It has never been simpler to grow your company internationally in the modern, globalized world. For high-risk businesses, this often means engaging in international credit card payment processing to cater to customers worldwide. However, navigating international payments can be complicated, especially for industries considered "high-risk" such as gambling, adult entertainment, or forex. According to a report by The Nilson Report, global card payments exceeded $40 trillion in 2022, and a significant portion of these transactions involved high-risk merchants.
For businesses in high-risk sectors, accepting international payments can come with pitfalls if not managed correctly. Missteps can result in higher fees, chargebacks, or even the loss of your merchant account. In this article, we'll explore the top mistakes to avoid in international credit card payment processing and how to secure the best high-risk merchant account to protect your business. Read on.
Overview of Credit Card Processing for High-Risk Businesses Globally
International credit card payment processing involves accepting payments from customers across different countries. For high-risk businesses, this is both a necessity and a challenge. Many traditional payment processors avoid high-risk industries due to the higher probability of fraud and chargebacks, which means finding a reliable processor is crucial.
When processing international payments, businesses must deal with various complexities, such as:
● Currency conversions
● Cross-border transaction fees
● International regulations and compliance
● Payment security and fraud prevention
The more risks involved, the more critical it becomes to find the best high-risk merchant account that can support these transactions without additional headaches.
Top Common Mistakes to Avoid in International Credit Card Processing
1. Ignoring Currency Conversion Fees Currency conversion fees are often overlooked when businesses begin accepting international payments. These fees can significantly impact your bottom line if not managed properly. Each transaction that involves a currency conversion comes with its own cost, and this is in addition to the standard transaction fees. For high-risk businesses, these fees can be even higher.
2. Not Considering Cross-Border Regulations Each country has its own set of regulations regarding credit card transactions, and failing to comply can result in penalties or restrictions. High-risk businesses need to be aware of varying standards, such as data privacy laws (e.g., GDPR in Europe) and financial compliance regulations.
3. Failing to Optimize for Chargeback Management High-risk businesses are inherently more prone to chargebacks, particularly when dealing with international transactions. One of the most common mistakes is not having a robust system for managing and reducing chargebacks. According to Chargebacks911, chargeback fraud, or “friendly fraud,” costs businesses over $125 billion each year globally.
4. Choosing the Wrong Payment Processor Not all payment processors are equipped to handle the complexities of international credit card payment processing for high-risk businesses. Some businesses make the mistake of working with low-cost, generic processors that cannot handle the specific needs of a high-risk merchant. This can result in sudden account freezes or higher processing fees.
5. Underestimating the Importance of PCI Compliance Data security is critical for any business handling credit card transactions. However, high-risk businesses often fail to ensure that their systems are fully PCI-compliant. Without proper security protocols in place, you risk losing customer trust and facing legal ramifications.
How These Mistakes Affect Your High-Risk Business
● Higher Transaction Costs: Failing to account for additional fees, such as currency conversion and cross-border charges, can eat into your profits. Over time, these costs add up and can make international transactions less lucrative for high-risk businesses.
● Increased Risk of Chargebacks: Without proper chargeback management, high-risk businesses may face high chargeback ratios, leading to penalties or termination from payment processors.
● Regulatory and Legal Issues: Ignoring compliance with international regulations could result in legal troubles or restrictions from specific markets, limiting your business’s global reach.
● Account Termination: Choosing the wrong payment processor can result in abrupt account termination, leaving your business without the ability to process payments, which can be detrimental to your operations.
How to Avoid These Common Mistakes
1. Choose the Right Payment Processor:
Partner with a payment processor that specializes in high-risk businesses and has experience in international credit card payment processing. This ensures they understand the nuances of your industry and can offer tailored solutions that meet your needs.
2. Optimize for Chargeback Prevention:
Implement strategies to minimize chargebacks, such as communicating return and refund policies, using fraud detection tools, and staying proactive in monitoring chargeback ratios. Consider investing in a chargeback management service to automate the process.
3. Ensure PCI Compliance:
Working with a PCI-compliant payment processor will protect your business from potential security breaches and data leaks. It’s essential to undergo regular audits to maintain compliance with the latest security standards.
4. Understand International Regulations:
Before entering new markets, familiarize yourself with local regulations and compliance requirements. This will not only protect your business but also improve customer trust in new regions.
5. Calculate Total Processing Costs:
Keep a close eye on all the costs associated with international credit card processing, including currency conversion fees, cross-border transaction fees, and processing rates specific to high-risk businesses. Budgeting for these costs will help you manage your financial performance more effectively.
Top 3 High-Risk Merchant Account Providers
1. PAYCLY: PAYCLY specializes in high-risk merchant accounts and offers robust international payment processing solutions. Their focus on fraud prevention, PCI compliance, and chargeback management makes them an excellent choice for high-risk businesses.
2. Durango Merchant Services: Durango is another well-known name in the high-risk payment processing space, providing tailored solutions for businesses dealing with international credit card payment processing. Their experience in managing the complexities of high-risk industries is a major advantage.
3. SMB Global: SMB Global is known for working with high-risk industries and offering comprehensive solutions for businesses that need international payment processing. Their services include fraud protection, multi-currency support, and chargeback management.
Conclusion
In a gist, high-risk businesses can succeed in international credit card processing by avoiding common pitfalls. Key strategies include selecting the right payment processor, optimizing chargeback management, ensuring PCI compliance, understanding regulations, and accurately calculating costs. Partnering with providers like PAYCLY offers tailored and comprehensive support. By staying proactive and informed, you can transform the challenges of international payments into a competitive advantage.
Visit us at: Credit card processing high-risk merchant
Originally published on: LinkedIn
