[jacquesm]

Whatever other merchant processor you'd find would likely (1) charge higher fees (2) also implement a rolling reserve (3) kick them off if they have > 1% chargebacks so they don't risk their merchant account.

Keep in mind that the processors are not going to be able to take on more risk than the card companies allow them to. You can not easily get around this in ways that are both feasible and legal at the same time.

One trick I know of was a company that ran a large number of low risk transactions (gas station payments) right along a much lower number of very high risk transactions. This 'blending' lowered the charge back rate to the point that their traffic was acceptable, but in order to get away with this they were mislabeling those purchases, pretending that the high risk payments were also gas purchases.

This is not acceptable to the card companies, they label this transaction laundering and will shut down any merchant account associated with such a scheme.

[blaung]

I'll even add two more to your initial list as these are still somewhat the norm for some merchant processors:

4) Personal guarantee 5) Up-front reserve

[ckdarby]

Extremely doubtful, any of the card schemas would shut this down so fast. Like the moment someone called in the first chargeback.

They're probably a payment aggregator with dynamic descriptors. This would allow them to process the high risk and gas correctly under the proper individual MCC but pool the transaction counts which would allow more chargebacks.

Source: Worked as dev at payment processor with dozens of acquirers, +10M transactions/yr, +$1B payments/yr.

[jacquesm]

We're talking a while ago, today this would never fly, and they were eventually - predictably - shut down.

[cutemonster]

> much lower number of very high risk transactions

Were those transactions of a lot more money? Or about the same as the gas payments

[jacquesm]

About the same. But always the same amounts so it is quite amazing they didn't get caught sooner than they were.

Yet another variation on this scheme: deduct a single $ for charity from the purchase price: double the transaction fees, double the transactions, half the chargeback rate because people won't charge back a single $.