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Yo, what’s up everybody. It’s Justin live from B2B Vault: The Payment Technology Podcast with your host, Allen Kopelman and we’ll be providing you educational information about business. Payments FinTech, decentralized finance and the technology businesses use in today’s world. And in today’s podcast, we’re gonna be talking about high risk merchant accounts. There’s a lot of stuff in the news re always about high risk. What does it take to be a high risk? Am I high risk to payment processing? Does my business fall under that? I don’t know. There’s just a lot of questions. So yeah, it’s like everything you wanted to know about high risk payment processing, but you were afraid to ask.

There you go. Like the Woody Allen movie. Everything. I don’t know what that is. Bill Woody Allen. He had a movie. Everything you want to know about sex, but you were afraid to ask. Whoa. yeah, definitely is a, that’s an old movie way before your time. Okay. Way before your time. Look, you have to look that one up. I will. What was the other movie? I gotta look about the, oh yeah, we wanna do one day. We gotta do a podcast about the, we need to all, we need to sit down. We’re gonna have to do it in the office one day, come in one morning early and watch the movie middleman. It’s a movie about, and it covers high risk payment processing.

We should do it like come in early one day. Watch the movie. Watch this movie. I think Luke Wilson is. And there’s a lot of other famous people. James con I believe is in it. And it’s about these two guys and James con just passed away. I think. So rest of the piece, James con. Yeah. So they basically sign up with authorized.net and they figure out how to, oh, these guys who were processing all the, yeah. The porn, they figure out how to process for porn sites. This is starting off as a, we weird podcast. Pause. No, what y’all no, but that’s what the movie it’s about high risk credit card processing. And then the story gets completely outta hand, but we’re gonna definitely watch the movie and then do a podcast about it.

Cause it’ll be fun. I was just saying, you said sex and porn. I not going on the very beginning, first three minutes of the podcast. Okay. Close your ears, ladies and gentlemen, if you have little toddlers in the car, so what should you know. Before you end up getting a high risk merchant account, are you really high risk? Yeah. Or what is be beyond that? Like how is, how do you even get classified as a high risk? So high risk, could be classified by you got shut off by a processor before, so you could be any business. You could get, you could be. We’ve had people come to us in their strip club and then somebody that’s not in the business, went in there, signed them up as a restaurant, and then they started processing and then the bank found out that it was a strip club and not a restaurant.

And then they get shut off. Okay. So sometimes the processor could put them on the match list or put ’em on a warning list and then it makes it harder for that merger. But, so what, so say if I’m starting my business, I’m a, I don’t even know what would I, what would be a good business that you could say a smoke shop, so you wanna make sure that you’re not picking a name like, oh, Justin’s. Justin’s weed smoke shop. Like you’re not gonna get credit card processing. Okay. Like you gotta sure. Smoke shops are a high risk. It could be depending on what you’re advertising, everything goes by, are you high risk or not? First of all, does the bank that you’re gonna go to deal with that merchant? You need to ask them like, oh, are you smoke? Shop friendly. Okay. Are you friendly? Oh, I sell some C, B D what do you sell in your smoke shop? Do you accept Merck? Do you accept? Somebody called me today, a guy, one of my sales reps, right?

So he’s oh, go look at this website. He goes, oh, they got decline by the place I normally send business to this guy sends me so little bit of business here and there. So he goes, go look at the website, goes, there’s nothing wrong. They had a vape, they had a bunch of bongs, right? So not every processor wants to process like a store full of bombs. But we have places that will take it. They don’t care. And so that’s what you have to understand. You go to some processors and they’re processing through place. He’s like bank of America, chase Wells Fargo.

Okay. Those are publicly held banks. They’re gonna shy away from those, right? You gotta keep it P PG, right? They’re gonna shy away from that type of client, but then you have other banks, privately held or family owned, and they’re very large. Some of them are in the top 10 banks in the United States. And they’re gonna say, we don’t care. We’ll take those clients. And you’re not gonna pay like some crazy high risk foods, 5% for credit card processing because that’s in their normal, state, normal types of business that they accept. Just like strip club. We talk to couple of processors we’re dealing with somebody new now.

We’re not gonna mention the name. We asked them, oh, will you do a strip club? And they were like, no, right straight up. No, they’re not doing it. Cuz it’s owned by a public company and they’re not gonna do that. Not gonna have strip club on the books. So you gotta make sure public means everyone on. The what public means. Everyone owns little piece right, public. For those that don’t understand, I get questions. So on the stock exchange. Yeah. It’s a publicly traded company they’re listed on the stock exchange, but all is a privately owned company. My company was a privately owned company.

