Online Dating Merchant Accounts: Business Or Frauds
Online Dating Business
Online dating service (or Internet dating) is a service-based system that allows people to find and familiarize themselves to new connections or colleagues over the World Wide Web (Internet), usually with the mind set of developing exclusive, romantic relationships. An online dating business is particularly a company that provides precise mechanism (generally websites or apps) for online dating through the use of Internet-enabled computers or mobile devices such as tablets, mobile phones, laptops. Such industries offer a wide variety of match making services, most of which are profile-based.
These services allow the users to become members, either premium or for free, by creating a profile and uploading personal information such as age, gender, sexual orientation, location, interests, photos, hobbies and appearance. Most companies and its services also applaud their members to add more pictures and videos to their profile on a regular basis. Once the profile has been published, all the members can have a look upon the profiles of other members who are also using the same service, and by using the available profile information so as to think upon whether or not to initiate the conversation. Most services offer digital messaging, while others provide additional services such as online chat, telephone chat etc. Members can limit their interactions up to the online service, or they can arrange a private date to meet in person.
Large number of online dating businesses currently exists in the market with humongous diversity. Some have a broad membership base of different users searching for many different types of relationships (open, live-In, closed). Others target highly particulars demographics based on features like shared interests (looks for common interests), region, religion, sexual inclination or relationship type. Online dating sites also differ widely in their revenue mediums. Some sites are free and totally depend on advertisement for revenue purpose. Others work on freemium revenue model, offering free registration and usage, with optional, paid, premium tools and other offerings. Still there are many others which totally rely on paid membership subscriptions i.e. premium memberships.
High Risk Business
From Tinder to eHarmony, and JDate, there are number of dating websites and apps around the internet. There seems to be one service for every category, making this a lucrative, attractive and helpful business venture and investment. For those who are looking for a new business venture, this one can prove to be a great solution. But, one of the biggest problems come while looking for a merchant dating account.
If one has previously owned a business, he/she knows that business merchant accounts are necessary for accepting various available payment processing options like credit card payments, debit card payments – which are required to having an online dating website. The lack of options available for online dating services are huge in number – thanks to the processing industry marking it as a “high risk” industry. “High risk” signifies that the business is at a higher risk of chargebacks, which we know are not favorable to a business. The understanding of chargebacks is one of the those things that one need to look for when he/she is looking for an online datingwebsite.
Why High Risk?
There are two main valid arguments in support of the fact that the online dating industry goes under the high-risk business category:
High Chargebacks: Costumers who have subscribed to online dating websites sometimes find very few or not enough admirers to their liking. Unsatisfied, it is very habitual practice for some out of them to file for a chargeback with their credit card provider, claiming that the online dating website/service has failed to cater its service.
Transaction Laundering: sometimes a merchant’s online dating website is a front for a different industry, such as an escort service or even prostitution.
Why Is This Industry Known For Chargebacks?
Chargebacks are out of those everyday challenges in the online dating industry for several reasons. The most typical reason is when a member of an online dating service may not find what she/he is searching for, and therefore may file a chargeback with their credit card brand for lossing to deliver its services.
Secondly, online dating websites are popular among married individuals committing duplicity. One out of the two often discovers the other on a dating site, who in turn denies any preoccupation and files a chargeback with their card provider.
These accounts established by the business firm owners may be called “adult merchant accounts”, since they are created so as to cater the adult-oriented services, and sometimes the volume of the services can be, well, not so family environment friendly. Regardless, of the name the merchant account is under, the owner needs to make sure that it is the right and suitable choice for him or her and his/her business. Chargeback understandability is one among the things that the owner needs to consider. Another is the merchant account security. Do the service providers provide the same great security to their high-risk merchants as they do to their general merchants? Not all do, and this is something to think about! Owner of the merchant account should make sure that the provider will offer her/him choice or payment processing and terminal. An even larger issues comes in the form of processing charges. Many charges a large sum for high risk businesses, which is not at all acceptable. The owner should seek out a provider that charges industry-standard charges for all merchants.
High-Risk Versus Low-Risk Merchants
Chargeback boundaries are what sets high-risk and low-risk merchants apart. Every processor has a chargeback observation system. When a low-risk merchant enters the system, it is given some time to deal with any concerns after which they are subjected to extra charges.
High-risk merchants are considered fee-eligible on the same note of time. Excessive charges are charged each month a high-risk merchant is in a chargeback observation system. Typically, chargeback charges rates are greater for high-risk merchants than others.
Challenges to the industry
Dating merchants have had to battle with in an industry that has increasingly becoming an attraction for various fraud activities. The dating industry already have numerous challenges with a typically high rate of chargebacks and reputation matters. Now in the last 5 years, there has been a bombardment of false or fake profiles on dating websites in order to deceive valid members for money, which filters down to the merchants.
Fraudsters are practicing their online dating profiles for reasons like they can send phishing e-mails. They attempt to develop correlation with an innocent victim which ultimately becomes a cyber ‘relationship’ of sorts. The deceiver might be from some another country or nation or from some far away state, and at last looks out for money for a ‘visit,’ or perhaps even to help them get out of a difficulty.
