Common problems with merchant accounts and how to fix them

Common problems with merchant accounts and how to fix them

So, you’ve got a merchant account, hopefully, accompanied by a reliable payment gateway. What’s next? For one, you can finally broaden your business and start accepting online payments. 

But, unfortunately, the risks are crawling around every facet of our life, and payments are no exception. And, as a merchant, you need to be prepared. This is why today we are covering some of the common online payment problems and sharing advice on how to deal with them. 

Payment fraud

One of the biggest concerns for merchants. Just to clarify, payment fraud refers to many kinds of illegal transactions carried out online. After all, it is easier to commit financial crimes when no one can see your face on the internet. Multiple lockdowns happening around the world only contributed to the unfortunate statistics. Fraud examiners noted a significant increase (31%) in global payment fraud in August 2020 and expected it to spiral further (47%) during the year. 

That’s why companies must implement security tools and reputable payment gateways to prevent fraud. But more on the solutions later.

Types of payment fraud

Identity theft

As the name suggests, this kind of scam occurs when a criminal steals an individual’s data and uses it for financial gain. Most merchants experience this online payment problem when fraudsters use people’s bank card information to make purchases, transfer funds, etc. Likely, if your payment gateway provides 3D secure services, this type of fraud usually can be avoided.

More elaborate schemes take place as well: scammers can even get enough data to take a substantial loan on behalf of a person, and this is dreadful news for the latter.


Next – the scam that leads to identity theft. Phishing entails that criminals will try to fish out personal data via emails or websites. All it takes is providing your credit card data or other relevant information and a person is sadly on the scammers’ hook. 

Friendly fraud

This online payment problem causes merchants many complications. Friendly fraud occurs when a customer purchases something on the internet but then disputes the payment due to a misunderstanding or malicious intent. 

The issue – there are many kinds of friendly fraud, some of which can be resolved, but others will cost you:

A customer forgot about a purchase.  This occurs accidentally. Here’s a typical scenario: a person purchased something on your website. Then, a couple of days later, they check the transaction history and don’t recognize the payment. It might be because your company’s name doesn’t match the one on the bank statement, or the product description isn’t accurate.  As a result, they request a chargeback. And if you don’t know why chargebacks are harmful to your business, check out our article on the matter. There we also explain how a quality payment gateway service can minimize chargebacks. 

A person’s payment info was used by a relative. This is a situation when a cardholder’s family member takes their card and buys something using it. There might be nothing criminal about it, but again, the card owner might not agree with the purchase and cancel it. 

A buyer’s remorse. Sometimes customers hesitate when making purchases. This may result in them canceling their order later or resulting in chargebacks. 

An intentional dispute. This type of fraud is not friendly at all. It happens when a customer requests a chargeback intentionally. For instance, they may lie that they didn’t receive the product/it was a low quality to get it for free. 

Triangulation fraud

Similar to phishing, this is another way criminals prey on people’s financial data. They create fictional e-commerce websites or pose as existing shops and lure people in with very low prices. Once a customer fills in their data on the malicious website, the scammers steal it.


Yet another data-stealing scam, but in this case, fraudsters reroute traffic from a regular e-shop. The traffic is then redirected to another malicious website.


For some businesses chargeback is dreadful news: if you face them too often you risk losing a big chunk of your revenue and get your company into the high-risk category. Why is that? 

Chargeback is a process when the electronic transaction is reversed – a customer gets their money back if they didn’t receive a product/service or are dissatisfied with it. So, what’s the issue? Unfortunately, merchants have to not only return cardholders’ money but pay additional fees for it. 

Thus, a refund is a preferable way you can return money to a customer, as other parties (acquirer, issuer banks) don’t participate in the process, and businesses don’t have to pay chargeback fees. 

Merchants should always keep their chargeback ratio in check: if the percentage of chargebacks compared to successful transactions is too high, your bank can stop providing you services. You will get into the high-risk category and will have to pay higher charges for using your merchant account and additional features.   

