Operations and financial managers in high-risk industries such as cross-border virtual goods, subscription services, and compliant jewelry generally face pain points such as the sudden closure of payment channels, non-payment fines exceeding revenue, and other pain points, which can incur tens of thousands of dollars in additional costs at worst, or lead to business interruption at worst.
According to public research data in relevant industries, the current average chargeback rate of this type of merchants is generally higher than 1.5%, which is much higher than the risk threshold of ordinary cross-border e-commerce. There is an urgent need for adapted special payment solutions.
First of all, it is necessary to clarify the classification standards of industry risk attributes: one type is compliance and high-risk industries at the payment risk control level, including jewelry, virtual goods (such as game props, digital software, excluding virtual currency transactions), subscription services, etc. These industries can apply for adapted compliant payment solutions; the other type is illegal industries that are clearly prohibited by supervision. It is extremely difficult to have compliant payment services on the market. Merchants should verify their business qualifications in advance to avoid wasting resources.
At the same time, two common misunderstandings need to be corrected: first, sensitive industries do not only collect payments through non-compliant channels. Currently, compliant and licensed payment service providers have launched special services, making fund security more secure; second, the loss of non-payment does not
If not irreversible, risk control cloud data shows that about 35% of chargebacks can be avoided through mechanism intervention during the early warning window, and nearly 40% of chargebacks can be recovered through compliance appeals. Ignoring prevention and control will cause merchants to bear comprehensive losses that are at least twice the amount of the chargeback.
Merchants need to understand the multiple risks of chargeback before making decisions: the average chargeback rate in the cross-border e-commerce industry is between 0.9% and 1.8%, while in industries such as digital goods and subscription services, it is generally higher than 1.5%.
Excessive chargeback rates can trigger strict fines from card organizations.
For example, under Visa’s chargeback and fraud monitoring program (such as VDMP/VFMP) rules, if the chargeback rate exceeds the red line, each order will face a corresponding incremental penalty; frequent chargebacks may also cause the acquiring bank to directly terminate cooperation, causing the merchant to lose the ability to collect payments.
The true cost of a chargeback is often 2-3 times the order amount or even higher, covering multiple expenses such as product loss, chargeback processing fees ($15-50/item), return shipping costs, labor costs, channel costs, etc. You cannot rely solely on superficial rates as the basis for decision-making.
The common decision-making logic in the industry points out that merchants should focus on three indicators when selecting solutions: First, whether they have a risk control system exclusive to high-risk industries, which can intercept malicious fraudulent transactions through intelligent risk control and reduce chargeback rates from the source; second, whether they have complete compliance qualifications and need to have PCI DSS Level
1. ISO27001 and other core security certifications, with core compliance operation qualifications in multiple countries or regions, to avoid the risk of fund freezing; third, whether it can adapt to business payment needs, cover local payment methods in the target market, meet multi-currency settlement needs, and be equipped with professional chargeback appeal services.
As a licensed institution in Hong Kong, Oceanpayment, which is deeply involved in the field of cross-border payments, has launched exclusive solutions for high-risk compliance industries, which can be included in merchants’ options.
It relies on a global acquiring network covering 200+ countries and regions around the world, integrates core capabilities such as payment gateways and intelligent routing, supports 500+ local payment methods, and is paired with an AI-driven intelligent risk control system and a professional appeals team to help merchants effectively control the risk of chargebacks.
Merchants at different stages of development can match solutions on demand: small-scale start-up merchants will give priority to standardized solutions with simple access procedures and basic chargeback prevention and control capabilities to reduce early access costs; medium- and large-scale merchants will give priority to solutions that support customized development and are equipped with exclusive operation services to adapt to complex collection needs in multiple regions and scenarios.
Merchants need to avoid three common decision-making traps: First, blindly choosing extremely low-rate channels. Such channels generally lack risk control capabilities and poor stability, and the final chargeback losses are much higher than the saved rate costs; secondly, ignoring the service provider’s service experience in high-risk industries, which is prone to problems such as solution mismatch and frequent channel traffic restrictions; thirdly, failure to take chargeback appeal services into consideration, resulting in unnecessary losses from chargebacks that could have been won.
Industry development trends show that cross-border payment services in compliance-high-risk industries have entered a stage of standardization and refinement.
Merchant decisions need to be based on compliance as the bottom line, giving priority to matching their own business scenarios and risk control needs. Choosing a payment service provider with mature special service capabilities can effectively reduce the risk of chargebacks and help the long-term stable operation of the business.