Samantha’s graphic design is a privately owned company, rockies, I don’t know, dog treats privately owned by Rocky infuse with special losses and chicken jerk. Infused with CBD. It sounds like you have a, that’s a product line right there. Rocky CBD treats could be never. Launch it dude never know you might make a billion bucks. Every bank has their specialty of some banks, like the adult business, some banks like CBD and then different banks, like different products amongst the CBD. Some banks say, okay, Delta eight, no flour. We’ll take it. But as long as it’s a hundred, they can show the tests are hemp derived, Delta eight.

We’ll accept it. Oh, you have flour. It’s you have the test. It shows that it’s hemp. We will take it. Got it. As long as you can prove that, that, you’re playing within the rules of the bank. So you have to make sure you don’t want to sneak something in, get signed up with a CBD bank, then all of a sudden you decide I’m just gonna add on five Delta, eight products, and then you get a call and they go, Hey, we review your site all the time because they use soft. That basically crawls your site every usually like monthly. And then if you have so audit the site. Yeah. They audit the site. And they’re looking for words, right? Cannabis, weed, Delta, a mushrooms, right? Mushrooms. Hey, they’re talking about legalizing. I’m all for legalizing mushrooms. Yeah. They’re talking about legalizing mushrooms and having it, I’m sure there’s gonna be max this got on some shrooms woo kid.

No, but I’m just saying. Yeah I probably wouldn’t shut. We probably have a two hour podcast, dude. I can not even, man, no way. Jose I’m podcast, he’s talking nonstop. We would talk about Dick Durban. I do be like this the whole time. No, I’m sure that they’re gonna put it into some kind of limit of what percentage of something you could have. Give those rooms to the PTSD guys, man, all the yeah. Soldiers out there. It works. No. Different banks, like different things. One bank likes adult, one bank likes cannabis related business, another bank doesn’t like that one bank likes nutraceutical products, like vitamins. Yeah. And, supplements another bank.

Doesn’t like that one bank likes doc prep. Doc prep is where, a website is helping you prepare documents, like to recover, get a replacement for your social security card, a driver’s license, a birth certificate. Those are big visa. Yeah. It’s a big business cuz you know, people are lazy. I mean you could go do it yourself, get a federal tax ID, stop being lazy, but maybe you want to get it faster. And you need to get it faster and you don’t have time to go retrieve all the documents and do all that. There’s companies that do that stuff, but not everybody likes each kind of merchant. Same thing like guns and ammo. Not everybody likes that. There’s a lot of rules around some of these merchant types, right?

Like with adult, they have certain guidelines from MasterCard that must be adhered to, and they get audited for that. Once a, yearly, they get audited for their business practices. The same thing, like with smoke, let’s say you’re selling cigars online, or you’re selling vapes online. You have to adhere, you have to have certain Disclosures on your website, right? And the same thing with CBD, you have to have disclosures on your website and they review your site. Like for CBD, the MasterCard came out with new regulations regarding, around advertising and also that all the certificates that stick all the COAs, which are to be available on the website has to be available and they have to be no older than 12.

If you, if yours are less than 12, over 12 months old, like I reviewed somebody’s site, the thing, the tests were like two years old, the bank won’t accept them for a merchant. They might have a merchant account now, but if they get audited, they probably get closed. Wow. Because MasterCards on the war path for that right now, every single bank, you open up a retail store, you’re selling tshirts t-shirts and embroidery hats. Where you have a restaurant and you’re selling. Every bank likes that, who doesn’t like that it’s card present, low risk. So every bank likes that. So real quick, just, that’s a really great part of the podcast to explain the difference between a high risk and a low risk. So you got your strip clubs smoke shops.

What else? They’re not necessarily high risk. I call niche. There’s the right bank people don’t like, right? Like the more hard edge or right stuff. No, you just gotta find the right partner that likes that business. You’re not overpaying for price. But I’m just trying to say to separate the two from each other. So then, banks The mom and pop clothing shop that does, custom t-shirts for people stuff like that. Yeah. So you, but you wanna make sure if you’re in a higher risk kind of category that you, the company you’re gonna work with is somebody that understands that business and wants to work and tells you like, oh yeah, we do this.

We do like people know. Like for me. Yeah. Oh, I have a hard to place client. They’re gonna call out, call me, they call me and they go, oh, do you have a solution for this? Usually, yes. We have 15 partners. So we have partners that they specialize in certain areas. . and that’s what you gotta understand. And don’t go to somebody. That’s just gonna take all your information and send it all over the place. Cuz you’re gonna end up with your credit pulled and that’s not gonna look good. And then when you do find a bank, they’re gonna go, man, this guy applied everywhere. So you don’t want to take the shotgun approach if you’re in a very niche category and believe me there’s businesses.

