Are Products You Sell Considered "High Risk" To Merchant Processors?

High Risk Merchant Processing - Sure You Want To Get Into That Niche?

I've been spending a lot of time on Reddit lately and have seen a lot of questions being asked about starting businesses selling ejuice, vaporizers and vape accessories, water pipes, coin, and many other products that are considered "high risk" to merchant processors.


Most people are probably not even aware there are certain products and industries basically locked out of banking and credit card processing. We've all heard how Medical Marijuana dispenseries have trouble finding banking relationships and credit card processors, however many people don't realize that many seemingly normal and legal products are banned by nearly all credit card processors.



These items could be anything from vaporizers or any vaping accessories, anything collectible, autographed memorbilia be it sports or celebrity stuff, coins, currency, drones, any non-tanginble items; ie programs and ebooks, many services,


Most credit card processors, as well as third party aggregators like Paypal, Stripe, and others, have a long list of specific items and businesses which they won't allow to use their service. All of them also add a caveat about how they have the right to refuse or terminate any relationship they believe may tarnish their repuation. This essentially means, if they happen to not specifically call out your product or industry or business, that they can fall back on that "harm to them" which basically means at anytime they can decide to kill your payment processing for whatever reason they deem necessary.

Some Examples Of Merchant Providers Prohibited Categories

 

Paypal Prohibited Businesses and Products

Stripe Prohibited Busineses and Products

Square Prohibited Businesses and Products

First Data Prohibited Businesses and Products

Is It Worth Entering A High Risk Industry?

I think most people think hey, I'll start a business, signup for a merchant account and things will be all good. For 99% of merchants this is true but many industries named above have an uphill battle finding credit card processors.


These businesses may occasionally find someone to take them on and they may have processing for a matter of days, weeks, or even months; but eventually that dreaded call or e-mail will come telling you that they are terminating their relationship with you and your business; and you'll be left scrambling to find a way to accept credit card payments.


The reason for this post is to bring this lesser known issue to people's attention. I've been spending a lot of time in the "Ecommerce" subreddit lately and see a lot of people dabbling with the idea of certain industries considered "high risk". I write this not necessarily to discourage people from entering these industries but at the very least, know what you are getting into.


I personally have run a business and sold items considered "high risk". My items were legal and not even really in any way "shady", had nothing to do with vaping, drugs or anything even questionable in nature; however I later learned my products had a high risk of credit card chargebacks and it's basically been impossible to accept credit card payments.


I was with Paypal for over 4 years. I did over 2 Million a year in sales on Paypal. I paid Paypal over $80,000 a year in processing fees and they still dropped me like a bad habit. Due to my stellar seller performance and relationship with my account manager they were kind enough to give me 30 days notice to find a new processor but not a whole lot of good that did as there really are no other options.


I wound up trying a few high risk credit card merchants. Got scammed out of a few thousand dollars, got a merchant account outside of the USA and thought all was good. What nobody tells you is that if you use a foreign merchant account 99.9% of your transactions will be declined by your customers bank for being "suspicious transactions". In order to get the transaction to go through nearly EVERY customer of yours will have to call their bank, explain the purchase, and ask the bank to okay that purchase. A huge headache when your trying to run an ecommerce business.


Another thing is 99% of high risk merchant processors are scams. I personally was scammed out of about $3,000 by a scumbag named Tony from Bankcard Services out of Chicago and New York. I personally know people who have lost tens and even hundreds of thousands of Dollars from scammers in the high risk merchant processing industry. I've heard it said for every legitimate high risk merchant processor there's 1200 frauds.


If you're considering entering an industry which you believe may be considered high risk, find a merchant provider, and search their website to see if the items you sell fall within the terms of service. It's also a good idea to call the merchant before opening the account. Don't just talk to a sales rep as they want the sale and will lie to you and tell you it's okay, only to have you be shut down weeks later, as all new accounts are typically audited within the first 30 days. Ask to talk to compliance or a supervisor and make sure they are okay with your business and the products you sell.


This extensive list below are just some of the products and business categories which are pretty much locked out of accepting credit cards...

What Types Of Businesses & Products Are Considered High Risk?

Not ALL industries, but it definitely covers a large number of them.

