Online Payment Risk and How to Manage It?
Online Payment Risk: Payment risk is considered as a loss if a merchant or a company handles a high volume of payments and they fail to comply with the contract.
The blockage of the payments as a source of fraud can be bounced back on the company. The truth is that every payment method involves risk. If you run an online business and process payments on your website, there is a risk involved. The major ones are a fraud and operational risks.
There are many types of operational risks:
- Inadequate and Failed Information Systems
- Fraud and Chargebacks
- Processing Errors
- Breaches in Internal Sources and Control
- Commercial Disputes
- Unforeseen Calamity.
Since the online payments form the foundation for digital foundation services, an approach to managing and regulating their risk is the first step. A company should work for an approach for assessing the economic impact of risk from the perspectives of customers, providers, and self.
A high level of transactional risk exists with internet products, particularly if the lines of business are not planned and implemented properly. That is the reason when banks underwrite for high-risk business or any business, they always go for a check whether the business is properly planned and implemented or not, whether its website is PCI compliant or not.
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Management of Risk:
A merchant needs to have a quantitative approach about the risk management to identify and manage it in online payment processing
- A merchant needs to identify the most critical risks by tying them to business processes.
- Quantify the severity of the identified risk, if they occur
- Measure the size of the risk and evaluate the likelihood of it, if it is to occur again.
Detailed Risk Management At A More Granular Level:
- Understand The Risks And Train The Staff – The staff should know what risks your business may have to deal with and plan for it beforehand. Everyone in the business structure needs to understand the types of risks inherent in online payments. Establish the procedures on avoiding and solving the risks.
- Ensure Information Security – Information here includes customer databases, buying requests, payment process. etc. It should be made sure that Information is not leaked nor hacked into. Setup a secure and efficient process for submitting authorization requests over the Internet. Before you can start accepting payments online.
- Use Collective Efforts To Minimize Losses – You have control over most types of chargebacks and especially the ones resulting from processing errors. A well-designed collection system can help recover unwarranted chargeback losses.
- Display Effective Policies And Rules – Your website must list your privacy, shipping, return and refund policies on each page. Customers should not be forced to search for them. This will also create satisfaction and convenience for customers to come to the website even more.
- Risk Evaluation – Fraud and any type of risk when occurs should be evaluated in first priority, by this approach the business has a guarantee of getting a sound data and planned structure to put up for future risks.
Finally, Risk Management is focused on the analysis and reduction of risk in various types of activities. To know more-
We provide specialized assistance for various issues including high-risk merchant account, offshore merchant account, merchant account, and online payment gateway. You can contact us using the toll-free number +1 (727) 330 – 3944 or visit app.merchantstronghold.com for more detail.
