CCBill payments platform accommodates and supports a myriad of business models, including various risk categories, allowing for a single payment solution for the different services or products your business offers. But navigating how your processing services are categorized as a specific risk classification can be confusing.
A CCBill account can have different risk classifications depending on the type of service or product you offer, and how you offer them.
High Risk is a term used by financial institutions to classify specific business models based on those models' overall history of chargebacks, returns, and refunds. Some business models are burdened with higher levels of abuse carried out by both businesses and consumers.
Credit card brands and financial institutions want to protect cardholder rights and avoid any association with illegal activity and potential liability. Fraud-prevention initiatives, such as the MasterCard BRAM (Business Risk Assessment and Mitigation) program and Visa’s Global Brand Protection Program (GBPP), use Merchant Category Codes (MCCs) to help detect, monitor and prevent brand-damaging activity.
A Merchant Category Code (MCC) is a four-digit number used to classify a business entity based on the type of goods or services the company provides.
If your business model is perceived as High Risk, it does not necessarily indicate that your business is at a higher risk of chargebacks. It only means that your business model and the Merchant Category Code (MCC) in which your business falls are classified in such a manner.
Types of businesses that are classified as High Risk:
|Annual memberships||Adult digital products||Bail bonds|
|Business opportunities||Electronics sold online||Debt service|
|Home-based||Horoscope/Fortune telling||Firearm dealers|
|Mail order or telephone order||Multi-level marketing (MLM)||Online auctions|
|Online dating sites||Software downloads||Telemarketing|
|Timeshare Advertising||Telecommunications (VOIP or Calling Cards)||Travel services|
|Direct Marketing - Inbound Telemarketing|
As noted, credit card associations use Merchant Category Codes (MCCs) to classify a business. These are four-digit codes that define a business whenever a new merchant account is added to the System. During the registration process, Merchants are screened and those with a high risk MCC may be required to pay a fee to become a Visa Sponsored Merchant or be a part of MasterCard's Payment Facilitator Program, depending on the type of content or product represented.
With CCBill, we work with the major card brands and follow their guidelines and policies as a company. The various card brands have different systems for classification and categories but align under standard MCCs.
Starting April 17th, 2021 credit card associations shall begin classifying MCC 7273 (for U.S, Canada, EU, and UK merchants) and Merchant Category Code 5967 (for EU and UK merchants) as high-risk categories.
CCBill is updating its policies to reflect the planned update. New and existing CCBill merchants classified under the Merchant Category Code 7273 and/or 5967 may be required to pay the High Risk Registration Fee.
Visa classifies high-risk material (selling downloadable, digital merchandise and/or services) under Merchant Category Codes 5962, 5966, 5967, 7995, and is only available to merchants in the Visa, Inc. regions of United States, Canada, and Europe.
MasterCard considers high-risk material (selling downloadable, digital merchandise and/or services) under Merchant Category Codes 5967, 7841, 7994, 7995, and is only available to merchants in the Visa, Inc. regions of United States, Canada, and Europe.
Payments taken directly from a website for a digital item present much higher risk than in-person payments, where the person is present and the card is swiped or inserted.
Furthermore, payments taken online for memberships with automated recurring billing are considered a higher risk due to both the card-not-present environment plus the scheduled, indirect nature of recurring payments.
Transactions without the card or person present are also subject to higher incidents of fraud, including both malicious and friendly fraud. Without the delivery of a hard good, some consumers have issues with technology or are not happy with the digital product which cannot be returned. Therefore, there is a higher level of comfort in disputing charges.
Digital items sold in which the consumer pays in person are considered medium risk, as are non-adult digital services with automated recurring payments.
Other factors which determine risk categories can be tied to the individual business history, and are factored into the boarding process:
Credit card associations charge this fee in certain regions due to various risk factors, including the type of content, with one of the primary reasons being that maintaining high risk accounts is usually more expensive due to regular fraud monitoring.
Depending on the region, this fee is upwards of $500 annually per card brand to maintain this status and continue to process with their card types. (As part of our service, CCBill will collect and submit that payment to the card brands annually on your behalf, at not added cost.)
Low Risk accounts do not fall into this classification and therefore are not subject to these additional programs or fees.
Low Risk accounts generally refer to specific business models with a low incident or 'clean' history of chargebacks, returns, and refunds.
These business models are not noted for higher levels of abuse by either businesses or consumers and include a much larger list of relevant business models that have a common thread of actionable return policies.
Low Risk Applications and Accounts include, but are not limited to:
|Non-adult digital products, such as music, video, or non-adult subscription services.|
|Tangible goods, including adult-related items.|
|Any goods delivered to a geographic and/or physical location.|
|Business services invoicing online for actual services.|
|Monthly recurring charges for business services, such as web hosting.|