Payment Gateways: What High-Risk Merchants Need to Know

Decrease cart abandonment by improving the checkout experience

If merchants can’t guarantee an error-free and smooth checkout process, consumers will go elsewhere for their merchandise.

Payment gateways are the unsung heroes in e-commerce processing. Few know what goes on beneath the surface. But, they play a vital role in facilitating a smooth and secure online payment experience.


Payment gateways provide the security and infrastructure needed to process transactions seamlessly while also delivering high performance. If merchants can’t guarantee an error-free and smooth checkout process, consumers will go elsewhere for their merchandise.


The stakes are even higher for high-risk merchants. Due to higher incidents of chargeback and fraud, security and anti-fraud technology are crucial. That’s why it’s essential to seek out the services of a payment processor like TransSource. A PCI-compliant payment gateway works in tandem to provide high-risk merchants with the services they need to transmit sensitive information, prevent fraud, and ensure a seamless experience. 

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How Payment Gateways Work

Merchant accounts that accept online payments must have a payment gateway. Payment gateways are a service tool that transmits funds for verification and approval (or disapproval). Like a POS checkout register, it ensures online transactions are processed and securely transferred to the acquiring bank for approval. All this happens in under two seconds. Here’s a brief snapshot:

  1. Card user makes an online purchase.
  2. TransSource connects merchants with the payment processor, providing support along the way. From there, the processor securely processes the transaction and passes it to the payment gateway.
  3. Your payment gateway shields the sensitive data via tokenization and sends it to the acquiring bank for approval.
  4. The processor securely transmits the funds from the acquiring bank to the merchant’s bank account if the transaction is valid and no fraudulent activity is detected.

Payment Gateways for the High-Risk

High-risk merchant accounts require special needs. That’s because banks and other financial institutions deem them risky and unpredictable. High-risk businesses include those with higher levels of fraud and chargebacks or those that pose a reputation risk. As a result, high-risk payment gateways are generally safer and more secure than low-risk categories.

The benefits of payment gateways for high-risk merchants are extensive but generally fall under three key categories: anti-fraud, security, and flexibility solutions.


Payment gateways detect and prevent online fraud. Generally, there are several tools to achieve this:

Address Verification Service (AVS) – AVS is one of the most successful (and popular) fraud detection tools merchants use. When consumers enter their credit card information online, they provide their billing address and zip code. AVS matches the billing address and zip code with what’s on file with their issuing bank. The payment gateway then sends a payment request to the bank, which will approve or deny the transaction based on if the information matches.

Card Verification Value (CVV) – CVV is the 3- or 4-digit number on the back of your credit or debit card. Therefore, since the card’s authorized user only knows it, all online and other card-not-present (CNP) transactions require the code. Again, the payment gateway will prevent the transaction if the information doesn’t match up.

Visa’s 3-D Secure – Another online fraud prevention tool requires users to punch in a 4-digit PIN, verifying their identity. It also aids in intelligence gathering and sharing among merchants for further verification purposes.

Flag High-Volume Orders – Fraudsters who steal credit card information know they’re on borrowed time and need to make as many high-volume transactions as possible before the authorized user reports the card stolen. The payment gateway flags suspicious high-volume transactions, preventing chargebacks (and saving consumers headaches).

Blacklist Functionality– Payment gateways can filter and block IP addresses that frequently engage in fraudulent activity. One such way is protecting against lock-out transactions, which involve online programs that generate hundreds of “valid” credit card numbers fraudsters use.


The primary function of payment gateways is to secure sensitive information. Therefore, it relies on tokenization to encrypt the data and adhere to certain security protocols. 

PCI Compliant – Every merchant that accepts credit cards payments must be PCI compliant. PCI is a set of rules that govern credit card use. It requires merchants to follow proper security protocols related to storing, transferring, and transmitting sensitive information. Payment gateways must be PCI compliant and adhere to rigid security protocol.

