High Risk Merchant Handbook

What Visa Means by a High-Brand Risk MCC

Visa puts some merchant categories in a high-brand risk pile. Here is what that label means and what it triggers.

Visa sorts merchants by risk, and one of its labels is "high-brand risk". If Visa puts that label on your business, your acquirer or payment facilitator must clear extra steps with Visa first. Only then can it sign you. This page explains what the label means, why your merchant category code sets it off, and what happens after approval. These are Visa's rules, not the rules of other card networks.

What high-brand risk means

Visa's guide says it classifies some merchant types as high-brand risk when they take card-absent payments, because they bring more disputes or brand risk. Card-absent means the buyer is not standing in front of you with the card in hand. Online sales are the common case.

The label is not a claim that you broke a rule. It says your category can bring more disputes or brand risk. That is why the process around you is heavier.

Why the MCC is the trigger

Your merchant category code, or MCC, is the code that tells what you sell. Visa's manual says a payment facilitator must evaluate the business of every sponsored merchant and assign the MCC most appropriate to that merchant's business.

The MCC has to match your real business. Some Visa rules name a code, such as MCC 5967 for adult content.

Visa's manual gives one clear example of how strict this is. A sale for another high-risk merchant must use that merchant's MCC. Visa's manual gives 7995 as an example, for loading a gambling wallet. The code follows the money, not the middleman.

What Visa requires before signing you

Two registrations can stand between you and a signed contract.

Visa's guide says acquirers must get a High-Brand Risk Acquirer Registration from Visa before contracting with a high-brand risk merchant. If you are boarding through an acquirer, that registration has to exist first.

If a payment facilitator boards you, the rule falls on that facilitator. Visa's guide says a payment facilitator must be registered as a High Risk Internet Payment Facilitator with Visa before signing high-brand risk merchants. Visa's guide also says only registered High-Risk Internet Payment Facilitators may sign up high-brand risk merchants.

These registrations are not free passes for the partner. Visa's guide says separate Tier 1 capital requirements exist to register a high-risk internet payment facilitator that intends to solicit high-brand risk merchants. So a facilitator that wants to sign you must meet Visa's capital rules first.

The due diligence you should expect

Visa's guide says high-brand risk merchants require an enhanced level of due diligence. Expect a closer look than a low-risk seller would get.

Visa's guide also says high-brand risk merchants are subject to enhanced due diligence for HRIPFs only.

Some of the checks are named. Visa's guide says the underwriting process should include checks of consumer complaint boards. Your partner may read what customers say about you on public boards before it signs you. Visa's guide also tells payment facilitators and marketplaces to check the websites of their sellers. The screen covers illegal activity, transaction laundering, and marketing that misleads.

None of this is a judgment about you. It is Visa telling its partners to look harder at a category with more disputes or brand risk.

Where marketplaces are blocked

A marketplace cannot sign you if you are in a high-brand risk category. Visa's guide says marketplaces are prohibited from soliciting high-brand risk merchants. Visa's guide says marketplaces under it include all high-brand risk merchant categories, franchises, and travel agents.

Say you sell through a marketplace and your category is high-brand risk. Visa's guide says that marketplace may not solicit you. You would need an acquirer or a registered High Risk Internet Payment Facilitator.

What happens after approval

Approval is not the end of the watching. Visa's guide says payment facilitators and marketplaces must monitor the ecommerce websites of their sellers on an ongoing basis. Visa's guide also says payment facilitators and marketplaces must keep watching their sellers. They check for compliance and signs of added risk. They must act right away if needed.

Your website can be reviewed again after you are live.

Visa watches from its side too. Visa's guide says it detects illegal activity violations through the Global Brand Protection Program. That program watches the payment system for illegal, prohibited, or brand-damaging activity. Visa's document says the Visa Integrity Risk Program replaces the Global Brand Protection Program. Visa's rules say adult content purchases under MCC 5967 require the merchant to meet all requirements in the Visa Integrity Risk Program Guide.

Visa's guide says Visa holds the acquirer responsible when a risk-compliance program identifies a merchant for excessive fraud, disputes or illegal activity.

What not to do

Some merchants try to dodge the label with a wrong MCC. Do not. Visa's risk standards say miscoding and transaction laundering risk comes from concealed illegal transactions such as miscoding. Your code has to match your real business.

Transaction laundering is worse. Visa's guide says illicit businesses commonly use transaction laundering for illegal gambling, illegitimate online pharmacies, illegal drugs, and counterfeit merchandise. That is when sales for one hidden business run through the account of another. Visa's guide says sellers involved in illegal activity pose a severe risk to the payment ecosystem.

Visa's rules say an acquirer must not knowingly accept from a merchant any transaction that is illegal or should have been known was illegal. So hiding what you sell does not just risk your account. It puts your partner in the path of a Visa rule too. Visa's guide says sponsored merchants terminated for harmful activity must be added to the Visa Merchant Screening Service.

What to do next

First, be honest about your category. Tell your acquirer or payment facilitator exactly what you sell. Then the MCC will match your business.

Second, if your product is legal where you sell it but not everywhere, get advice. Visa's guide says certain goods or services may be legal in one region but illegal in another. Talk to a lawyer about where you can sell, and tell your processor the full picture. Do not rely on a processor to work out your legal position for you.

There is more on why banks keep an eye on payment processors if you want it. Phone sales as well as web sales? See what the FTC rule says about billing authorization.

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