• 1-800 type chat sites
• Airlines
• Airplane charters
• ALL sexual oriented or pornographic merchants: (i.e. companion or escort services, adult telephone conversations, adult book stores, dating services, online adult membership or matchmaker services, adult paraphernalia or toys.)
• Amazon, Yahoo or Google Stores
• Annual contracts
• Antiques
• Auctions
• Automotive brokers
• Bankruptcy attorneys
• Brokering
• “Business opportunities”
• Calling cards
• Casino, gambling or gaming
• Check cashing services
• Cigarette or electronic-cigarette sales or nicotine cartridges
• Coins, collectible currency or autographed collectibles
• Collection agencies
• Coupons or rewards-points program
• Credit or debt repair
• Credit counseling
• Credit protection
• Debt collection
• Direct selling
• Discount health – medical care programs
• Debt consolidation
• Drug paraphernalia
• eBay Store
• E-Books (copywrited material)
• Electronics
• Event ticket brokers (unlicensed – non registered (i.e. Stub Hub type merchants))
• Exporting services (non US based)
• Fantasy sports websites
• Federal Firearms License (FFL) dealers
• Finance broker, financial consulting or loan modification services
• Indirect financial consulting (i.e. How to Save Money by Lowering Your Electric Bill.)
• Financial planning, strategy or advising
• “Get rich quick” – books, programs, etc…
• High average tickets
• “How-To” type websites (i.e. “Learn How-To Make Money on The Internet”)
• Horoscopes, astrology or psychic services (i.e. fortune tellers)
• “Hype” products or services
• Hypnotists or self-hypnosis
• International merchants (non US based)
• International shipping, cargo or import/export
• Investment firms
• Investment strategy
• Investment books
• Lawyer referral services
• Life coaching
• Lingerie sales
• Lotteries
• Magazine sales and subscriptions
• Mail order
• Membership organizations (over 12 months)
• Merchants on the terminated merchant file (TMF list)
• Modeling agencies
• Multi-currencies
• Multi-level marketing (MLM)
• Music, movie, software downloads or uploads (ie. copywrited music, movies or software (i.e. Microsoft office))
• Non US citizens
• Off-shore corp. establishment services
• Pawn shops
• Poor credit
• Prepaid debit cards
• In-bound or outbound telemarketing services
• Real estate
• Replica handbags, watches, wallets, sunglasses etc… (knock-offs)
• Self defense, pepper spray, mace, etc.
• Seo services
• Social networking sites – Facebook, Twitter, MySpace etc…
• Sports forecasting or odds making/betting
• Talent agencies
• Telecommunications
• Telephone companies
• Telephone order
• Third-party processing, factoring merchants (i.e. payment processors, vacation rental brokers)
• Time-shares or time-shares advertising
• Tour operators
• Travel services
• Travel agencies
• Travel clubs
• Vacation planners
• Vacation rentals (unless property is owned by merchant)
• Vitamin and supplement sales – diet pills, prescription pills, health supplements, pharmacy
• Voip services
• Extended warranty companies
• Weapons of any kind – guns, knives, stun guns, or ammo. Includes any parts of weapons (i.e. butts, triggers, magazines, etc.)
• Vaporizers
• Coins
• Currency
• Vaping Accessories
• Water Pipes or Drug Paraphanalia

How Maintaining A Good Credit Score Can Help You Start A Business For Free

Did you know a good credit score can allow you to start a business for FREE??? Well maybe not for free, you will eventually have to pay back the money, but you can oftentimes get not only 0% interest but also no payments for anywhere from a few months to up to a year.

This is why it's so very important to monitor your credit score, dispute any errors you see on  your credit report, and keep your credit score as high as possible.

If your a regular reader of my blog or watcher of my Youtube videos you already know how important I feel it is to have multiple income streams. Whether those streams are full fledged businesses, or just little side hustles like some affiliate accounts, a few books on Amazon's Kindle KDP Marketplace, and a few blogs. It's important to have multiple hustles and multiple revenue streams.

Recently myself and my business partner decided to start another venture. A landscaping company. Now granted it's not a glamorous business and it's tough to scale, you can only make so much money. I greatly prefer ecommerce where I make money in my sleep and work from a desk in the comfort of my office to outside in hot weather doing manual labor and busting my butt. That said I felt the need for another revenue stream, I had an employee lined up so this would be a pretty passive business and we decided to give it a go.

At the outset we debated on saving money and buying used equipment which would mean paying outright from the start. The other option we looked into was financing. We found out we could finance all our equipment with no only 0% interest for 48 months, but also no payments til September. We started this in late April so the idea of no payments til after the summer when we made the bulk of our money was appealing, and after that we could use proceeds from the business to pay down the loan at 0% so no harm in taking our time paying it back.

Now granted, this didn't allow us to start a business for free, we eventually will have to pay back the $13,000 and change we spent on equipment. The key however is that we did not have to lay out that cash at the outset. We were able to get all our equipment and have almost 6 months to earn that money to pay it off. Now granted we probably won't make a ton of profit the first year, but hopefully by the end of lawn season we can pay off the loan in full, hopefully with a little bit of profits in the bank. At that point we will probably invest a couple thousand in a snow plow for the winter and have another revenue source, snow removal.

