As a PayPal merchant, it can be stressful when you encounter a transaction rejection due to risk models. It’s a common issue but one that can be quickly and easily resolved. In this guide, we’ll take a look at PayPal’s transaction risk model and provide step-by-step instructions on how to resolve any rejected transactions due to risk model.
Understanding the Risk Model
PayPal has implemented a risk model that prevents questionable transactions from entering the system. While the model does an excellent job of preventing potentially damaging or fraudulent transactions, it can be overly sensitive and reject perfectly valid ones. Before you can resolve the rejected transaction, it’s important to understand the model and the factors that PayPal uses to assess the risk of a given transaction.
The risk model considers the following data points when determining if a transaction should be accepted or rejected:
- The credit score of the purchaser.
- The total amount being purchased.
- The previous purchasing history of the purchaser.
- The location of both the merchant and purchaser.
Once the model has reviewed all of this data, it makes a determination of the risk level, either low, medium, or high. If the risk level is too high, the transaction is rejected.
Step-by-step Resolution
Once you understand the risk model, then it’s time to move on to resolving the rejected transaction.
The first step is to thoroughly review the data that was sent from the customer, such as their name, phone number, address, method of payment, etc. This is especially important if the customer is located in a region considered to have a high risk of fraud.
The next step is to review the customer’s past purchasing history. If they have a history of successful purchases, then it could be considered a sign that the transaction is valid.
After reviewing the data, contact the customer and ask for further information to validate the transaction. This could include a password, or in some cases, a government-issued ID.
If the customer does not respond to the requests for further information, or if the additional information provided does not validate the transaction, then it’s best to reject the transaction and refund the customer’s money.
Finally, after the reject transaction is resolved and refunded, contact PayPal and explain what happened. They may be able to adjust the risk model for future transactions.
FAQ
What Is a PayPal Transaction Risk Model?
The PayPal Transaction Risk Model is a system designed to assess the risk of any given transaction, and prevent potentially fraudulent or damaging purchases. It considers the credit score of the purchaser, the total amount of the purchase, the location of both the merchant and purchaser, and the customer’s purchasing history.
What Does It Mean When a Transaction Is Rejected Due to Risk Model?
When a transaction is rejected due to the risk model, it means that PayPal’s system detected that the transaction has a higher than normal risk. This may be due to the credit score of the purchaser, the amount of the purchase, or any of the other data points that were used to determine the risk level.
How Can I Resolve a Rejected Transaction Due to Risk Model?
The first step is to review all the customer data and do your own assessment of the risk level. If you determine that the transaction is valid, you can request additional information from the customer to validate it. If the customer does not respond or you are unable to validate it, then you may need to reject the transaction and refund the customer’s money.
What Should I Do If I’ve Rejected a Valid Transaction Due to Risk Model?
If you’ve rejected a valid transaction due to the risk model, then the first step is to refund the customer’s money. After you’ve done that, you can contact PayPal and explain the situation. They may be able to adjust the risk model to prevent similar issues in the future.
What Other Types of Rejections Does PayPal Have?
PayPal also has rejections for payments that exceed the merchant’s pre-set spending limit or those that violate the merchant’s Terms of Service. Additionally, PayPal may reject payments from customers with negative account balance or that are problematic due to the purchaser’s history.