with 5 days notice. Is that enough "volume" for you? Stripe is shit, and the only reason you didn't get shut down is probably because they didn't notice. That makes 4 stripe accounts shut down for me, all with charge backs *well below* 2%

A high charge back business needs to have the business reinvented, not a more accommodating processor. You need to kill the root of the charge backs, and there are only a few reasons why your charge backs are high:

- Your product is a piece of shit
- Your pages are scammy
- You have zero customer support and you make people e-mail you for refunds instead of having phone support

These are usually the main culprits. Focus on fixing those rather than finding a processor that allows more charge backs.

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They shut all 4 accounts down at once? You were doing 17M on 1 acc and they shutdown the other 3 as well? Or after the first shutdown did you create another account and so on and so forth?

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First account was the best one, before Stripe became like a fucking shutdown machine. Lasted for about 18 months, and we did $17M worth of volume. They shut it down with 5 days notice in April of 2018.

I was so furious I actually found Patrick Collison's personal email and fired him off a nasty message. I got the shut down extended to 30 days notice, but other than that, no break.

Then I said fuck Stripe, I am done with these fools. So I had no Stripe up until 6 months ago. In the meantime I used payment processors and Clickbank.

6 months ago I started 3 Stripe accounts. Two for Ecom, one for a PHYSICAL business, bricks and mortar. Volumes were small, 25K, 35K and maybe 60K. All three shut down within a month or less. One of them had ZERO charge backs or any issues at all. Other two had well below 2%.

I still have money being held by Stripe.

Joke of a company.

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Shit man, that sucks. I guess if they flag you once, you can't create any other accounts regardless of business model.

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No, you still can make more, and they work just fine until Stripe catches on. It's just really risky to make more of them.

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What did they say was the reason for the shut downs? The chargebacks or just general risk?

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Here is the exact email I got from stripe. They are all the same. I only removed the domain name for privacy. They don't tell you shit. Bold parts put in there by me for emphasis. This was for an account with less than 1% charge backs.

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Hi Adamo,

Thanks for using Stripe!
Unfortunately, we will only be able to accept payments for XXXXXXXX.COM for a bit longer. Stripe can only support users with a low risk of customer disputes. After reviewing your business and account information, we've found that your business presents a higher level of risk than we're able to work with.

As noted above, your service will not end immediately—we understand that moving away from Stripe can take time. To help with the transition, we are able to provide you five additional days (beginning today) to switch to a new provider. Because of the elevated dispute risk here, your account balance will be placed on reserve for the next 90 days, the industry-standard period during which most payments are disputed. During this time, the reserved funds will help cover any disputes or refunds on your account. The remaining balance will transfer to your bank account at the end of this period[1].

If you need an alternative payment processor, we recommend considering PaymentCloud, which works with businesses with a higher level of risk than we're able to support: https://paymentcloudinc.com/stripe.

We're sorry that we can't offer you ongoing service and wish you the best of luck with your business.

Best,
Felix

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I think it was because it was a new account with < 1 month of activity and you got a CB. Happened to a guy I knew, had his acc shutdown within 30 days because he got a CB. Their risk management for new accounts is horrible.

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Damn, talk about poor customer service.

Experienced something similar when I was doing dropshipping a few years ago and using them as a payment processor.

They simple dont care how much volume or revenue your business brings in. Once you hit a certain threshold in terms of chargebacks or disputes, they send that bullshit email and that's it. Sucks big time!!

The alternatives out there arent that great either thus you just have to cycle or rotate through a number of them at any given period.

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Nope, happened on an account with ZERO chargebacks as well. It is totally random.

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Stripe isn’t really relevant considering the thread was about High Risk processing
and Stripe doesn’t deal with that, as explicitly stated in their terms.

But if you really have an irresistible urge to use Stripe (be it for regular business, or even for high risk) then you should:

load up on accounts - that’s how some cowboys manage to run even high risk businesses through Stripe - having 100+ stripe accounts with spoofed sites and the cash flow management skills to absorb funds being held.

OR

have other (none-Stripe) backups in place.
Let’s be realistic, Stripe processes billions and we are all far below irrelevant to them so don’t think for a second that stripe (or any other single payment processor) will ever be a stable pillar of your business - you always need backups full stop.