The Importance Of Maintaining A Good Credit Score

This story highlightes the importance of monitoring your credit, paying your bills on time, and maintaining a good credit score. Not only will it help you when you want to buy a home, a car, a boat, do some home remodeling. It will also allow you to pay less for pretty much all credit that you get.

Recently I had a few dings to my credit due to a mistake by a credit card company and was denied a mortgage on a rental property I've been eying for months. This was hugely disapointing, and though I know this will be remedied, it's most likely going to prevent me from buying this particular home. I imagine it will sell before I'm able to get this corrected and adjusted on my credit file. I'll do a follow up post and video in more detail about this but just wanted to write this post as a quick reminder how important maintaining a good credit file is.

Banks Offering Instant Debit Cards On The Spot - Chase Bank & Wells Fargo

Have you ever found yourself needing a replacement debit card on the spot? Whether you signed up for a new checking account and need a debit card right away or if you have an account and had your debit card lost, stolen, or compromised, I'm sure we all at one point or another have found ourselves wanting a replacement debit card quickly.

I recently found myself in this situation. I'm leaving the country Monday on a trip. Today, Friday afternoon, I stopped at a bank to do something for my business. I had to pull a few hundred dollars out of the banks ATM machine and it turned out to be one of those machines that suck your card, and give it back to you after the transactoin. I hate these ATM's as I'm notorious for leaving my card in them, however rarely do you come across those machines anymore these days.

Unfortunately, the bank I was at had one of these machines and it wasn't until about 4PM that I realized I had lost my debit card. I was at my bank when I realized it so I asked the personal banker if it would be possible to get a rush card sent, however the quickest they could do it was 3 days which I would be gone by then.

I hopped on Google and searched instant debit card. I think instant debit cards are going to be the wave of the future as I found lots of articles about instant debit cards, as well as press releases by companies offering this service to banks. I eventually stumbled upon two banks that issue instant debit cards whether for new accounts or replacement cards.

Chase Bank & Wells Fargo Offer Instant Debit Cards On The Spot

The two banks are Chase Bank and Wells Fargo. Surprisingly a lot of small community banks and credit unions are offering these as well, but as far as the big chain National banks, Chase and Wells Fargo are the two offering this service.

My origional plan was to withdraw some money tomorrow, Saturday, before my bank closes and put the money in my girlfriends checking account. However, I've been meaning to open up another account soon anyways, so tomorrow I'm planning on heading over to Chase and opening up an account so I can get a debit card on the spot.

Just wanted to share this information incase any of you have found yourselves needing a debit card on the spot or same day. These two banks can do this for you.

2 Banks Offering Replacement Debit Cards On The Spot

1. Chase Bank

2. Wells Fargo Bank

Earn Cash Back, Frequent Flyer Miles, Or CC Rewards With BlueBird & Vanilla Reload Cards

Okay, so this isn't as good as the US Mint Credit Card Hack from a few years ago but a quick easy way to make some money or rack up some rewards or frequent flyer miles. In this post we will teach you how to rack up credit card rewards, frequent flyer miles, or make an extra $200 a month with Cash Back from a Wells Fargo 5% Cash Back card or other cash back cards.

This doesn't take much time, less than an hour. After that maybe a half hour a month recurring to do this each month. This doesn't take much time or money but you can earn free vacations or even cash back. There are however 4 requirements you will need to meet...

The Requirements...

1. Must have a social security number and reside in the USA.
2. Must have good credit, preferably 720 or higher, though possible to get other cards with lower scores.
3. Checking account or savings account with "BillPay" or "ACH Transfer" ability
4. Need to have a CVS, Walgreens, 711, or other stores that sell "cash cards" and can be reloaded with a credit card.

What To Do...

1. Apply for a Wells Fargo 5% Cash Back Credit Card...

This card gives you 5% cash back for grocery, drug store, gas, and a few other purchases for six months. This card is meant for those with higher credit scores. There are some other cash back cards and you can earn credit card rewards, miles or points on but make sure it's a high earning card. If you have a card that does not offer good rewards you will actually wind up losing money due to the few fees that are involved in buying the reloads and paying bills as often time paying bills with cards adds a small surcharge. If you're denied by Wells Fargo applying online you can call on the phone and generally get a quicker decision. Once you have confirmation you've been accepted to the card you can move on to the next step.

