Get High-Risk Merchants Approved Through Any Processor!

All ISOs, processors, and banks want to acquire as many MIDs as possible.  But with market saturation, profit margins are at an all-time low.  And with increased external scrutiny on the banks and processors and self-regulation being forced down to the processor, ISOs, and agents; banks and processors are less likely to approve certain merchants because they are deemed as being high risk.

There is a solution, however, and a way to monetize high-risk accounts.  The solution lies in knowing why banks and those shouldering the risk of fraudulent and charged back transactions will reject potential merchants, and what their underwriting and approval process looks like.   Generally, the underwriters want to know if the business is duly organized, follows all applicable regulations, and is being run in a sustainable fashion.  The E-Cig line of merchants are a great example.

Although the lines are still gray with the FDA having somewhat balked on dropping substantive regulation, states have taken it upon themselves to apply internal laws and regulations that apply to traditional tobacco products to E-Cigs, and related products, such as smoking accessories, which many vapor shops also sell.  Thus, to avoid liability for illegal and fraudulent transactions, banks and processors must be confident that a merchant applying for a processing account is compliant with all applicable regulations.

But the banks and processors might not take your word or even the merchants’ confirmation that they are legally compliant.   And most merchants do not even know all the regulations that apply to them, such as shipping restrictions, age verification, and product quality testing for E-Cig merchants.  But many sales organizations and processors have found a solution.

By engaging industry experts to review the merchants’ business practices, fill in any gaps, and provide an opinion letter, many high-risk merchants are getting approved.  The cost of such a service is generally low, and often times the merchant is willing to pay this fee so that they can be advised as to their potential liabilities.  The appreciation that a merchant expresses from knowing that their business is compliant and operating legally goes a long way at serving retention purposes as well.

Sales organizations are finding great success and increasing profit margins by getting high-risk merchants approved through this process, and often times, the merchants are no longer deemed high risk, which means that pushing compliance on you merchants is a lucrative plan for sales organizations.  This also serves the dual role of mitigating the sales organization’s, processor’s, and bank’s potential risk exposure, making all downstream and upstream vendors happy and preserving important relationships.

— Written by James Huber, partner at Global Legal Resources, LLP law firm.  James practices law heavily in the ISO space and his team is experienced at providing opinion letters that have been used to get high-risk merchants approved based on an anlaysis of the merchants’ business and potential liability.  This also provides a valuable service to the merchant who can rest easy knowing that their business is compliant and allows them to build their business on a solid foundation.

— Contact James Huber at

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