Questions about PSPs

[rolex]

Hello everyone, I'm a software developer and I've been lurking around this forum for a while now. I'm often seeing posts about people wanting to find a reliable PSP for their “high-risk business”, which seems to be nutraceuticals, sweepstakes, cbd, sarms, replicas etc.

I'm wanting to possibly start my own PSP, and I've got some questions that I'd really appreciate if anyone can help answer.

1. Why is it so hard for people here to find a reliable and trustworthy payment processor?
2. What are the main products that will be sold using high-risk PSPs?
3. Would people try to get an account with my PSP for the sole purpose of cashing out stolen credit cards?
4. What shop software do high risk shops normally use? (Shopify/Woocommerce/Magento etc etc)

Any other advice or tips that would help me would be greatly appreciated
Thanks!

 

[Sols]

rolex said:
Why is it so hard for people here to find a reliable and trustworthy payment processor?
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The good ones are good because they are stable. They are stable because they only work with high quality merchants (no/low chargebacks, high volume). They only work with high quality merchants by not being public and relying on referrals and outbound sales.

rolex said:
What are the main products that will be sold using high-risk PSPs?
Click to expand...

Anything considered high risk: adult/P**N, dating, nutra, pharma, cannabis products, gambling (licensed/unlicensed), web hosting, and so on.

Not all high-risk is equal. Each industry has its quirks.

rolex said:
Would people try to get an account with my PSP for the sole purpose of cashing out stolen credit cards?
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Yes. It's called card testing. Here is a recent article about it: Debit card fraud leaves Ally Bank customers, small stores reeling

rolex said:
What shop software do high risk shops normally use? (Shopify/Woocommerce/Magento etc etc)
Click to expand...

Depends on the industry.

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This is the probably the answer to your question.

 

[VESTANON]

@rolex

1. A multitude of payment processors exist globally,worldwide,and regionally. typical processors alike deal in various categories, ie high risk,low risks,gaming,Electricals, DIY equipments etc. and as such payment processors consist of a specific niche, they would readily deal with and onboard while rejecting inappropriate items deemed high risk/ unpalatable...

in relation to the OTC, specific Processors have been listed inline with user needs and popularity, processors on here are like guidelines and a map pointing towards certain categories, needs, regions, processing volumes etc.

2..main products using/requiring a high risk processor varies, an across the board category of high risk:
( gambling,crypto,CBD,Herbal products,Medical prescriptions,
IPTV,VOIP,Telemarketing, Cigarettes,
Vaping based items.. Etc). the list simply goes on, basically you ought to streamline the high risk product category of interest, and then proceed to weed out highrisk processors of choice.

3. Highly likely and probable a few user of your PSP platform would carry that out, as PSP are quite decent towards laundering related activities...Though in real life situations could be a 70/30 probability...

4. Basic and common Integration Based Software include and not limited to: shopify,woocommerce,Wordpress,wix,
ecwid..etc
as per the above, integration and plugins could be abit more straight forward than other options readily available..all comes down to the specific choices,jurisdiction of operations, users and clients within your product category,settlement processes etc... rea#44!

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[rolex]

Thanks so much for the replies @Sols @VESTANON, it's very helpful 🙂

Sols said:
The good ones are good because they are stable. They are stable because they only work with high quality merchants (no/low chargebacks, high volume). They only work with high quality merchants by not being public and relying on referrals and outbound sales.
Click to expand...

1. Is the only reason that PSPs cannot offer services to high-risk shops because of a high chargeback rate?
2. Does that mean if the nature of the products being sold are high-risk, but have a abnormally low chargeback rate, it won't be hard to find a PSP?

3. If I were to offer my services as a PSP, what stops me from taking on the business of high-risk shops?

4. Here is a list of "acquiring banks" in the US licensed by Mastercard.
https://www.mastercard.us/en-us/business/overview/start-accepting/find-an-acquirer.htmlI understand that most of the banks listed there are traditional banks (Wells Fargo, Citi, etc) but there are also multiple "banks" listed there that aren't actually traditional banks. (EVO Payments, Elavon, FISGlobal). How are they classified as an acquiring bank? Does it mean they've partnered with a traditional bank like Wells Fargo to offer their services?
I ask this because I want to know how I would go about getting/partnering with a bank for acquiring on behalf of my customers.

 

[Sols]

rolex said:
1. Is the only reason that PSPs cannot offer services to high-risk shops because of a high chargeback rate?
Click to expand...

No, there are also regulatory considerations when it comes to certain types of goods and services (CBD, nutraceuticals, gambling, crypto) as well as the business profile (offshore company, UBO/director/shareholder from high-risk country, complex structure, delivery channels). There are special rules for certain merchants that you must follow and manage. Failure to comply can cost 25,000 USD per incident and higher.

rolex said:
2. Does that mean if the nature of the products being sold are high-risk, but have a abnormally low chargeback rate, it won't be hard to find a PSP?
Click to expand...

It's all about volume. There are PSPs that tolerate above-average chargebacks as long as the volumes are high enough (i.e. a few million USD/EUR a month).

rolex said:
3. If I were to offer my services as a PSP, what stops me from taking on the business of high-risk shops?
Click to expand...

You need to find the right acquirers/processors, and they need to trust that you know how to manage high-risk businesses.

As long as you or someone you hire have a couple of years in the payment industry and the right connections, you can make it happen.

rolex said:
4. Here is a list of "acquiring banks" in the US licensed by Mastercard.
https://www.mastercard.us/en-us/business/overview/start-accepting/find-an-acquirer.htmlI understand that most of the banks listed there are traditional banks (Wells Fargo, Citi, etc) but there are also multiple "banks" listed there that aren't actually traditional banks. (EVO Payments, Elavon, FISGlobal). How are they classified as an acquiring bank? Does it mean they've partnered with a traditional bank like Wells Fargo to offer their services?
Click to expand...

You don't have to be a bank to be an acquirer. Across the world, most acquirers are banks but in some regions (such as EU/EEA), non-bank financial institutions can become acquirers. Some have their own acquiring licenses from Visa, Mastercard, Amex, and so on. Many others have ISO (Independent Sales Organization) or similar relationship with an acquirer which lets them resell without the merchant ever knowing the acquirer.

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This is the probably the answer to your question.

 

[rolex]

Sols said:
There are special rules for certain merchants that you must follow and manage.
Click to expand...

Do you think you could point me in the right direction for finding these rules?

Sols said:
You don't have to be a bank to be an acquirer. Across the world, most acquirers are banks but in some regions (such as EU/EEA), non-bank financial institutions can become acquirers. Some have their own acquiring licenses from Visa, Mastercard, Amex, and so on. Many others have ISO (Independent Sales Organization) or similar relationship with an acquirer which lets them resell without the merchant ever knowing the acquirer.
Click to expand...

This is incredibly helpful. Thank you so much.

 

[Sols]

rolex said:
Do you think you could point me in the right direction for finding these rules?
Click to expand...

Rules for merchants are usually public but the rules for acquirers and processors are not publicly available, or only partly publicly available.

They vary slightly by region but you can usually find the public ones just by searching.

https://usa.visa.com/support/consumer/visa-rules.htmlhttps://www.visaeurope.lu/en_LU/support/consumer/visa-rules.htmlhttps://www.mastercard.us/en-us/business/overview/support/rules.html

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This is the probably the answer to your question.