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Blog Category: Know Your Customer

merchant onboarding

From gaps in healthcare delivery to supply-chain bottlenecks, the pandemic has illuminated shortfalls in many established in-house systems. For payment providers, pivoting to a remote workforce introduces additional risk into the critical Know Your Customer (KYC) component of the merchant boarding and underwriting process.     Automated KYC Risk professionals know that manual KYC due… read more

– January 22, 2014 –  Allied Wallet, a G2 Web Services client, uses Global Boarding to dig deep into its potential merchants’ histories to uncover hidden risks and make more informed boarding decisions. Due diligence during the boarding process is the first line of defense when it comes to protecting a company’s merchant portfolio from financial loss due to risky merchants. With the increasing demand for a quick turnaround time at boarding, the careful balancing act of thorough due diligence along with the need for speed at boarding is a rising challenge. G2 Web Services developed Global Boarding, a fast flexible due diligence solution precisely to solve this problem.

Fraudulent merchants are abundant during the holiday season, profiting from consumers’ generous spending during the most lucrative shopping days of the year.  According to a report by ComScore, online retailers are estimated to bring in over $52.2 billion during November and December in the U.S. alone. The volume of transactions in such a short period of time is the perfect breeding ground for fraud schemes that can hurt acquiring banks and payment providers. Not only do the holidays bring an increase in merchant fraud, but they are also a popular time for merchants to add non-compliant goods to their websites, as these can often be very profitable. Monitoring merchants for compliance and fraud is imperative for acquirers and payment providers during this busy shopping season to prevent possible brand damage and financial loss.

This week, we sat down with Robert H. Caldwell, Founding Partner of G2 Web Services, to interview him on cyberlockers and marketplace merchants, and the risk they present to the payment system. Read on for Bob’s insights into where cyberlockers and marketplace merchants fit in the payment system, the risks associated with them, and best practices for payment providers to mitigate risk associated with these entities.

As an acquirer, knowing what your merchants are selling is key to minimizing your risk for potential violations, especially since merchants can add products to their websites at any given moment, without your knowledge. New products are constantly put on the market, and unfortunately, illegal and risky products are often hard to detect and monitor. Without being aware of these products, you run the risk of brand damage and potential violations, including regulatory fines and even legal penalties. While the list of goods and services that violate MasterCard’s BRAM program and Visa’s Global Brand Protection program (not to mention the law) is exhaustive, G2 Web Services has compiled a list of five lesser-known products that we have identified on merchant websites that you should be on the lookout for.

As the payment industry continues to undergo significant changes spurred by strong innovation and new payment methods, online merchant risks are on the rise, making it challenging for payment providers to stay one step ahead. With an increase in data compromises and government regulations, as well as new compliance concerns, the importance of performing extensive due diligence before boarding a new merchant could not be greater.

Bringing on the wrong merchant can be detrimental to your portfolio, as you could potentially bear the burden of any fraud, card network compliance violations, chargebacks and data breaches, which can cost you extensive financial damage, not to mention legal and regulatory penalties. Unfortunately, many acquirers do not thoroughly investigate their merchants’ online presence and history of risk. The good news is that many of these potential threats can be avoided by ensuring you follow the right steps and knowing exactly what to look for during the merchant boarding process.

The following are five areas of a merchant’s history to pay extra attention to at boarding:

We all know how difficult it can be as an acquirer to monitor all of your merchants’ websites effectively. It is a costly and time-consuming process to do in-house, and regulations are constantly changing. However, choosing to not monitor your merchants can open you up to brand damage, legal liability, and card network assessments.

Here are the “Top 5 Tips to Monitor Your Merchants” from G2 Web Services, a leading provider of payment risk management solutions and expert at merchant compliance monitoring, to help you stay better protected.

See how our solutions can help you.

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