By Gene Lieb
Business Financial Resources
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.
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.
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.
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.
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.
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