Payment gateway: High risk

Offshore payment gateway: High risk

Correctly chosen payment gateway can be a key to success and a stable growth of your business. However, the only way to contract a payment gateway is through payment institutions and bank that facilitate access to virtual terminals with the regulation of MasterCard, Visa, Diners Club or Cirrus.

Due diligence department of financial entity is the one in charge to approve or decline the payment gateway application. The decision is based on whether the merchant involves high or low risk of possible non-payment or chargebacks and passes anti-money laundering filters. If your business is new and at the time of requesting a virtual POS terminal your corporate bank account doesn’t have a lot of movements, it is probable that the application will be declined. The reason for that is the importance the bank gives to a credit history of a client. When there is no history of transactions or credits to analyze the payable ability of a merchant the bank makes decision to decline the payment gateway and avoid possible risks. 

As we can see, the duty of the banks, being the intermediaries between the merchants and credit cards brands, is to favor or decline a payment gateway or virtual POS terminal. When a client makes a purchase with debit or credit card in online store, the due amount gets transferred automatically to the account of the company linked with the payment gateway. Technically the process would take one two days but card brands advance the payments of a due amount to the bank, which, in its turn, deposits it on the account of the merchant. On internal level, the card brands such as Visa, for example, charge the bank the fees for these operations and the bank, in its turn, charges its clients higher commissions in order to cover the expenses. Therefore, in theory, the entity that grants the credit line to a card holder is not a bank itself but the brands of the cards with which the purchases were made.  

The criteria used by entities to decide whether a line of credit is approved or not are:  

• Incorporation date of a company; 
• Nature of business; 
• Average ticket of sale;
• Merchant´s solvency.

In case one of these factors doesn’t meet the criteria, the application of the client gets rejected.  

Offshore payment gateway providers as alternative for the banks 

Offshore payment gateway providers are small payment entities that tend to accept more risks due to higher commissions and more centralized business activity. High-risk payment gateway providers accept the merchants with history of chargebacks and overlook risks related to the solvency of a client. At the same time, they, usually, charge higher commissions on transactions and ask for rolling reserve. However, taking into consideration all the factors, offshore payment gateway providers grant virtual POSs more easily and can become a perfect option for many kinds of business activities.  

Types of high-risk payment gateways 

What is a high-risk payment gateway? A payment gateway is considered to be of a high risk when it is used to process the payments of a company that sells intangible services. Since there is no actual product sent to a client, whose quality can be questioned and analyzed, it is very difficult for the bank to defend the interests of a merchant and, as a result, the case gets resolved to the favor of a final client.   

High-risk payment gateway providers are obliged to comply with anti-fraud and anti-money laundering protocols the same way as other financial entities do. There are two types of protocols they use:  

3D Secure protocol 

Its main characteristic is security. Due to the fact that the cardholder has to introduce a security code every time he makes a purchase, his identity gets confirmed which almost eliminates the possibility of card fraud. In case your card is stolen and someone tries to make an online purchase he has to have the access to your phone in order to obtain the code that the bank has sent to you. In case you use one universal security code for all online purchases and the thief knows it, he can easily make a fraudulent payment on your behalf. Therefore, before choosing a bank for your personal or corporate bank account make sure the insurance that covers this kind of cases is included.     

Without 3D Secure protocol  

This kind of protocol is also called Traditional because it was used before Visa and MasterCard have come up with their own anti-fraud 3D Secure protocol. Since when making an online purchase the person who uses the card, sometimes not even a cardholder, doesn’t have to identify himself by introducing the unique code sent by the bank, Traditional protocol involves high percentage of fraudulent operations. Usually when a merchant is granted this kind of protocol, the PSP provider or financial entity withholds a rolling reserve, an amount of money kept for 3-6 months that serves as a guarantee in case of fraud.  

High-risk offshore payment gateway: Advantages  

• Implementation of anti-fraud and anti-money laundering protocols;
• Possibility to accept all brands of debit and credit cards (Visa, MasterCard, Amex, Diners Club, Cirrus, Discover);
• Considerable saving on tax; 
• No need to present a credit history;
• Unlimited number of processed transactions;
• Physical presence of online store´s owner is not required; 
• No restrictions on whether the company is offshore or onshore;
• 99.99% of approvals within 48-72 hours; 
• Customer support in English, Spanish and Russian.

High risk payment gateway: Commissions

The fees depend on the nature of business, percent of chargebacks and type of service or product that the merchant will be selling.  

* To confirm the exact rates, please contact us via phone, e-mail, Skype or WhatsApp.

* Contract high risk payment gateway for e-commerce without physical presence. All arrangements are made through e-mail and / or certified mail.