With today’s technology why don’t we just board every merchant who applies and then put limits on their daily, weekly and monthly dollar volume? The same with the amount and number of their transactions.
We’re monitoring transactions and batches in real time, as well as chargebacks. We have a reserve to grab. What do we have to lose? A number of well known individuals in the merchant world have become rich this way. A larger number of less remembered folks have lost it all.
I consulted with a large processor who insisted on trying this a few years ago. The results were, to say the least, not optimal and the experiment did not last long.
The answer to “Why don’t we” resides in the reliance on systems intelligence to replace human intuition (experience). Many merchant risk managers have seen the ball dropped between electronic alerts and immediate action that limits loss.
Initial due diligence via thorough underwriting will weed out some of the fraudsters who will invariably get a step ahead of you.