High risk payment gateways are essentially a specialized financial bridge, purpose-built to meet the unique demands of businesses that operate on the fringes of financial risk, as perceived by payment processing companies. There can be several reasons behind this perceived risk. It could be due to a business’s track record of experiencing a higher-than-average number of chargebacks, which can be a thorn in the side of payment processors. Alternatively, it might be the result of the nature of the industry in which the business operates, where fraud risks tend to be common. These are just a couple of the contributing factors we will delve into further.
In some instances, these tailored payment gateways for high-risk enterprises may come with a slightly steeper price tag. The rationale behind this is to offset the risk that the payment processor willingly shoulders when serving these businesses. It’s a bit like an insurance premium in the world of digital finance.
But in today’s world, where paper money is rapidly becoming a thing of the past and digital transactions reign supreme, the cost of utilizing these high-risk open banking payment gateways still remains a wiser option than attempting to navigate the intricate web of financial transactions without a robust payment gateway in place. In a sense, it’s an investment in safeguarding the monetary flow of your high-risk business, ultimately ensuring smoother and efficient financial operations.
Understanding the Mechanism of Payment Gateways
In order to grasp the concept of a regular or open payment gateway tailored for high-risk businesses, it’s essential to delve into the workings of payment gateways in general. At its core, a payment gateway enables you to accept various forms of igaming payments, including mobile payments, debit cards and credit cards. Within this process, three main players come into play: the payment processor, the acquirer and the merchant.
The initial step unfolds when a cardholder makes a purchase either through a point-of-sale terminal or your online platform. This is where the payment gateway comes into play, as it takes the transaction details and forwards them to the acquirer. The acquirer plays a pivotal role by determining the specific credit card network associated with the card in question. After that, the transaction is directed to the appropriate payment switch, which then forwards a request to the issuing bank responsible for providing the card and maintaining the associated account.
Now, as the transaction request reaches the issuing bank, it steps into the spotlight. The issuing bank plays a crucial role by implementing a series of verification protocols. This entails scrutinizing various aspects of the transaction, such as the proximity of the purchase to the cardholder’s registered address or the transaction amount, ensuring that it falls within reasonable limits. Additionally, the bank checks whether the customer has sufficient credit or funds in their account to cover the cost of the purchase.
If all these checks pass and the transaction is deemed legitimate, the issuing bank issues its approval. This approval is then relayed back through the credit card network to the regular or open banking payment gateway and the acquirer. It’s essentially a green light that signals the transaction’s a go.
In certain cases, the merchant may need to fine-tune the transaction, perhaps by including tips or other adjustments. Once this is done, the merchant consolidates all the authorized transactions into a batch capture. This file is then sent for processing, ensuring that all financial transactions are accurately recorded and cleared, ultimately ensuring a smooth and reliable payment process.
Is a High-Risk Payment Gateway Right for Your Business?
Determining whether your business requires a high-risk payment gateway depends on a variety of key factors. If your business or personal credit history is not ideal, then the answer is likely yes. Similarly, if your business deals in high-value goods or services, a high-risk payment gateway like the one at Pay.cc might be the way to go. Moreover, if your chargeback ratio goes over the one percent mark, the need for such a gateway is quite probable.
Another scenario in which a high-risk open banking payment gateway could prove to be a wise choice is if your business is just starting out and lacks a track record of processing the igaming payments. In this case, the answer leans toward a yes as well. Finally, if your business operates within an industry associated with products or services that are considered high-risk or have the potential to lead to legal consequences, the wisest course of action is likely to enlist the services of a high-risk credit card processing provider.
At the end of the day it’s all about assessing the unique characteristics and circumstances of your business to make an informed decision about whether a high-risk payment gateway is the right fit for your financial operations.