1. A system for detecting risk in a transaction, comprising the steps of: a database of unique merchant names, each merchant name associated with a merchant cluster and each merchant name is textual data or other high categorical data; a transaction processing component that receives a transaction between a consumer and a entity, that derives transaction data from the transaction, and determine a unique entity identity for the entity from the database; and a statistical model that receives the data derived from the transaction and the unique entity identity, and outputs a score indicative of the level of risk in a transaction.