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Table of Contents

Lead Story

The EMV clock is running

News

Industry Update

Card acceptance at pot shops poised to rise

Verizon defends the PCI DSS

SEAA welcomes voice of payments

USPS weighs plunge into crowded GPR pool

Tradeshows usher in new payments era

Features

The Mobile Buzz: BLE, Taco Bell and the mobile cornucopia

Flexibility in work, not just in service

Views

Things are not always what they seem

Brandes Elitch
CrossCheck Inc.

High risk processing:Best bets for success

Gene Lieb
Business Financial Resources

Education

Street SmartsSM:
Four ways to leverage machine intelligence

Dale S. Laszig
DSL Direct LLC

Help merchants sleep better at night

Adam Moss
Charge Card Systems Inc.

Bolster skills before you need them

Jeff Fortney
Clearent LLC

Hiring employees – Part 2

Vicki M. Daughdrill
Small Business Resources LLC

Company Profile

Meritus Payment Solutions

New Products

Enterprising mPOS

ROAMmcm 5
ROAM

Automatic reconciliation

XiRecon
paymetric

Inspiration

Little changes, big results

Departments

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

March 10, 2014  •  Issue 14:03:01

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High risk processing:Best bets for success

By Gene Lieb

The lure of high risk processing and its potential for windfall profits is nothing new. Since it became a legitimate and bankable income source some 15 years ago, more and more consulting firms and processors out there are claiming they can help you get rich by placing accounts your regular processor won't touch.

But whether you're looking to diversify your portfolio with some less traditional accounts or to target them exclusively, you've got to know how to separate smart risks from just plain risky business.

Plenty of potential

There are still plenty of high risk accounts that offer excellent income potential, but the rules are constantly changing. To stay current, profitable and within the confines of the law, ISOs, merchant level salespeople (MLSs) and processors must become educated regarding what the governing laws are and how to manage risk appropriately. It helps to network with experts who can provide sound advice on what types of merchants to look for and which ones to avoid.

In the beginning, high risk involved just a few processors willing to take on furniture and flooring sales with maybe a few escort services thrown in. That's how it all started. Today, future delivery status still factors into the equation, especially with Internet sales, but market globalization has made the business of serving high risk merchants more complex.

A game-changer

There are thousands of online merchants operating all over the world with the ability to sell to nearly anyone with a computer or smart phone. With good reason, this has made many banks more cautious about the types of accounts they will accept. ISOs and MLSs should proceed with caution when navigating international processors – many don't recognize U.S. laws – and when dealing with varied rates and conditions between regions. This is especially true for anyone choosing to work with gambling, replica, nutraceutical, cigarette and tobacco clients, for example.

Unfortunately, it has become common practice to disguise these types of businesses for the purpose of securing accounts. Earning off of prohibited items such as sea salts, controlled pharmacy items, firearms and other objectionable goods has created a darker, greedier side of high risk processing. The allure of a large payday can be tempting, and less reputable organizations will promise creative solutions to get around the laws governing these types of merchants.

Multiple risks

Such items are illegal and potentially dangerous – that's obvious. In addition, working with these types of businesses can also damage your reputation. You risk having your accounts turned off and becoming blacklisted by processors at the very least. And it just gets worse from there.

It is possible to make good, honest money from high risk processing. Begin networking with experts in the field who can connect you to providers that are skilled at managing the risks associated with cancellations and chargebacks. They can suggest emerging safe-bet categories, as well.

Opportunities versus pitfalls

With proper sales and delivery monitoring, verticals such as travel, multilevel marketing, foreign exchange, dating services, adult products, gambling, and psychic services make excellent accounts. Just keep in mind the fact that the high risk processing business has become more sophisticated means there are more opportunities, but also new pitfalls.

After gaining experience in the freight distribution and real estate marketplaces, Gene Lieb found his niche in the early days of merchant services. He subsequently spent many years developing his international experience and connections and has built a strong network that enables Business Financial Resources to support many types of merchants and agents. BFR is a merchant service consultancy located in New Jersey and working on behalf of agents and merchants, including those considered high risk or nontraditional, to help them accept credit cards and other forms of payment, secure loans and save money. For more information, visit www.bfresources.com. To reach Gene by phone, U.S. companies should call 800-313-2265; international companies may call +44 2036087504. His email is gene@bf1992.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | USAePay | Super G Capital LLC | Humboldt Merchant Services | Impact Paysystems | Electronic Merchant Systems