Lowest Rick Merchant Categories?

I was wondering if anyone had a list or idea of what the lowest risk merchant categories are? I know "Book Stores" is pretty low, while "Computer Networking Services" is more high-risk. It would be great to get an idea of what is considered low risk categories. I see plenty of lists for high-risk.
Thanks,
Shannon

 

Hi Shannon - I am involved in the payment processing industry and from what I have seen it is more about how the card is presented rather than specific categories when determining "low risk". Any "low risk" list I have seen is nearly 100% businesses which accept the card presented by the customer in person, which is referred to as "card present". As soon as the card is not present, such as in ecommerce, the risk factor immediately jumps up to "medium risk" at the very least. After that, other factors such as average transaction value, merchant past processing history, billing model, type of product, merchant location, etc determine the risk factor for a specific merchant.

 

Thank you for the reply. This would be for online transactions. I know for a fact, one of the factors is merchant category (at least for visa). Some categories are higher risk (gambling, adult), some are lower. I am interested in finding which are classified as lower. OR, is it that all are the same except for those categorized as high risk?

 

Hi again Shannon - you are correct that some categories are higher risk or prohibited, but in the majority of cases it is more the business model than the merchant category. Every merchant is assigned one of the hundreds of MCC (merchant category codes) that Visa/Mastercard have created to classify merchants. These are 4 digit codes. If you googled "MCC codes" you would find lists of these codes. However, almost all ecommerce businesses are considered medium/high risk. Whether or not they are classified to extra high risk depends on the business model. For example, an ecommerce merchant selling electronics with an average order value of less than $100, one-time sales only, located in the USA, with good prior processing history, delivery time in 3 days, would be considered far less risky than an ecommerce merchant selling electronics with an average order value of $1500, some kind of recurring sales component, located in Nigeria, no prior processing history and delivery time of 30 days. A gambling merchant which is properly licensed and selling only to the area where it is licensed (ie - EU) would be less risky than a gambling merchant selling worldwide without proper licensing. So it is not so much about the category, it is more about the risk factors presented by the business model and business history/reputation. There are certain banks that like adult and gaming, others that won't touch it due to reputational concerns. So other than illegal businesses, everything ecommerce is basically high risk, and can be upgraded or downgraded depending on risk factors unique to the business.

 

Cascadia Pay, Thanks for the detailed answer

 

If you googled "MCC codes" you would find lists of these codes.

 

Hi Shanon,

low risk merchant accounts are merchants that have face to face transactions where card is present and service or product is offered immediately after the financial transaction is made.
On top of that average tickets are less than $500 and industry wide chargeback ratios are less than .5% of the total volume and transaction count