Making hard to place easy and profitable
When it comes to nontraditional businesses, the payments industry is gun-shy. The card brands label many such enterprises high-risk and slap them with higher fees, and some processors refuse to even consider boarding these accounts. That frustrates merchants designated as high-risk, as well as the ISOs and merchant level salespeople (MLSs) who want to serve this market.
Some payment professionals assume the companies categorized as high-risk are involved in X-rated, reckless or otherwise unseemly business endeavors. But what about travel agents? They often fall into the high-risk pool. Yet for many, travel agents are as traditional as Mom and apple pie.
What, then, are the feet on the street to do when they believe in a merchant's mission and ethics but are having difficulty finding a processor to board the account? These businesses must accept credit cards to stay afloat, after all.
Enter International Merchant Solutions LLC, a consulting company that specializes in placing all types of high-risk accounts. And the company offers a host of domestic and offshore solutions.
Ken Baldo, Managing Partner at IMS, said merchants can fall into a high-risk category for any number of reasons, and "an agent may have to contact 25 different banks or processors to board that account. Our agents use us because they don't have the time to research all the possible solutions and make all those calls. We do the hard work for them."
IMS offers more than 20 credit card processing solutions, more than six automated clearing house (ACH) solutions, four automated teller machine solutions, two security solutions, one solution for PCI compliance and one chargeback retrieval solution. All are selected with the needs of hard-to-place merchants in mind. Maximizing profitability for IMS' registered agents is also paramount.
A niche well-served
IMS reported a 300 percent increase in revenue over the last 12 months, largely attributed to an aggressive growth strategy. The company has about $20 million in processing volume. It also recently added 70 outside agents. Additionally, IMS has forged partnerships structured to offer a comprehensive range of payment solutions.
Although Baldo and IMS Managing Partner Gene Lieb had nearly 15 years' experience working in the traditional payment processing arena at the time, they formed IMS as a consulting company in April 2005. And they chose to dedicate their business to fulfilling the needs of nontraditional businesses.
"We thought there was more of a need there," Lieb said.
"As a processor you can only offer your solution. It may be a great solution but probably not for everyone." Baldo added that, as consultants, "we can offer a huge range of solutions, and by staying on top of the industry and the solutions themselves – the criteria changes constantly – we can determine which is the best solution for a particular merchant at any given time."
A new source of income
Because IMS is not a processor, it doesn't pay agents residuals. But it does pay a monthly referral fee per account, based on an account's profitability. Lieb said this payment lasts the life of the active account, "feels like a residual and adds value to your portfolio, like a residual."
Baldo said high-risk merchants are particularly profitable for ISOs and MLSs who know how to go about landing them.
"Because we have experience handling nonconventional types of businesses, our agents are able to charge higher rates, which yield them profits that are higher than the competitive rates for traditional accounts," he added.
IMS has nearly 400 registered agents, does not demand exclusivity and sells only through its sales agents. So MLSs don't have to compete with in-house sales staff.
"I'd like to tell you that all of our agents make referrals every day or even every week, but that's not the case," Lieb said. "Some make a referral weekly, others every three months. Very few of them are actively going after high-risk merchants; they call us when they come across someone that, for whatever reason, is hard to board. "
According to Baldo, many agents using IMS' new partner programs, such as its chargeback retrieval service, have increased their income not only on high-risk accounts boarded with the aid of IMS, but on low-risk accounts, as well. "These programs have begun to encourage agents to think of us for more than just high-risk," he said. "We offer quite a bit to give agents an edge when closing all types of deals."
A resource pipeline
IMS sends its registered agents weekly e-mails and monthly e-newsletters containing information on new solutions, selling tips, new programs and industry news. "The industry changes very quickly, particularly when it comes to programs for nonconventional merchants," Baldo said. "Our objective is to help our agents stay on top of these changes and profit from them."
Herb Denmark, an IMS agent, is enthusiastic about IMS' customer service. "They're easy to work with. They get right back to you, and if there is a problem, they solve it and don't leave you hanging. It's not easy to find quality, honest players, but they are both."
Denmark said he doesn't actively market to high-risk merchants, but he has done so in the past.
He gets frequent referrals from his merchants, "particularly when they know [I can] set them up when no one else could."
Lieb noted that as each industry "hits the undesirable list, we get flooded with calls from that industry. When adult accounts were being turned off, everyone was bringing us adult accounts."
Baldo said the payments industry's current roster of undesirable account types includes "companies with 'financial services' in their title – credit repair, debt reduction, loan modification, collections agencies.
Some are being closed down, and others are being moved by reps who don't want their customers to wait until they are closed down."
IMS distributes its High Risk Hit List to interested agents. It identifies a broad range of industries in which IMS can place merchant accounts even though such accounts may be considered undesirable.
Some, but not all, of the high-risk categories are adult Web sites and services; bail bond providers; gambling casinos; check cashing services; collection agencies; door-to-door sales; fireworks purveyors; gun shops; home-based entrepreneurs; kiosk-based businesses; mortgage services; multilevel marketing; nightclubs; offshore businesses; seminar promoters; telecommunications equipment providers; telemarketers; time share sales; tobacco sales companies; travel agents; weightloss centers.
A bevy of solutions
This roster doesn't encompass merchants who don't fall into a designated high-risk category, such as those with bad credit or high-risk/high-volume operations.
IMS has solutions for these merchants, as well as for traditional businesses.
IMS services include payment processing for credit, debit and ACH transactions; Internet processing with secured gateway; check processing and electronic check payments via the ACH; municipality processing for fees, fines and taxes; rent processing; and wireless processing.
IMS also offers merchant cash advance; gift card and loyalty programs; a restaurant touch-screen solution; electronic benefits transfer (quick, reliable acceptance of welfare benefits and food stamps); a consumer loan program; ATM placement, including mobile ATMs and casino cash advance; online fraud protection for merchants; chargeback retrieval; and dynamic currency conversion.
Lieb expects to see substantial growth in international commerce. "We can place high-volume, Internet mail order merchants or merchants that need to be able to accept Asian or European debit cards, for example," he said. "That's a growing issue for the international marketplace; debit cards are far more common in Europe or Asia than credit cards." So, if you'd like to have IMS up your sleeve next time you're ready to close one of your merchant prospects, you know who to call.
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