[ameoba]

Payment processing is a commodity when things are easy. If you're shipping T-shirts with cheesy movie quotes to college students, you don't have a problem. If you're selling credits for nude webcam chat, things get more complicated.

You get people waking up with hangovers regretting the $500 they spent. You get married men denying that they ever used the site. You get Ukrainian hackers running up charges on stolen cards. You start to wonder if people are laundering money through the site. You get mountains of chargebacks & fraud - preventing most processors from even wanting to do business with you, let alone compete for your business. The ones that will do business with you are going to charge an arm and a leg to deal with the risk.

I had the misfortune of working on a site that ran one of these businesses. They had to run a pool of processors - selecting which one to go through based on how trusted the customer was, how suspicious a transaction looked & even what part of the world they (and their card) were from. Being able to funnel transactions through a single commodity gateway rather than having to add & remove new processors every month as they dropped our account would have been a dream.

[erikig]

I got firsthand experience of this as well. We built a system that leveraged Bayesian filtering for risk measurement and transaction approval (above and beyond CVC and AVS) in high risk markets.

When things were going well, they were great but when they weren't it was really bad. In short, card issuers tend to side with clients (card holders_ and even with the best risk management, it is not an easy business to get right.