2. Apply for American Express Bluebird Card:

You can often buy a starter pack at Walmart for a few bucks, but it's just as easy to buy one online and wait for it in the mail, shouldn't take longer than a week max. This card doesn't pull your credit for an approval so you won't have your soft credit dinged any points as you would applying for a real credit card. You do however need a social security number, probably due to Frank/Dodd and Anti-Money Laundering Policies but you're credit won't be pulled and you won't be dinged. It basically just allows them to validate your identity.

3. Now that you have the Wells Fargo Card and the Bluebird card in your possession go to any one of the stores that qualify as a drugstore, gas station, or grocery store and buy Vanilla Reload cards with your 5% Wells Fargo Credit Card. It's important that these are Vanilla Reload cards and NOT One Vanilla, My Vanilla or any other variations of the Vanilla brand. You may want to find a store which sells these cards prior to getting all this setup. The card should look like the pic below...

The Vanilla Reload cards are reload packs. They allow you to put cash onto many prepaid and other debit cards. They do have a $3.95 charge per card and you can only load a max of $500 on each card. The tough part is locating a gas station, drug store, or grocery store that allows you to purchase the Vanilla Reload cards with Credit Cards. Many of them will only accept cash or will take a card but only debit. Once you find a location which will allow you to use credit cards buy them with your Wells Fargo 5% cash back card.

It will depend on your credit limit and how much a store will sell you. Buy as many as you can up, you max out at $5,000 per month.

4. Now you have Vanilla Reload cards. Visit VanillaReload.Com adn enter the unique 10 digit PIN number into the box. You will find it on the back of the Vanilla Reload card after you scratch it off like a lotto ticket. After doing this enter your 15 digit BlueBird card number. BlueBird will allow $5,000 per month to be loaded and a $1,000 daily limit. This will take you a min of 5 days to accomplish.

5. You now have $5,000 loaded onto your BlueBird card. Go to the "settings" tab on the upper right hand corner and link it to your bank account. You can do this as soon as you get your card as well. Once it's linked you can transfer the entire $5,000 from your BlueBird account that you recieved by buying the Vanilla Reloads to your bank using the "Withdraw Funds" link/feature.

*Some people have been shut down either by Bluebird or their Credit Card company by doing the direct transfer of funds to your bank account. To fly under the radar you may want to instead use your BlueBird card to pay bills, pay your taxes. Though many bills will not allow you to pay with a Credit Card most will allow you to pay with a debit card for a small fee of $3 or $3 vs 2% or 3% which is generally waht you'll be charged to pay bills by card, if they allow payment by credit card at all. It's up to you if you want to take the easy/lazy way and transfer to the bank or if you want to pay your rent and other bills with the debit card.

6. Last step here. Now you have $5,000 in your bank account. Use Billpay or ACH to pay off the $5,039.50 balance on your Wells Fargo 5% cash back card. The reason your paying $5039.50, even though you only loaded $5,000 is because you pay $3.95 per load. This is also why you want to make sure you have a card where points are at least valued at a penny or more, because you're paying about 0.8 cents per mile you earn. If you have a poor earning card you will lose money. If you have a good earning card you will be earning about 0.2 cents per Dollar spent and come out ahead. This is what you will have completed...

1. $5,039.50 Charged on Wells Fargo 5% Cash Back Card for Vanilla Reloads.
2. $5,000 moved from Vanilla reloads to BlueBird.
3. $5,0000 moved from Bluebird to bank account.
4. $5039.50 moved from bank account to pay off Wells Fargo 5% Credit Card.

You're now left with...

1. $5,039.50 credit card balance paid off.
2. 5% rebate of $5,039.50 which comes to $251.98, subtract the $39.50 you paid for 10 Vanilla Reload cards.

Total Monthly Gain: $212.48

Couple Other Things To Consider...

1. No reason to, but don't inform the cashier you are buying the Vanilla Reload cards for what you are doing. If they realize it's easy money they may hoard the cards for themselves.

2. Finding these cards can be a challenge. I'm surprised how hard it is to find these cards. I do find them at a few different CVS locations near my home though. If you get a rapport with a cashier they will sometimes save the cards for you when they come in, be nice and bring them a coffee or something.

3. Not sure how this is taxed if at all. You should do your own research. I'm under the impression this is considered a discount and not taxable income but I suppose all income earned is ordinary income at the least.

4. This sounds somewhat complicated but it's very easy and simple. This type of earning is referred to as arbitrage. It normally takes me 2 minutes to drive to the CVS by my home and buy $5,000 worht of cards. A couple minutes everyday for each reload. Basically less than an hours worth of work for $212.48. Do you make that at your job? the toughest part will be locating the cards and a store who sells them.

Wrapping Up:

Your not gonna get rich off this but at the same time hard to not take advantage of $1,275 over a 6 month period with basically 2 hours worth of work.