Mobile Payment Processing for High Risk Merchants: Trends and Best Practices

Mobile payments are changing how we buy things, but some businesses struggle to use them. These are “high risk” businesses that sell products or services that banks and credit card companies see as risky. Examples include online gambling, gun shops, and adult entertainment. 

Despite these hurdles, solutions exist. This article will explore mobile payment processing for high risk merchants, explaining what it means and current trends. Read on to learn how these businesses can embrace modern payment methods and what the future holds for them.

Mobile Payment Processing: A Quick Overview

Mobile payment processing lets customers pay using their mobile devices. This can be done through apps, mobile websites, or devices that connect to phones. For merchants, mobile payments offer several benefits:

1. They’re convenient for customers.
2. They can speed up checkout times.
3. They often come with better security features.

For high risk merchants, offering mobile payments can help attract more customers and keep up with the latest technology.

Current Payment Trends 

Mobile payment processing is at the forefront of the financial technology revolution, with trends reflecting a strong shift toward convenience, security, and innovation. Here are some of the most significant payment industry trends currently shaping the mobile payment landscape:

1. Increased adoption of contactless payments.
   • Tap-to-Pay technology: Consumers are increasingly favoring contactless payment methods, allowing them to make purchases by simply tapping their cards or devices at checkout.
   • Near Field Communication (NFC): NFC technology is becoming standard in many smartphones and POS systems, facilitating seamless transactions.
2. Rise of digital wallets.
   • Popular platforms: Digital wallets like Apple Pay, Google Pay, and Samsung Pay are gaining traction as users prefer the convenience and security they offer.
   • Integration with loyalty programs: Many digital wallets are integrating loyalty programs, allowing users to earn rewards directly through their payment methods.
3. Emphasis on security features.
   • Biometric authentication: The use of fingerprint scanning and facial recognition is becoming more common as a means of securing mobile transactions.
   • Tokenization: Payment information is replaced with a token, enhancing security by ensuring that sensitive data is not transmitted during transactions.
4. Expansion of cryptocurrency payments.
   • Mainstream acceptance: More businesses are beginning to accept cryptocurrencies as a form of payment, reflecting a growing consumer interest in digital currencies.
   • Blockchain technology: The underlying technology of cryptocurrencies is being explored for its potential to enhance payment security and transaction speed.
5. Growth of Peer-to-Peer (P2P) payment services.
   • Popular apps: Applications like Venmo, Cash App, and Zelle are increasingly popular for transferring money between individuals, making transactions easier and faster.
   • Social features: Many P2P apps are incorporating social features, allowing users to share payment activities with friends, enhancing user engagement.
6. Focus on E-commerce Integration.
   • Mobile-optimized checkout: As online shopping continues to grow, businesses are prioritizing mobile-optimized checkout processes to facilitate easy transactions.
   • One-click payments: Features like one-click payments streamline the purchasing process for consumers, reducing cart abandonment rates.

What the Future Holds for High Risk Businesses

As the landscape evolves, high risk businesses may face additional challenges but also opportunities: 

• Increased regulation and compliance: High risk businesses may face stricter regulations, necessitating robust compliance measures.
• Growth of alternative payment methods: The rise of e-wallets, cryptocurrencies, and buy-now-pay-later services will provide more options for these businesses to cater to diverse customer needs.
• Enhanced data analytics: Companies will increasingly use data analytics to understand customer behavior, optimize payment processes, and reduce transaction risks.
• Focus on customer experience: With competition intensifying, high risk businesses will prioritize seamless and user-friendly payment experiences to retain customers.

Best Practices for High Risk Merchants in Mobile Payment Processing

By applying a few best practices, high risk merchants can successfully adopt modern payment methods that improve customer experience and ensure security. Here’s how:

1. Choose the right payment processor.
   • Look for processors that work well with high risk businesses such as Electronic Transfer, Inc.
   • Ask about their experience with your specific industry.
   • Check if they offer protection against chargebacks.
   • See if they have services designed just for businesses like yours.
   • Compare fees and contract terms from different processors.
2. Set up secure payment gateways.
   • Use payment gateways that have strong security features.
   • Make sure your system follows PCI DSS rules. These help protect customer information.
   • Consider using tokenization, which replaces sensitive data with unique symbols.
   • Regularly update your payment software to stay protected against new threats.
3. Offer many ways to pay.
   • Accept credit cards, debit cards, and digital wallets like Apple Pay or Google Pay.
   • Think about allowing cryptocurrency payments if it fits your business.
   • Let customers pay in installments for big purchases. 
   • Offer options like ACH transfers for recurring payments.
4. Use tools to prevent fraud.
   • Get software that uses artificial intelligence to spot suspicious transactions.
   • Set up two-factor authentication. This adds an extra step to verify it’s really your customer making a purchase.
   • Use address verification services to check if billing addresses match card information.
   • Set transaction limits or flags for unusually large purchases.
5. Teach customers about payment safety.
   • Create easy-to-understand guides on how to pay safely on your website or app.
   • Explain the security measures you use in simple terms.
   • Use trust badges or seals to show customers your site is secure.
   • Provide clear contact information for customers who have questions about payments.
6. Keep good records.
   • Save detailed information about each transaction.
   • Keep track of all customer communications related to payments.
   • This can help if there are any disputes later.
7. Have clear policies.
   • Write easy-to-understand refund and return policies.
   • Make these policies visible on your website and during checkout.
   • Be upfront about any fees or restrictions.
8. Stay up-to-date.
   • Keep learning about new payment technologies and regulations.
   • Attend industry conferences or webinars to stay informed.
   • Regularly review and update your payment processes.

Wrap Up

Mobile payment processing offers many opportunities for high risk merchants, but it also comes with challenges. Understanding the trends in the industry and following best practices  these businesses can offer their customers convenient and secure ways to pay. The key is to stay informed, be adaptable, and always prioritize security and customer experience.