A Guide for High-Risk Merchants to Prevent Frauds

For businesses operating in high-risk industries like iGaming, Forex, Adult or CBD, managing chargebacks and fraud is crucial for long-term sustainability. Traditional payment providers don't work with these sectors due to elevated risk levels, and you left with handful of providers that take this risk.

But there are always challenges to keep the payment processing smooth. In this blog, we will discuss some effective strategies to protect your business while maintaining smooth operations.

Understanding the Challenge

High-risk merchants face unique challenges when it comes to payment processing:

• Higher scrutiny from financial institutions

• Increased vulnerability to fraudulent transactions

• Greater chances of chargebacks affecting business stability

• Complex regulatory requirements to navigate payment

Essential Prevention Strategies

1. Implement Strong Authentication Measures

   1. 3D Secure (3DS) authentication has proven to be a game-changer for high-risk merchants. This additional security layer not only verifies customer identity but also shifts liability away from merchants in many cases, providing an extra layer of protection against fraudulent transactions.

   2. However, it is found that iGaming merchants face decrease in sales after implementing the 3D secure. Some players don't like to use their personal details on gaming platforms. In such cases, you can use the methods like e-wallet or local payment methods to gain the trust of the players.

2. Leverage AI-Driven Fraud Detection

   Modern fraud detection systems powered by artificial intelligence can:

   1. Analyze transaction patterns in real-time

   2. Flag suspicious activities before they become problems

   3. Adapt to new fraud patterns as they emerge

   4. Reduce false positives while maintaining security

3. Consider Fiat-to-Crypto Solutions

   Blockchain-based payment solutions

   1. Irreversible transactions, eliminating traditional chargeback risks

   2. Enhanced security through blockchain verification

   3. Immediate settlement, low dispute windows

   4. Support for multiple crypto tokens while maintaining security

4. Maintain Clear Communication

   Transparent business practices can significantly reduce unintentional chargebacks:

   1. Provide detailed transaction descriptions on statements

   2. Ensure clear refund and cancellation policies

   3. Maintain accessible customer support

   4. Document all customer interactions and transactions

5. Optimize Payment Processing

   Choose payment providers that offer:

   1. High approval rates (aim for 80% or higher)

   2. Multiple authentication methods

   3. Quick settlement options

   4. Comprehensive fraud protection tools

Best Practices for Implementation

1. Keep Tracking

   1. Keep track of your chargebacks and frauds rate. Regulary talk with your acquirers to get their guidance, and monitor the transaction patterns.

2. Compliance

   1. Stay updated with industry regulations and card networks policies. For example, now Visa's new program "Visa Acquirer Monitoring Program"will come into effect from 1st of April 2025.

      "The evolved VAMP, effective April 1, 2025, consolidates five existing fraud and dispute programs into a single acquirer program and streamlines 38 distinct remediation processes into a single process."-Visa.

      1. The new VAMP threshold for merchants will be 1.5% from April 2025, then dropping to 0.9% from the first day of January 2026. Anything higher than that will be classed as “excessive”.

3. Work with Payment Experts

   1. To navigate the hard waters of high-risk payments for industries like iGaming, Adult, Casinos or CBD is tough. That's where PayConsults come into play.

   2. We evaluate your business and recommend steps to optimize your payments. In high-risk sectors, what works for one merchant may not work for another. That’s why it’s essential to take control of your payments.

      
      

The key is finding the right balance between security and user experience. While implementing strict fraud prevention measures is crucial, ensure they don't create unnecessary friction in the customer journey.

Rech out to us today. Invest in the right tools and processes early to protect your business's long-term success.

Contact us