Merchants who have established an online dating business will know that it is a challenging experience. Banks and acquirers have taken a more conservative approach when underwriting higher risked merchant applications. In reality, online dating websites generally do not contain adult materials, thus it is not considered as a high risk business. As time changes, merchants feel the need to include “some” adult material or get totally mixed up between adult and dating contents.
The main reason why online dating websites are classified as high risk is because of the payment methods which include recurring billing, subscriptions, and automatic renewals after free trial periods. Payment methods like these are generally more prone to high chargeback counts. Other points that contribute to the industry being high risk include:
- Customers feel bored or give up when they cannot connect to anyone
- Customers are not satisfied with the results as promised
- Customers have found someone and wants to discontinue the services
- Customers cannot find the option to cancel their subscription
- Customer Service details cannot be found
- Customers found better sites with better services
Prostitution through online dating sites is also common these days. Merchants will post fake profiles, usually with sleazy names and provocative pictures, to lure customers to pay for fake services. Sometimes, scammers like these could also be other customers or members of a particular site. They typically find a partner and build a what-seems-like-a strong relationship with a partner. After a period of time, they will use them to wire over an amount of funds over various excuses. Though it seems like common sense, yet many customers tend to fall for the same tricks. Merchants should advise their customers on signs of scam to look out for and that it is a bad idea to wire money to anyone they meet online.
How to avoid risk and chargebacks
Many merchants out there want to build a legitimate online dating business but find it difficult to obtain a merchant account due to its high risk. However, it is not impossible if they take all available measures to ensure that the risks and chargebacks remain at a very low level. Here are some tips that can help you build a good and trustworthy online dating site:
- Merchants should ensure that the customer’s expectations are met. Promises or guarantees that are stated on the website should be accompanied by clear and ideal terms and conditions.
- Cancellation of subscriptions or memberships should be easily available at all times. This is to ensure that the customers do not result to contacting their banks to issue a chargeback.
- Frequently advise customers about other scam users or new techniques of fraud.
- Consider using anti-fraud features like 3D Secure and Address Verification System
- Choose a Payment Service Provider that can help you monitor fraudulent activities and also has additional anti-fraud features like IP Matching, card transaction limit, ticket size limit, etc. If you are providing recurring billing services, choose a PSP who has special features for this billing method.
- Identify a particular country where fraud is originating from and block its transactions.