Insider’s Advice On High Risk Payments With Alex Roy

Here’s some insider advice on high-risk payments and ClickFunnels.

Launching a new e-business is an exciting milestone in an entrepreneur’s career.

Keep in mind, if you sell certain products such as continuity programs, instant downloads, member access, nutraceuticals, dietary supplements, weight loss products, and skin care, or engage in certain business practices like multi-level, affiliate marketing, moderate chargeback models, or trial sales, you may find yourself stonewalled by a payment processor.

Simply put, you can seemingly have everything in place, yet fail to launch your business on time, or at all, because you can’t find a payment provider who will partner with you to accept credit cards.

You may have been turned down by a payment aggregator, like PayPal, Braintree or Stripe, or you may feel they are not a good fit for your business.

The answer to this conundrum is to consult with someone who specializes in high-risk markets. These are not your neighborhood banks or large national banks where your brick-and-mortar counterparts may do business, but rather payment consultants that have a firm grasp on your industry.

These merchant service providers, and educators are better able to understand and manage the real risk you present.


As a general rule, you should keep your chargebacks below 1% to prevent your account from being penalized or shut down. You can calculate your chargeback percentage by dividing the number of chargebacks by the number of sale transactions you have.

For example, if you had 100 sales and 1 chargeback, you would be at 1% (some card types compare the previous month’s volume to the current month’s chargebacks).

Another important metric is the chargeback “hard count”. Hard count refers to the total number of chargebacks that you receive in any given month. There are several gross chargeback hard count numbers that can raise flags at different levels in the payment hierarchy.

At the processor and bank level having total chargebacks above 50 can cause an internal review where the processor’s loss prevention team will take a close look at the reason codes for your chargebacks, and the percentage.

The card associations themselves really take note when your chargebacks reach a 1% ratio and a 100 hard count for any one card brand. If you reach this level you will almost certainly be either shut down, have funds held, or best case, be placed on a monitoring program whereby you must present a chargeback lowering plan, and show rapid improvement.

One additional note on this topic, there was a time when merchants who processed their sales through European processors were held to a different, and looser, standard; that is no longer the case, the 100 and 1% rule now applies to pretty much all merchants, regardless of where their processor is located.

What if you are below the 1% mark, should chargebacks be a big concern?

I believe the answer is a resounding “yes” for several reasons:

  1. Chargebacks Indicate Customer Dissatisfaction

The most important reason to investigate every chargeback, even if you’re under the 1% threshold, is that they often indicate customer dissatisfaction. Sometimes this is as simple as the customer being unhappy with your product and often it runs even deeper. Why did they not request a refund? Are your return policies too strict or difficult to find? Was the client angry or did they feel you treated them unfairly? Are your products failing to reach their destination? All these things are worth investigating to improve your business and your customer satisfaction.

  1. Unreviewed Chargebacks Are A Welcome Mat For Fraudsters

When you let fraud slide without taking steps to prevent it in the future, you are sending a message to the fraudsters that your site is a safe place for them to do illegal business. And just like customers spreading the news about your business by word-of-mouth, international fraudsters often do the same. If you don’t want to become known as a safe place to process a stolen credit card, make sure you review all fraud-related chargebacks for ways you can improve your loss prevention process.

  1. Chargebacks Are Lost Revenue

Not only do chargebacks cost you the amount of the sale, but they also carry fees of their own. Chargeback fees can be quite expensive and add up to a measurable loss over time. They can also be a cause of less tangible losses, such as lower customer retention, fewer sales, and slower growth.

  1. Chargebacks Are Lost Opportunities

Each chargeback is an opportunity to improve a process, identify a weakness, or reach out in a positive way to a customer. By ignoring your chargebacks, you sidestep opportunities for growth that could push you to the next level. Never view analyzing chargebacks as a waste of time, but rather as a chance for improvement.

  1. Chargebacks hurt your reputation

Each chargeback, no matter if won or lost, counts as a mark against you. We already know about the 1% rule when it comes to chargebacks but even having 1 or 2 chargebacks can make the difference in being classified as a “High-Risk Merchant.”

For these reasons and more, chargebacks are worth fighting even if your overall ratio is under the 1% limit. Don’t wait until you reach the danger zone to start paying attention to your chargebacks – Be proactive and see the positive results it will have on your business. Here at ecommerce4im we offer a low-cost service to help you prevent a chargeback before it happens. This service is called chargeback mitigation.