Tokenization – Payment gateways use tokenization to transmit sensitive information. It works by taking sensitive information, like account numbers, and assigning meaningless values and symbols in its place. That way, if breached, hackers and fraudsters will be unable to decipher the information and commit fraudulent transactions.


High-risk merchants must have more flexible payment options and offer a greater variety of goods and services than low-risk categories.

MultiChannel payment processing High-risk merchants can process recurring payments and accept all types of credit cards, invoicing, and alternative payment methods. By definition, high-risk merchants process higher volume orders, so they must be accommodating and have a payment gateway to handle the load.

Accept various currencies – Accepting multiple currencies means you can expand your business into other markets, which increases revenue. Not only that, it saves you time not having to translate currency values.

TransSource Can Help in 4 Key Ways

Now that we’ve discussed the benefits of high-risk payment gateways, let’s consider how TransSource can help. Here are four ways TransSource helps merchants integrate with a gateway best suited for them.

Payment Gateway Agnostic

We’re gateway agnostic. In other words, we provide you with the tools you need to be successful while you have the freedom to choose which payment gateway to use. We don’t try to hamstring you or recommend one that isn’t right for your business.

Choosing the right high-risk gateway can be a process, so we provide consultation services that partner you with the gateway service most suited for your business. A few things to consider:

  • We offer complete gateway integration services.
  • Our management team has over 20 years of experience, so we know how to match your business with the gateway service you need.
  • We have a reliable partnership with banks that knows your industry and know it well. Also, our strong partnership means your merchant account won’t terminate overnight for any reason.

Anti-Fraud Advantage

Preventing fraud is among every merchant’s highest priorities. One such anti-fraud solution is CB-ALERT.

CB-ALERT is our solution to preventing chargeback disputes before they become chargebacks. CB-ALERT works by immediately notifying merchants when consumers initiate a chargeback dispute, thereby giving merchants time to issue refunds or resolve the dispute before it affects their chargeback ratio.

How is this related to payment gateways, you ask?

Good payment gateways give merchants complete control over payment logic, preventing chargebacks. For example, you can program your payment gateway to send email notifications to remind consumers that a recurring payment will automatically deduct from their bank account. This prevents friendly fraud, and also, consumers appreciate the heads-up. You can also program the payment gateway to flag high-volume or international orders or other suspicious activity.

By having complete control over the purchasing process, you can create personalized if/then logic to protect against fraudulent activity you commonly face, enabling you to immediately respond to threats or chargeback disputes.

Security Solution

When dealing with consumers’ money, you need top-rated security features to prevent attacks and protect sensitive information. Our security protocols include AVS, CVV, tokenization, VMPI, and 3-D Secure. On top of that, we help integrate with a PCI-compliant payment gateway that adds additional security measures via firewalls, encrypted data, restricted data access, access logs, and other protocols.


We work closely with all our merchants to ensure your payment gateway integrates seamlessly with your website. But, of course, we’re with you every step of the way, incorporating our security and anti-fraud solutions into the mix as well.

But that’s not enough. The backend is well-taken care of, but what about the front end? Above all else, it must be consumer-friendly. If consumers become frustrated during the checkout process because they’re too many subfields or the layout is confusing and poorly designed, they’ll likely abandon the cart and shop elsewhere. Our consultation services ensure this won’t be an issue.

One Final Thought on Cart Abandonment

Consumers landed on your order page, so it’s time to close the sale. However, it’s not that simple. Consumers abandon their e-commerce cart for several (avoidable) reasons, such as not accepting their preferred payment option or being too complicated of a checkout process. Remarkably, a Baymard Institute meta-study found that 69.80% of consumers abandoned their e-commerce shopping cart. 

However, that same study saw a 35.26% improvement after fixing checkout design and usability issues.  This tells you that many of these usability issues are self-induced. What’s needed is a reputable payment processor that provides consultation services that cover everything from payment integration to set up a merchant account. 

Simply message us, and we can get you started with a seamless, no paperwork application process. That way, you’re free to focus on your business, and we’ll get to work.

The way it should be, right?

ecommerce, selling online, online sales
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