Smart Routing Payment Systems for High-Risk Merchants: Benefits and Features

There are many roadblocks to running a high-risk business, from strict regulations to high chargebacks. However, one of the most challenging tasks is finding a reliable payment processing solution – especially when traditional banks and payment providers are reluctant to work with you.

This is where smart routing payment systems make a difference. Smart routing ensures that thousands of transactions move from customer to merchant without any hiccups. Whether you’re a CBD distributor or a seller of adult online entertainment, you gain more control over payment handling, helping you grow your business revenue.

In this article, we break down the intricacies of the smart routing payment system and explain why it’s so valuable to high-risk merchants.

What are Smart Routing Payment Systems?

Smart routing is a kind of GPS for your payments. Also known as intelligent payment routing, this technology intuitively directs a customer’s transaction through the most suitable payment path or processor.

The good news about this type of routing is that the system doesn’t rely on a single payment gateway; rather, it uses real-time data, including location, currency, type of card, or transaction size, to route each transaction through a path that has the highest chance of approval – and the lowest cost.

This payment flexibility is extremely vital for high-risk merchants, who are more prone to facing payment failures and higher approval rates compared to standard businesses. They may even have to jump through several compliance hoops, especially when payments occur across multiple regions.

Why Do High-Risk Merchants Need Smart Routing?

High-risk businesses are likely to face payment-related challenges, such as:

  • High decline rates: Historically, banks and payment processors have always been more cautious with high-risk businesses, leading to higher transaction rejections.
  • Higher chargebacks: The high-risk nature of the industry makes customers more likely to dispute payments and request refunds, resulting in higher chargeback rates.
  • Limited options: Banks and payment processors are typically reluctant to work with high-risk merchants.
  • Global regulations: High-risk businesses deal with international transactions, which entail managing multiple currencies, cross-border fees, and maintaining compliance standards.

Due to the above factors, high-risk merchants need a more intuitive and dynamic routing system that seamlessly supports their transactions.

What are the Main Benefits of Smart Routing for High-Risk Merchants?

Better Chances of Transaction Approval

High-risk merchants are all too familiar with the hassle of dealing with a declined transaction, a reality with traditional payment systems. However, smart routing automatically reroutes transactions through another processor if one rejects a payment, considerably improving your chances of approval.

For example, if an American bank declines a foreign card due to geographical restrictions, the smart routing payment system quickly reroutes it to a processor with global transaction capabilities. This ensures a steady cash flow while also keeping customer satisfaction intact.

Lower Processing Fees

While it’s a given that every transaction incurs fees, smart routing ensures that your customer payments are routed through the processor offering the lowest interchange rate – or more favorable terms for a specific card type or region. Over time, lower processing charges lead to big savings, especially for high-risk businesses that have high transaction volumes.

Lower Risk of Payment Failures

Relying on a single payment processor can be a risk, with technical glitches or temporary downtime quickly eroding the bottom line. Smart routing systems have alternative processors on standby for payments if one goes offline. For high-risk merchants who can’t afford downtime, this kind of flexibility is priceless.

Improved Chargeback Handling

High-risk industries commonly face high chargeback rates, but smart routing helps clamp down on these. The system helps merchants flag high-risk transactions and reroute them to processors with stronger fraud prevention tools. Thanks to this early warning system, merchants can keep chargeback ratios to a minimum and stay well within compliance thresholds.

Cross-Border Compliance

High-risk merchants get a lot of business from international customers, making the use of smart routing a wise decision. The system routes international transactions through the right regional providers while also adhering to currency and regulatory requirements. This means less friction for customers and higher compliance with global payment laws.

Guaranteed Customer Satisfaction

More than half of customers who face payment failures won’t return to a website to try again – this means thousands of dollars of losses for high-risk merchants.

Smart routing payment systems are known to enhance approval rates and ensure a smoother checkout experience for customers, no matter where they are in the world. The result? Repeat business and long-term loyalty, both valuable markers of credibility for high-risk businesses.

What are the Core Features of Smart Routing Payment Systems?

Multi-Processor Network: Smart routing payment systems ensure connectivity with multiple processors and acquiring banks, which means merchants can rely on a diverse payment network instead of a single one.

Rule-Based Routing: With smart routing, merchants can set routing rules based on card type, transaction amount, customer location, or currency type – giving them greater flexibility and the best chances for transaction approvals.

Data-based Decisions: Smart routing systems use intuitive algorithms to make real-time decisions about routing a payment. This reduces latency, speeds up transactions, and ensures a hassle-free checkout for customers.

Failover Protection: With smart routing, failed transactions aren’t absolute, they’re just a stepping stone to finding the next best payment processor, without letting it affect the customer.

Load Balancing: Advanced smart routing systems, such as Centrobill’s, ensure an even load balance across multiple merchant IDs or payment service providers. This way, merchants avoid overburdening a single payment provider and reduce the risk of penalties or account freezes.

Advanced Fraud Screening: Some smart routing systems have in-built fraud detection tools that help assess risks in real time. If a transaction is flagged as potentially fraudulent, it routes the payment to processors equipped with stronger risk management protocols.

Real-Time Velocity Rule: Smart routing systems have real-time velocity rule management capabilities that ensure merchants don’t cross transaction thresholds set by providers. This is critical to help maintain compliance and reduce the possibility of fraud.

Choosing the Right Smart Routing Provider

It’s important for high-risk businesses to partner with the right smart routing provider – one that specializes in high-risk industries, offers global coverage, and advanced security.. For a competitive edge, look for providers that offer the majority of the core features.

Centrobill is a leading smart routing payment provider that helps you manage your high-risk accounts and transactions with ease, so you can take your business to global heights without worrying about cross-border fees and compliance issues. Learn more about our payment systems. Talk to our expert team today.