The processing of high-risk credit cards occurs when a business helps a merchant to facilitate potentially problematic credit card purchases. There are many reasons why a given merchant would be considered high risk, depending on the nature of the business and its customers. A business that handles high-risk credit cards knows that its merchants may have an inconsistent relationship with its customers. For this reason, the subcontractor could incur financial liability due to its relationship with the merchant in question.
Credit cards are the source of funds for a wide range of purchases, allowing consumers to acquire goods and services without immediate payment to the seller. In a process called credit card processing, consumer card information is sent by the merchant to the processor, then to the credit card company, which then validates the purchase and ultimately remits payment to the merchant. However, there are merchants for whom this process can be complicated and fraught with pitfalls. These companies should seek the treatment of high risk credit cards.
There are many problems between merchant and customer which, if they arise often enough for a given business, would require processing of high risk credit cards. One of these problems is the recurring distrust of customers and the lack of satisfaction with the products or services offered by the merchant. Such problems can lead to excessive chargebacks, which happens when a credit card payment is returned to the customer. Customers who constantly ask for returns would be a huge problem for processing companies attached to unreliable merchants.
Other problems related to the type of business carried on by merchants may require them to require the processing of high-risk credit cards. For example, a business offering adult services, such as escorts or massage parlors, might be too controversial to be run by a leading financial institution, and that financial institution could refuse to use its credit card at such places. Some businesses that require a long delay between payment and the provision of services may also be considered high risk.
Basic competence is linked to the degree of efficiency and expertise demonstrated in a particular field. Although the term was developed to be used in professional environments, it is used today in all kinds of contexts. Besides use in business, references to basic skills can be found in contexts as diverse as faith-based organizations, non-profit organizations, and even at home.
Also called core ability, core competence focuses on something that is particularly well done by a person or entity. In terms of the business context, it is understood that core competence exists when three specific elements exist. The company is capable of delivering benefits to consumers, offers something unique and difficult for competition to imitate, and has a service product base that can serve a wide range of consumer markets.
Once the classification has been made, a processing company may decide to completely avoid any trader considered to be high risk. On the other hand, some companies specialize in the processing of high-risk credit cards. These companies may charge merchants in the high-risk category a little more. Other high risk processors may offer services designed to simplify the transaction process for traders and reduce problems, thereby reducing the risks associated with trading with them.