When a merchant uses a chargeback mitigation program they will receive an early heads-up from their customer’s credit card company (issuing bank) on many chargebacks before they occur. Merchants can then quickly hold shipments or refund clients, and then through a simple, easily set up system, inform the customers’ bank that a chargeback is not needed.

Chargebacks mitigation programs have an extremely small net cost because they reduce chargeback fees and as a bonus they are looked at positively by processors.

High-Risk Merchants:

There are a variety of businesses that are categorized by payment providers as high risk, and you may not be aware your business is even in this category. You may even be doing ‘business as usual’ with a current provider like Stripe or Braintree.

However, what you may not know is that these payment providers can, with no notice, hold back funds in your account or worst still, shut you off. Actions like this can cripple a business very quickly because you would be unable to process credit card transactions on your website or fall into an immediate cash flow dilemma.

Some of the products that are in the high-risk category would include diet/weight loss, colon cleanse/detox and general supplements, especially ones with forskolin, garcinia, and African mango (to name just a few).

Even skin care and brain care products fall into this group.

Other products would also include tobacco/e-cigarettes, government information, wine, firearms, and ammunition. Many service and sales industries are also viewed in the same regard – multi-level marketing, affiliate sales, continuity sales and technical support are several examples.

At E-Commerce4IM we are consultants that specialize in getting high-risk businesses approved for credit card processing. As a result, we can provide tools for straight sales, trial offers, and recurring billing.

Additionally, you can use Backpack with your new merchant account as a high-end tool to track affiliates. We can even set your business up with multiple merchant accounts to accommodate sudden increases in volume from successful sales funnels and marketing campaigns. There is nothing like being prepared for the unexpected!

We are payment industry consultants, and ClickFunnels payment integration experts – what that means is it is our job to help you find appropriate and stable merchant accounts.

The best part is that we do this at no cost to you. We use a simple one-page form to gather basic information about your business, sales process, and any history you have.

We collect this information to screen you with up to 25+ different payment processors to find you the best fit for your business and your products.

The merchant account providers themselves are the ones that pay us to find the best fit for their business.

Not every processor takes every product or every sales model, nor is every product a good fit for every processor, even if they accept the product. We are not employees of any one payment processor.

As consultants, we can not only help you shop for the best terms on a primary merchant account, or even a secondary account for volume cap, or backup reasons but can also help with other items like fraud, chargebacks, gateways and ClickFunnels integration –   again at no cost to you.

Furthermore, if you’ve already been turned down by PayPal or Stripe, we can help!

Contact us anytime, even if you are just looking for a little free, friendly advice.

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7 thoughts on “Insider’s Advice On High Risk Payments With Alex Roy

  1. After 8 years with an immaculate record with PayPal, they put an outrageous hold on my account, because I processed two significant payments (around $13,000 total) from the same client whose accounts were flagged because of HIS identity theft issues. They put the entire amount of his transactions on hold, plus 30% of any additional payments. I tried to look at it from their perspective – but I did switch to another payment processor. Just hit 90 days since the hold was placed, and requested they remove it. Certainly was an interesting challenge.

  2. Great article. Thanks for this information. I had no idea nor would have even thought of it until a problem arises.

    I like this article but it frustrates me at the same time…….I’ve been selling online for 17 years now and have been fortunate to have had tens of millions in sales…….that being said it frustrates me to no end that Clickfunnels only offers credit card processing (Stripe and Braintree)
    I’ve been through the days of having deposits held up and the credit card companies requiring a $30,000.00 dollar deposit to offset risk because of rapid online sales growth……..

    Ironically, Russell Brunson himself, describes his experience in his story in 2005, of having a problem with his credit card processor which almost put out him out of business………

    This being said I’ve been with my current credit card processor for 11 years through and would love to use clickfunnels for a number of different transactions……Is there anyone here that can tell me how to do this without signing up for a Braintree account.

    Sorry for shouting but I’d really appreciate help in getting this sorted out…..

    1. Good Morning Morgan, With the new Payment Gateway, NMI. You can now do One Click UpSells, DownSells, and Order Bumps. To Sign Up for NMI with Click Funnels, visit