Credit card data theft

This is a part of credit card fraud and can generally happen with any kind of payment information used to make transactions (debit cards, e-wallet data, etc.).

What happens is that a criminal steals the cardholder’s physical card, or hacks into their account/website the information is stored to steal the card data. The fraudster then uses the data to make unauthorized transactions to buy goods/transfer money to their account. 

Multi-currency payment methods

Thankfully, this online payment problem does not include fraudulent actions. Multi-currency payment methods refer to a merchant’s ability to provide the customers with an option of paying for their goods and services in different currencies. 

The good news – it allows significantly increasing your customer base. The bad news – implementing such services is not easy, and you might be required to open more merchant accounts to process cross-border payments. 

Solution for each problem

Some ways can help you significantly reduce or eliminate the online payment problems described. Let’s address them one by one.

Payment fraud

The common issue with these types of fraud for merchants is that they are at risk of getting fraudulent transactions that lead to chargebacks and traffic losses. 

To prevent such unfortunate events, you can make several steps:

Enable 3D Secure. Maxpay’s team has talked a lot about the benefits of 3D Secure and how it is related to the PSD2 implementation in the EU. But, in short, the 3D Secure protocol allows a double verification of a cardholder when they buy something online. 

So, when a client buys something from your website, not only do they need to fill in their payment data, but to confirm that they have authorized the transaction: via an OTP, biometrics, or interaction with their phone. As this verification requires the cardholder’s direct participation, it is much more difficult for criminals to pass it, and, as a result, make unauthorized transactions.   

Use anti-fraud tools. It is much easier to detect suspicious payments when you have special services for the purpose. Thus, we recommend you find a payment service provider or a payment gateway that will offer you anti-fraud features.

For instance, Maxpay has developed our very own anti-fraud platform Covery – one of the top companies in the industry! Covery has all the tools necessary for fraud prevention, detection of suspicious transactions, and risk management – find out more about it here.

Maxpay is PSD2 compliant and provides 3D secure services. Our merchants even can analyze their clients’ 3D secure usage using our reports. 


Unfortunately, you can’t escape chargebacks entirely, but you can try minimizing them with your efforts, as well as request help from your bank, PSP, or payment gateway. 

What merchants can do. As a business, you must make sure that you clearly state your refund policy on your website – your clients should understand that the refund will be more preferable for both parties than a chargeback.

Merchants should also clearly state the products’ description to avoid unsatisfied customers that get “not-as-described” products. Explain the delivery process: tell your clients how long it takes for a product to ship, and if they can track it.

What financial institutions can do. Banks and PSPs can offer businesses additional tools to reduce the number of chargebacks and avoid other online payment problems.

Our payment gateway offers a great fraud-stop solution Covery. We also help to avoid chargeback with Ethoca Alerts and VMPI solutions. 

With Visa Merchant Purchase Inquiry (VMPI), it is easier to prevent friendly fraud and chargebacks that occur when a person forgets they made a purchase. VMPI allows notifying merchants when a client is about to request a chargeback. Thus, a business can gather evidence that verifies the transaction in question and will convince the client to reconsider a chargeback.

Ethoca Alerts is a valid solution when it comes to client-confirmed card fraud cases. A merchant gets notified about the confirmed fraud within minutes a client has detected it. This way, the company can act quickly: issue a refund to the client and cancel shipping operations to prevent revenue losses.

Credit card data theft

In addition to fraud and chargeback prevention tools we have described prior, we also advise to indemnify your website and services:

  1. Encrypt the data on your website with the SSL technology;
  2. Comply with the PCI DSS requirements for merchants;
  3. Find a secure and reliable payment gateway;

Find out more details on each of these precautions in Maxpay’s article: “How to ensure online payments security”. 

Multi-currency payment methods

If you don’t want to start additional accounts in the bank, you can always find a payment service provider or a payment gateway that supports multi-currency payment methods. You can even choose one from our article on the top 10 most popular online payment gateways.