Newly added task of identifying fake, predatory profiles to the list of issues that dating merchants need to mitigate, along with the above-mentioned chargebacks and reputation worries, and performing due care is approximately a full-time job within a full-time job.
Fortunately, there are solutions and assisting hands for online dating website merchants, which does not make them helpless.
Solutions Available To the Merchants
• Merchants Are Supposed to Improve Fraud Management techniques
Merchants are needed to go on to find a balance between supporting a good user experience and hampering fraud. In this year 2019, merchants are needed to remain observant in not allowing their fraud rules to downfall the chance to meet client’s expectations. With the entrance in 2019, merchants should perceive technologies like machine learning and other fraud solutions that explore many hazard factors and also do not play with the customer experience.
• Blockchain-utilized Dating Platforms will Bloom
Online dating services to safeguard their uniqueness by accepting cryptocurrency payments. Adult entertainment merchants often run into troubles due to weak messaging behavior and fake accounts. To encounter this, block chain-optimized dating platforms to be used and gaining publicity. With the deployment of these platforms, first payments are made with prepaid card functions through e-wallets sooner messages can be sent to validate the interactions.
• Use Of Artificial Intelligence for Better Fraud Detection
The practice of artificial intelligence in general, will continue to grow increasingly in 2019. Believe more to use to work upon the fraud exposure techniques.
• IP address monitorization:
Without taking the names of particular countries, there are regions that are hotspots for fraudulent activities all over the eastern Europe, Africa and Asia. I am not favoring the decline of all transactions from these regions, but I do urge merchants to mark them for a closer examination.
• ‘Report’ options for members:
Let’s take an example here of Facebook’s ‘Report Ad’ and ‘Report Post’ features. Empowering the subscribers to report suspicious subscribers and/or activities is a way of getting online dating business to work.
Payment Processor
A payment processor is a financial system lending the payment processing services needed by online merchants. It may be in partnership with other companies concerned with merchants or consumers. It agrees into a reselling negotiation with a payment gateway or a merchant account caterer so as to offer their services straightly to an online consumer.
There are some of the payment processors that offer precise merchant services, but the large part of them is engaged in providing the payment processing. As a rule of thumb, payment processors wishes not to publicize their services. They are usually enrolled in the back end and process payments for Independent Sales Organizations or ISOs and Member Service Providers or MSPs that have come into partnership with them.
Nowadays, the payment processor is the one which connects with both the merchant account and payment gateway, quickly passing information forward and backward, also preserving its security and almost spontaneous for the naive user.
A payment processor is important for assuring that you have a good conversion rate so it's a decision you don't want to take softly. A payment processor can be any how involved with all of the following mentioned:
• Customer
• Business Owner
• Payment Gateway
• Credit/Debit card company of the customer purchasing
• Bank of your business
Payment Gateway
A payment Gateway grants for charging customer’s credit and debit card with the purchase that is being made online. Thanks, to the authentication and authorization which is provided by a payment gateway, so that one can take card payments right from the website. So it plays an intermediary role between the transactions being processed on the website and the payment processor. Due to security concerns, transaction details cannot be transmitted straight from your website to a payment processor.
It is a doorway for making online sales. It will allow you to cost the customer’s credit/debit card with the purchase he/she makes online.
The Payment Gateway authorizes to take card payments directly from website. The payment gateway behaves as a mediator between the transactions that take place on website and the payment processor. This is needed because it is prohibited, due to security concerns, to transmit transaction details directly from your website to a payment processor. Most of the online merchant accounts these days come with a payment gateway included, like PayPal.
Merchant Account
A merchant account facilitates you to accept credit/debit card payments via the Internet. You will need a merchant account if you want to progress transactions from your own website using a payment gateway. Merchant accounts are rendered and supported by many companies. You can get a merchant account also from some payment processors as well as from some payment gateways. Besides, you can also open one with some large banks.
ISOs and MSPs can also render merchant accounts as they make agreements with payment processors to offer such services. What you can have more, you can get a merchant account from Independent Contractors or Agents of ISOs too.
Anyway, to obtain a merchant account, you should choose the right merchant account provider that provides the best possible charges, plans and fees for your online business.
Merchant accounts are one of the types of bank accounts that validate merchants to accept credit or debit cards payments online. These accounts become a necessary, if you want to use a payment gateway to process transactions from your website.
Merchant accounts are also known as MIDs (or merchant IDs).
There are a variety of payment gateways and payment processors in the market out there. They vary in the monthly fees and transaction charges. It is important to choose the right company for your merchant account if you plan to run a profitable and successful online business.
Methods of payment accepted with a merchant account
As soon as you get a merchant account you can start accepting payments in the following modes:
• Online – a payment gateway that enables you to receive online payments through website
• Card Machine – with the obvious debit and credit cards, it’s also vital to find a merchant account that can provide contactless, as well as Apple and Android Pay
• Phone – although you may have a website, a customer may have a question about a product and you can then take a payment over the phone