They are not a bank either so looking at it from their perspective it actually makes total sense to protect themselves and terminate accounts automatically - not necessarily related to chargebacks either, which is why you simply can’t rely on them solely unless your hobby is building 10 story apartment blocks on quicksand.

Bottom line:
I’d look at stripe accounts the same way as facebook ad accounts: they get shut down by an unpredictable algorithm so always be prepared for that.


As for high risk processing - which is what the thread was originally about:

2% CB rate is considered LOW for a high risk business so if you can demonstrate that in prior processing history, it will be fairly easy to find a couple processors:

• we found that if the initial contact is with a slick sales guy then often you’ll end up spending weeks (or even months…) filling application after application and updating your sites content for them, but in the end they can’t get you approved for jack sh*t. So stay away from those types. The cockier the initial contact, the faster you should turn away.
  
  
• during the application process you’ll sometimes hear that 2% CB rate is the maximum allowed for high risk processing but that’s not true. What they’re really saying in such case is: “YES I want your business and it’s high risk so I’ll be charging you extra high fees you little idiot, but NO I don’t want to actually deal with the headaches that come along with high risk processing”. It’s like making someone pay for an Etihad first class ticket to Dubai and then throwing them on a C-130 with the Navy Seals.
  
  
• most shops are just brokers. Try to find those few which have a DIRECT bank relationship (ask or check their site). That’s the 80/20 key I wish we learned much earlier on.
  
  
• sometimes overlooked, but you or your signers can also apply direct with whatever banks you’re already using. Those are for us by far the best and most relaxed mids we have because there’s no middlemen sucking away your attention or money.

Chargeback handling:

about 35%

The 2 most common ones are ethoca and verify, but most people use them through a reseller like chargebacks911, chargebackgurus, etc..
So there’s a distinction to be made between:

• chargeback representment services: this is when chargebacks come in and you want to fight them after the fact. Those services are specialized in that and if your business is set up correctly (see * below) and not just a cookiecutter scam shop, they will win back the majority of chargebacks for you.
  Sidenote: so these services help you recover your lost revenue, but all the chargebacks, including all the ones you won, will still remain on record and count against your chargeback %.
  
  
• that’s where the chargeback alerts come in. These can be used to block the chargebacks before they hit you and not make them increase your CB%. For a legit business I don’t like to use them because you’re basically signalling to consumer scammers they are welcome to take full advantage of you:
  “YES you all come buy my product and sure I’ll refund you everything and best of all… you can even keep the product”
  
  NUTS...
  
  but if you’re in a corner trying to save a mid and don’t have enough backups lined up, or again, if you’re running more of a scam shop short of business, it can help you buy some extra oxygen.

Currently we use chargebacks911 for representment but they recently dropped the ball on us so we’ll be leaving them - don’t know yet where we’ll be going next...

In addition we also use kount.com which scans the customer profile prior to sale and if he’s determined to likely result in a chargeback we block the sale.
So yes that’s lost revenue but if you have a good product and they really want it they might still be willing to pay you through alternative methods - though generally speaking consumers are too lazy and won’t jump through many hoops for you here.


FAR more important then all this though…

You absolutely cannot live without a great customer support
and that should really be a no-brainer for anyone trying to build a real lasting business.

I totally agree with the main sentiment and it cannot be overstated enough that chargeback prevention is the real key, but when talking about high risk businesses specifically, there’s just certain types where no amount of customer support or awesome customer experience is ever going to totally save you.

Think about it…

you walk in the room and before you even had a chance to open your mouth and demonstrate what awesome customer support you have, or how great your product really is, or maybe even how low your chargeback % is, etc… none of that matters because simply due to the nature of your business alone, you get a big fat HIGH RISK stamp on your forehead and told to shut up and go stand in the corner together with all the other naughty high risk actors.

