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    High-Risk Payment Processing: High-Performance Merchants

    high-performance high-risk merchants

    In the first four posts of this five-part series, we covered the rules of payment processing for high risk merchants, what causes processors to shut down merchants, and how merchants can stay operational with one or many PSPs.

    This post, the final installment of the series, will cover the best practices of high-performance merchants.

    What it Takes to be a High-Performance High-Risk Merchant

    As we covered earlier in the series, it can be challenging to operate in a high-risk vertical due to the increased challenges of fraud, scrutiny, chargebacks, fees, and more. Implementing the right strategies, however, can ensure that these merchants not only operate successfully, but also thrive. 

    Best practices high-risk merchants should follow to become successful include:

    • Understanding industry regulations: Becoming knowledgeable about the standards that card networks and PSPs have in place regarding chargebacks and disputes, fraud prevention, reporting and compliance, and industry trends can ensure that your business remains operational even as the industry evolves.
    • Choosing the right PSP(s): Partner with reputable and experienced payment processors that specialize in high-risk merchant accounts and have a history of working successfully with your MCC.
    • Providing clear communication: Make it easy for prospective customers and partners to understand exactly what your business is, how the purchasing process works, and what the terms of use are. It becomes significantly easier not only for you to fight for yourself in the event of fraud, but also for your partners to do the same.
    • Offering best-in-class customer service: These days, great customer service should be table stakes for most businesses, and especially for merchants in high-risk sectors. Ensure that inquiries into refunds, issues, or general questions are addressed promptly and clearly to keep chargebacks low.
    • Maintaining PCI DSS compliance: any merchant that handles sensitive card information must be PCI compliant. With several partners in the market that can assist, it is easier than ever to achieve compliance.
    • Monitoring transactions and alerts: Regularly review transaction data to identify trends, patterns, and anomalies that may indicate potential fraud - and pay close attention to any alerts your payment partners share. High-performing merchants diagnose and address issues before they ever threaten business continuity.
    • Leveraging specialty partners: Managing payments in a highly regulated environment is not the time or place to DIY or “figure it out”. Enlist trusted partners with expertise to assist with fraud management, compliance, security, and analytics.

    Case Study: Passes, a Creator Platform, Thrives with Basis Theory

    Founded in 2022, Passes is a Miami-based creator platform that enables fans to access exclusive content and experiences. Passes has a similar business model to OnlyFans or Fansly, empowering creators to monetize on their own by enabling seamless and secure transactions between creators and their fans. 

    However, the team had trouble building relationships with payment providers because of the perceived high-risk nature of the platform, even with strict content rules that do not allow nudity on its platform. Unfortunately, many PSPs specializing in high-risk transactions were slow, difficult to work with, and could shut them down without warning.

    Patrick Zheng, Tech Lead, recalled, "We were working with a PSP, and they said they were okay with our business but they ended up going back on their word and shutting us off without any warning." Passes had to quickly integrate with another payment provider in the middle of the night, but there was a risk they would be shut down there too. He continued, "We wanted to make sure that we're always in a position where we will have a provider even if something happens."

    They found Basis Theory, a PCI-compliant cloud provider for data encryption and storage, through their QSA. The team replaced the front-end component with the Basis Theory card Elements and used the Basis Theory Proxy to send data to PSPs. The implementation process only took two weeks, which was impressive considering how complex PCI compliance is. 

    By partnering with Basis Theory, Passes was able to build a solid foundation for its payment system, and open the door for cascading payments, ensuring it would always be in a position to have a provider to process transactions for its platform.

    Read the entire case study.

    How Basis Theory Helps Merchants

    Basis Theory can assist high-risk merchants that would like to secure their payments, achieve PCI compliance, and maintain ownership over their payments data. Outsourcing your CDE to Basis Theory not only takes away a significant portion of the burden to maintain compliance, but it also provides freedom in the form of network-agnostic tokens that growing merchants can use with any PSP, partner, or network.

    Resources to Continue Learning about High-Risk Payment Processing

    It is no secret that the payments industry continues to evolve at a rapid pace; keeping up with the industry news, trends, and best practices can be challenging.

    Basis Theory Resources

    Our payments experts have written several articles tailored to high-risk merchants. 

    High-Risk Merchant Category Codes (MCCs) - Learn more about the rules credit card associations place on particular "higher risk" MCC categories for risk monitoring. 

    What Are High-Risk Payment Processors? - Oftentimes, high-risk merchants must use specially designated payment processors that specialize in their business. Learn why. 

    What is a High-Risk Merchant & How Do Payments Work? - Learn more about what it means to be a high-risk merchant and how this impacts payment processing.

    All parts of this series:

    Other Great Resources

    Other great resources merchants can use to stay knowledgeable about the high-risk industry include:

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