This the product listing obfuscates that these are cannabis seeds, but the 'pack size' dropdown menu is a giveaway. SafetyKit can scrape a merchant's entire website and go through their checkout flow to confirm this is cannabis and identify which jurisdictions the merchant ships to.

But merchant monitoring is not always as easy as spotting cannabis. SafetyKit analyzes hundreds of fraud indicators and policy documents to find critical issues with sub-merchants and their products. How does it work behind the scenes?

Key Concept: What Is Merchant Risk?

Merchant risk involves the dangers associated with allowing certain businesses to participate in online transactions. These risks include non-compliance with financial regulations, fraud, illegal activities, or deceptive marketing. For online marketplaces, managing these risks is crucial, as unchecked merchant activities can lead to financial losses, brand damage, and legal consequences. High-risk merchants pose an elevated threat, often due to fraud, selling illegal products, or generating excessive disputes.

Marketplace Content Moderation: Keeping Transactions Safe

Effective marketplace content moderation is key to ensuring a safe environment for buyers and sellers. Content moderation involves monitoring merchant activities, product listings, and sales practices to ensure compliance with policies and regulations. SafetyKit's solution helps marketplaces flag violations of card network or platform rules, ensuring prohibited products or suspicious listings are quickly addressed.

A lack of online marketplace content moderation can lead to illegal transactions, including counterfeit goods, unlawful pharmaceuticals, or illegal gambling—all strictly prohibited by Visa. Monitoring these violations in real-time keeps your platform compliant and trusted.

High-Risk Merchant Monitoring

Certain merchants are inherently risky due to their business nature, such as those selling tobacco, pharmaceuticals, or services like online gambling. Visa classifies these as high-brand risk merchants. Specific categories include MCCs like 5122 (Drugs, Drug Proprietaries), 7995 (Betting, including Lottery Tickets and Casino Gaming), and others prone to fraud or regulatory scrutiny. High-risk merchant monitoring is essential to identify and manage these merchants, minimizing financial and reputational risks.

SafetyKit's tools track high-risk MCCs, review merchant metadata for discrepancies, and continuously scan for suspicious activity—designed to prevent high-risk merchants from affecting platform integrity.

How Visa and Mastercard Monitor Merchants

Payment platforms like Visa and Mastercard maintain the integrity of their payment system by enforcing guidelines for payment facilitators, marketplaces, and merchants. Visa monitors merchants using compliance programs that track dispute rates, fraud reports, and regulatory violations. These include the Visa Fraud Monitoring Program (VFMP), which identifies excessive fraud, and the Visa Dispute Monitoring Program (VDMP), which monitors dispute activity. This proactive approach helps prevent financial losses and ensures that only compliant businesses participate in the Visa network. Visa also uses the Visa Merchant Screening Service (VMSS) to check for prior compliance violations.

Payment processors also seek out illegal and prohibited products, which are often tied to high dispute rates, and take down policy violations. Marketplaces can leverage tools like SafetyKit to ensure merchants adhere to Visa's standards, reducing risks associated with non-compliant actors.

Staying Compliant with Visa and Mastercard Rules for Merchants

Compliance with Visa rules for merchants is critical for payment facilitators and marketplaces. These rules cover onboarding standards, transaction transparency, and consumer protection. Acquirers, facilitators, and marketplaces must work together to verify merchant legitimacy during onboarding and continually monitor their activities.

Visa also requires marketplaces to prevent transaction laundering, where illegitimate businesses use other merchants as fronts to conceal their activities. Detecting and blocking these practices is essential for maintaining platform safety.

Conclusion: Proactively Identify and Manage Merchant Risks

Managing merchant risk requires a focused approach involving effective content moderation, ongoing monitoring, and strict adherence to Visa standards. By partnering with SafetyKit, marketplaces can maintain trustworthiness, protect their reputation, and stay compliant. With tools for high-risk merchant monitoring, automated moderation, and proactive risk management, SafetyKit helps marketplaces navigate evolving regulations and mitigate emerging threats.