Why such unfair treatment?

in my opinion, because high risk businesses are known to attract high risk consumers
in other words: scammer and card fraudsters

We done experiments with one of our high risk businesses where we:
- upgraded the call center from overseas to US-based, 24/7 availability, properly trained agents, awesome script flows guiding agents realtime
- over-communicating before the sale and overly generous MBG
- keep communicating hard proactively after the sale
- etc..

and all these things definitely are required and help A LOT with chargeback prevention
(* note: this is also the type of ammunition you need to win back your chargebacks after the fact)

but NO
for high risk businesses you always end up with consumers who are actively trying to scam you out

I done experiments where we literally educated customers about the chargeback process and how we fight it and how we end up eventually winning, and guess what…

Folks respond to such message by canceling their order straight away before it even shipped out

That really tells you everything you need to know about what their true intentions were from the start

Now I’m a little hesitant to bring this all up because
some folks will read it and think

“OK f*ck it I’m not even going to bother then creating an awesome customer experience”

which is a glaring shortcoming because it’s what might 10x or more your business in he long run

So don’t get things reversed and focus too much on chargeback alerts etc..
because the real key is examining every contact point between you and your (potential) customer
… and probably you will also need to create additional contact points

and then asking yourself at each point how you can optimize towards chargeback prevention

it’s a neverending and very rewarding loop of tweaking and testing your systems

but if it’s NOT something you’re personally super enthusiastic about and absolutely love doing then I’d recommend you either learn it or else hire someone to do it for you - you need to look for the types of people who’s brain works similar to Jeff Bezos, Michael Dell, Ray Kroc, Ingvar Kamprad, etc.. obviously midget versions of that but you get the idea.

Happy new year to you all!

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Any ideas how those cowboys manage to keep creating new accounts? I think Stripe flags SSN when it bans a business.

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I tried to get Ethoca for Stripe but it seems like they require an actual merchant account to make the alert program work. Has anybody been able to get a CB alert program working for Stripe?

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Finally, someone that knows what the fuck they are talking about. You all need to read and reread this.

Oh, and Kount is owned by the same people who own Clickbank, which is why it's much easier to run slightly higher chargeback rates on CB and get away with it.

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I have a hate and love relationship with stripe. I totally agree that they suck at being transparent and explaining things, but I do have to say they are extremely easy at getting setup with versus dealing with a traditional mid / bank.

The reason you got that email though is because they checked out your domain and didnt like the site / product / service you were offering. It most likely was not against their TOS, however was something very borderline or in the grey area that they don't accept. For example they even don't really like dropshipping. If your store looks cheaply made or you're selling just basic aliexpress rip off products, it most likely will be denied by stripe with this email as they know its a high risk case for them. I've tested it myself and as long as the front end looks very safe you can get away with selling other things in my experience. Also that email isn't too threatening, you can always change the domain and the site up a little bit and try again. They didnt perma ban you or anything so thats your best bet.

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What CB alert program do you use for Stripe?

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I use chargebacks360 - so far they have been very good.

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Thanks, i'll give em a go

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I agree with most of the things you say but wanted to raise one point here regarding the effectiveness of alert programs.

- The net positive impact depends on the type of business you operate and on a lot of factors relating to how you operate so saying it will be xx% is too general (you never implied this will be the same for everyone just highlighting it). Everyone has to audit their advertising copy, product quality, fulfilment, and customer support. If your product is taking 40 days to arrive and your support answers in a week then you can probably reduce chargeback by a lot with this but you will be focusing on the wrong issue. You will also see different effectiveness in different markets for these programs.
- If you are running a high risk business you will also have false positives meaning transactions that while flagged by the issuing bank after a customer complaint will not make it to a chargeback. This is a very important factor to keep in mind for two reasons:
1, You are taking a profitability hit
2, If your acquiring bank is looking at your processing volume in relationship to your chargeback volume you may actually be increasing this negative signal if you are running something that has a recurring billing.

From our experience and if your processing can support it the best thing to do is let the CB hit and have a competent team do representment. There are also a number of new services coming to market (CB911 is one reseller of a visa one) where you can have your transactions be listed in databases accessible to issuing banks with information on the product and shipping together with availability for customer support. The issuing bank is generally on the customers side but they have to push them to at least attempt to resolve the issue, and many chargebacks are a result of the customer not recognising the transaction. These could be good in the future where more banks join!

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Anyone pitching there CB response service, is going to take you to the cleaners.

Have your $3 an hour VA, log in to your processor's back end and pull / fax a response.
Use a template form, and drop in the following.

Proof of CVV, proof of tracking, proof that customer agreed with a signature or affirmative check box consent.

As for high risk processors, I'll do intro's if your serious and have volume.

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