We recently got an application that had a similar business model, and unfortunately, the application was rejected by our partner processors.
Let us first review the profile of a merchant that that inspired us to answer this question.
- Industry: Training & Workforce Certification Support
- Location: Netherlands (EU-based entity, operating since 2023)
- Target Market: International workers relocating for certification/employment
- Core Services:
- Exam preparation (VCA training)
- Accommodation during training period
- Ancillary car rental support
- Payment Model:
- Primary: Online payments (links / checkout)
- Secondary: Occasional MOTO (phone/email payments)
- Business Structure:
- Service aggregator with third-party exam network
- Bundled service offering (training + logistics support)
- Risk Indicators (Underwriting Lens):
- Card-not-present transactions (MOTO exposure)
- Cross-border customer base
- Multi-service / bundled offering
- Fulfillment dependency on partners
I would say that the primary reason for the rejection of such accounts is basically a high fraud and chargeback ratio and risk associated with Moto transactions. Since all Moto payments are card-not-present, they, most of the time, bypass strong customer authentication features such as 3D Secure under PSD2. Such transactions can be considered far more vulnerable to misuse.
Even if positioned as an occasional feature at the merchant’s establishment, the underwriters would definitely treat it as a major liability. And this is because the disputes are actually harder to defend without proper authentication trails. Another major issue is the mixed business model. Because it combines training, services, and accommodation as well as car rental.
All of these verticals already carry their own level of risk as per the payment industry underwriting guidelines. And when we bundle all of this together, it creates risk stacking. This actually makes it extremely difficult for payment service providers to clearly categorize the business. It also increases the uncertainty around the fulfillment of the services and do not forget that it also creates challenges associated with refund responsibility and potential disputes.
All of this leads to a higher likelihood, of rejection of the merchant account application. Additionally, the application definitely raises concerns about the operational control and payment handling process.
Underwriters are actually looking forward to getting clear visibility into how MOTO transactions will be verified, recorded, and most importantly, secured. If there is no detailed explanation or information on fraud prevention measures taken by the merchant (include phone recordings, signed authorization forms, or identity checks) all of this signals that the provider assumes weak controls, which can significantly increase the perceived credit risk.
Finally, there are compliance and regulatory concerns also, which are important, especially within merchants that are operating in the Netherlands and the broader European Union framework. With PSD2 and AML requirements in place, businesses that are dealing with international clients and non-standard payment methods like MOTO, they actually face even stricter scrutiny.
This kind of combination of cross-border customers, reduced authentication, and multiple service offerings basically signals highly elevated compliance risk, which can often result in a decline.