How Wave’s risk team helps your business

July 3, 2018
5 minutes read

Dealing with fraud is part of living in a digital world. If you’re running a small business, you have to be extra cautious about scam artists who will target you because they know that you’re hungry for business, and that your attention is pulled in a million directions.

In fact, according to this study, small businesses who reported fraud suffered a median loss of $150,000. That’s a lot of money, especially when you’re freelancing or in the early stages of running your business.

Wave’s purpose is to help small business owners build financial sophistication, and to make running a business easier. That’s why we’ve built a highly skilled risk team that’s responsible for protecting not just Wave, but also the brave entrepreneurs we serve, from financial loss.

What we do

Wave’s risk team works to give business owners a safe and secure environment for processing payments, while ensuring we comply with the laws in the countries where we operate, as well as industry best practices for payment processors.

Our expertise spans across compliance, fraud, and credit risk. We monitor all payments for fraud and compliance violations, making sure nothing illegal or non-compliant happens inside Wave’s ecosystem. We also support and educate new businesses that are at a greater risk of experiencing chargebacks to help them identify potential scams and document their activities properly.

Compliance risk

Wave’s risk team has to follow the USA Patriot Act or the Proceeds of Crime (Money Laundering) and Terrorist FInancing Act (PCMLTFA) in Canada in order to be considered compliant and allowed to process payments for our customers. We have a legal obligation to ensure we’re following strict Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance requirements for each and every customer.

To do this, we have a responsibility to know every business on our platform and understand what they’re accepting payments for. Ideally we’ll have the information we need to satisfy these requirements from your Payments by Wave or direct deposit application, but sometimes we can’t verify all the information we need. When that happens, our risk team will reach out for more information like social media links, your business license, and other items that can help us verify and better understand your business.

As part of our compliance requirements, there are some types of businesses we’re not allowed to support at all for payment processing. There’s a list of these businesses for each country based on a variety of factors, like historically high chargeback rates. Companies like Wave aren’t allowed to process payments for these business types, or we will lose the privilege of providing payments or direct deposit services.

A good example of a prohibited business are companies in the cannabis industry. Even though selling cannabis or related products and services is legal in a lot of states, since the laws are not consistent across the United States and we are an online merchant, we can’t monitor if these packages cross state lines and break the law.

We would love to be able to support such a lucrative business (with a low chargeback rate given they typically have very happy customers!), but for compliance purposes we can’t.

Fraud risk

Protecting you from fraud is our biggest concern. The unfortunate reality is fraud is on the rise, and it can be very costly to a small business owner who is financially liable for any potential loss.

The good news is we have a highly skilled team and advanced analytical tools to detect this activity. We see numerous types of fraud, from purchasing items or services with stolen credit cards, to scamming unsuspecting merchants out of thousands of dollars, to Account Takeover (ATO) Fraud, where a fraudster accesses your account and moves funds into their own bank account.

We can see a lot of data on your cardholder and account activity that you can’t, which allows us to identify suspicious behavior. We can identify if your potential customer isn’t where they say they are, or if they’re not who they say they are.

We use device analytics and other third-party tools to give us a well-rounded assessment of the risk of each payment. Our amazing team of engineers built an in-house risk engine that consolidates all of the relevant information on your business and your customers to help us make as accurate a decision as is possible. Public data is compared to what your customer provides for our highly trained team of risk analysts to investigate any inconsistencies.

Chargeback risk

Our third responsibility is to ensure you understand the risk of chargebacks and your liability. It’s very important that you understand the types of chargebacks that can affect your business, and are properly armed with the right documentation to protect yourself if a falling out with your customer happens.

Some business types are at a greater risk of chargebacks than others, so we may reach out from time to time to help you understand those risks and confirm that you’re obtaining the right documentation to protect your business.

Wave has a shared financial liability if your business can’t cover the amount of a chargeback, so this precaution is both to protect you as well as us as a financial services provider.

We understand there are some growing pains with starting your own business, and chargebacks are not always well understood. We also understand that cash flow is a major concern for new businesses, and receiving an email from the risk team telling you that your payments are on hold can be startling, intimidating, and downright frustrating.

Our goal is always to keep losses low while making as minimal a disruption to your day-to-day lives as possible. It’s not a perfect science, we don’t get it right 100% of the time, but your cooperation whenever we do reach out ensures a speedy resolution time and allows us to keep our platform, and your business, safe.

Over 90% of our tickets are resolved same-day, so the best thing you can do when you receive an email or phone call from a risk analyst is to provide exactly what was requested. Anything you send to us is kept confidential and we’re always happy to provide more context should you have any questions or concerns.

When you need us we’re here to protect, empower, and educate you to become a savvy entrepreneur that understands and is prepared for the risks of running a business. If you ever have concerns about a particular customer or payment and would like our experts to take a closer look, email

By Angie Dobbs

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

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