Precious Metals

Why Precious Metals businesses are considered High-Risk?

Volatility and Susceptibility to Market Fluctuations and Fraud

  • Precious metals have a high value per unit, making them susceptible to market fluctuations.
  • The industry is also attractive to fraudsters, money launderers, and other criminals.

 

High-Value Transactions

  • Precious metals trading involves high-value transactions, which increases the risk of financial losses.

 

Strict Regulations and Security Protocols

  • Precious metals merchants are required to comply with strict regulations and implement robust anti-fraud measures.
  • KYC (know your customer), AML (anti-money laundering), and other compliance protocols are mandatory.

Risk of Chargebacks

  • Chargebacks occur when a customer disputes a transaction, resulting in significant financial losses for the merchant.
  • Chargebacks can be caused by fraudulent transactions, shipping issues, and customer dissatisfaction.
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Mitigation measures for Precious Metals merchants to reduce risks when selling online

Robust Anti-Fraud Measures

To prevent fraudulent transactions, precious metals merchants should implement robust anti-fraud measures. These measures may include:

  • Implementing a KYC (know your customer) process to verify the identity of buyers.
  • Conducting thorough background checks on buyers to prevent money laundering and other illegal activities.
  • Using fraud prevention tools such as address verification, IP address tracking, and card verification.

 

Secure Payment Processing

Precious metals merchants should work with experienced payment processors who specialize in high-risk industries. These processors offer secure payment processing solutions that are designed to mitigate the risk of fraud and chargebacks. Merchants should look for processors that offer:

  • Chargeback mitigation tools to reduce the risk of financial losses.
  • Secure payment processing that complies with industry standards and regulations.
  • Integration with anti-fraud tools and compliance management solutions.

Being a high-risk merchant vs. a regular merchant

  • Higher payment processing fees
  • Lengthier application process
  • Higher chargeback fees
  • Cash reserve requirments:
    • Capped reserve
    • Rolling reserve
    • Upfrom reserve
  • Volume caps
  • Additional technical requirements
  • Being on the TMF / MATCH list

 

Check out our knowledge hub to learn more about what processing fees, application process, chargebacks and cash reserve requirements or TMF / MATCH list mean. 

Other risk factors?

There may be other risk factors as to why you as a Precious Metals merchant are classified as a high-risk merchant, such as:

  • Accepting subscription-style payments

  • Being on the Member Alert to Control High-Risk Merchants, or MATCH list — a list managed by Mastercard that monitors merchant behavior, like chargeback history

  • High average transaction sizes

  • High sales volumes

  • Highly regulated industries

  • International sales

  • Large number of card-not-present transactions

  • Little to no business experience

  • Long fulfillment time frames

  • New or poor credit scores

  • Past fraud or illegal activity

As high-risk Precious Metals merchant how to find a payment provider?

It takes effort for businesses to secure a payment processing partner when they are considered high-risk but it is definetly possible to find the right payment solution if you focus on:

  • Maintaining healthy cash levels. Most processors would like to see a healthy cash level in your business bank account. 
  • Try to reduce chargebacks. There could be a number of factors behind the soaring number of chargebacks in your business. Whatever the reasons may be, you can always analyze them and try to reduce your chargebacks.
  • Be transparent. Disclose all materials and relevant information during the application process. Payment processors may ask you for very detailed information about your business and finances. Be open, honest, and transparent.
  • Keep your documents ready. This could mean having six months of bank statements and a few years of tax returns. That said, each processor has its own set of requirements so make sure to check them.
  • Follow the guidelines of your payment processor. When you apply for a high-risk payment solution, besides your business needs, the risk the payment solutions provider takes also matters. So, be flexible and see if there are things you can do to reduce your risk by discussing with them and following their recommendations.

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We provide payment solutions for merchants with a 90% Succes Rate by Algoritmic matching and pre-KYC onboarding in each industry and region globally.

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