High Risk Merchant Solutions are Often a Disappearing-Reappearing Act

High Risk Merchant Solutions are Often a Disappearing-Reappearing Act

Domestic high risk merchant solutions come and go. There are industries and business types for which we once had payment processing that we no longer have. Conversely, we’ve seen acquiring banks shun the highest of high risk industries for little or no reason. Then, perhaps six months to a year later, we’ll be notified that the same acquirer is welcoming such industries again.

When it comes to high risk industries, we’ve never made a secret that there is nothing that we value more than partnerships – partnerships with acquiring banks, with high risk merchants and even with competing payment service providers. While Instabill may not currently have a solution for Industry Y, we’ll know a colleague/competitor that does. And when our colleague doesn’t have a banking solution for Industry Z, we do.

Thus, a partnership is formed, revenue shares are exchanged, and a domestic high risk merchant solution is in place. Everyone is happy.

High risk industries, interrupted

This is confession…

Under our Supported Industries tab above, we have close to 90 pages of high risk industries. We’ll go as far to say that we have payment processing solutions in place for the majority of them – but we cannot furnish payment solutions for all of them (at different times, we could). We’re not sure anyone in high risk merchant services is able to. It is symbolic of the high risk industry: Acquiring banks can turn on a dime and decide not to offer payment processing for a certain industry. It could be a change of CEO or leadership, a legal precedent or no reason at all.

Over the last year-to-18 months, we’ve ‘reclaimed’ solutions to five industries. Among them include:

Non-profit agencies: A non-profit agency poses less of a risk if it is affiliated with an organization, such as the Salvation Army, Catholic Charities or Big Brother-Big Sister. It lends a significant degree of credence to the merchant.

Collectibles/Memorabilia: Particularly with sports memorabilia (an industry which I used to follow closely), authenticity and fluctuating values remain the industry’s biggest hurdles, hence what makes it categorized high risk. As far as fluctuation, a case in point might be the value of the baseball cards of certain players prior to the MLB steroid scandal, as opposed to after the scandal. For example, consider the value the rookie baseball card of Mark McGwire before and after the scandal. Additionally, there is a dubious side to the collectibles industry that involves counterfeit items, bogus signatures and false certificates of authenticity.

Pawn shops: Similar to the collectibles and memorabilia industry, there is a high degree of risk concerning the legitimacy of the products for sale on two levels:

  • Though most legitimate pawn merchants place 30-day holds on expensive or rare items (for fear they are stolen or illegitimate), pawn shops are magnets for stolen goods – items stolen in a home invasion, then quickly sold to a nearby pawn dealer. In cases of stolen valuables, law enforcement, from the community to the state level, have relationships with local pawn store merchants for when complaints of stolen goods arise.
  • Additionally, pawn shops also attract counterfeit goods, such as rare sports memorabilia and bogus autographed items. The industry has its share of bad actors, hence, its classification of high risk.

Auction houses: Auction houses pose similar risks as pawn shops in that they can be attractive outlets for criminals trying to sell off stolen or counterfeit goods, with the exception that auction houses and auctioneers go for quick sales.

Tobacco and paraphernalia: We recently blogged about how we got a merchant account for an online wine merchant that we knew. To sell wine over state lines takes quite a bit of knowledge and navigation of state liquor laws, but it is possible as our merchant showed. Tobacco is a different story. Though we’ve seen a handful of tobacco websites, we currently do not have a solution at the present time. We do, however, have solutions for pipes, papers and other tobacco paraphernalia as well as e-cigarettes (an increasingly difficult industry), but tobacco merchant accounts remain elusive.

In finding high risk merchant solutions, it’s not all about the industry type

The industries we discussed pose only part of the challenge in finding high risk merchant solutions. Indeed, these business types tend to cause acquiring banks to put their guard up for varying reasons. However, there are many other factors that play a crucial role in getting an approval, such as:

  • The merchant’s target market
  • Average transaction and highest tickets amounts
  • Processing currency
  • Processing platform: E-commerce? MOTO? A combination?
  • Subscription or recurring billing scheme
  • Monthly volume

Each of these factors plays a crucial part in getting a merchant account. The good news is that our expert merchant account managers will guide you through the approval process and remain on hand as consultants for the life of the merchant account relationship with Instabill.

We’re available at 1-800-530-2444, Monday through Friday between 8 a.m. and 6 p.m. US eastern time.

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