No one’s ever heard of. I’ve had a few this week. Like I had a guy. That’s specifically doing graphic design for NFTs and web three. No, specifically, that’s what it’s for. It’s smart for you, right? I thought it was a unique category, or let’s say you want to run a subscription program where you’re charging somebody every month. Not every processor likes that. So you gotta make sure that they like it before you do it with them. So you have to make sure like what you’re doing and the, that their comfort level is there. And, getting just, cuz someone says, oh, I could get you processing. And then they tell you, oh, it’s 9% or 10%.

That’s always not good. That’s a red flag to their bank. Why are they charging this guy such a high price? So we try not to do deal with people that do that. We want to get our merchants the best deal we can get them always, and that’s what we’re in business for to make sure we’re getting people, the right bank for their business and the right price. The other thing is here’s an example of somebody sent me a website a couple weeks ago and I tried to explain to the client potential client. I said, at first glance, I looked at his website and I said, Hey, yeah, we could get you. We probably can get you credit card processing, but you’re gonna have to make a few adjustments.

And the guy’s like why? And I’m like, okay, like the lingerie and the toys. Okay, that’s easy. We can find a bank, not believe it or not. There’s banks that don’t like that because there could be some questionable pictures on the website. So they’re not gonna be down with that, selling that online. And then the guy also had ed pills and some neutral products and the bank that takes the lingerie. Doesn’t. Those two products. Then the guy was also selling C B, D so now you got the three things. Whoa. And then the last thing he had, he was selling adult magazines and DVDs. So I was like, dude, like this right here, like we’re not gonna find an adult bank that likes the adult bank probably will like the lingerie and toys, but they don’t like the ed pills and the Nutri and they don’t do CBD the CBD bank.

Doesn’t like adult and Nutri. Yeah, but they’ll take the lingerie. So you’re not gonna get all those four categories. So what would you suggest to him? Does he like build different websites out? Yeah. Build, sell your, if you want to, if you’re gonna sell adult stuff, if you’re gonna sell. So like the lingerie adult toys and the adult megs could be one. That could be one website. Couldn’t the pills and a CBD be one. Probably not cuz the bank that like C the banks that like C B don’t like the nutraceutical products, no bank. That’s crazy. The banks that like nutraceutical don’t like CBD cause Nutra is a people don’t understand this, but it’s two different types of products.

And it sounds like it might be close to the same cuz it’s an ingestible product, but. It’s two different things. I have no idea what you’re talking about. I’m just saying ed medication. Oh, yeah, I get it. Purposes are two totally different purposes. So I’m just saying like for whatever Nutra is like for nutraceutical health stuff. Yeah. But I’m just saying like the banks, that process that don’t, there’s not one bank that lights all four of those. I asked they, the underwriter was like, come on, dude. No, do you know already? Yeah. The, I knew the answer, the vibes and I already told the guy, I. You could go call like 20 people. No. Anyone that says yes to you, you’re just right. They’re just gonna waste your time. Have you fill out paperwork, you’re gonna send it in and then you’re gonna get declined. And then you’re not gonna be happy.

Yo, before you get into that next part, please, don’t forget to enter for your chance to win a MedQuest two for the hundredth episode, giveaway of the B2B vault. We could check out the contest on Twitter, Facebook, the Facebook B2, B vault community page, sharing it on TikTok. Instagram, you can enter the site via social media check for the links. When you follow B to B vault on TikTok, Instagram, Twitter, and Facebook and play there’s also and LinkedIn the LinkedIn page. And also watch for our post about posting a question for the hundredth episode. And if your questions get picked, we’re gonna send everyone whose question that we talk about on the podcast.

We’re gonna shout, give you a shout out for your name and your company. Read your question and we’re gonna give out surprise gifts. Whoa. We have some cool stuff. Not part of the contest so you can win some other cool stuff. If you ask a question and we use it on the podcast, IDU contest on Facebook, Twitter, Instagram, LinkedIn, and LinkedIn TikTok. Check us out at B2B vault. Also check out B2B vault.info. There’s ways for you to check out past episode. Get in contact with Alan. If you’re looking for a merchant account yourself, there is a beautiful apply now button in the top navigation click that it sends you to the form donezo. So yeah. Check us out on Spotify.

Apple, Stitcher, Google, Amazon Pandora, overcast. You name it. We’re there. We’re you’re, we’re probably on every single we were on one the other day. What was that one called pod? Something. I don’t know. Somebody posted on tagged us on Twitter and we went and looked sure enough. We’re listed on the, yeah. Shout out to Allen for being in a bus, south Florida business journal too. We were nationwide paving systems was in the business spotlight section, which. It was pretty cool because yesterday afternoon he got a notification that nationwide payment systems was in. Got it. Was a part of the Google news.

Yeah, that was cool. Pink. So that’s very interesting. That’s very cool. Thanks. Shout out to the south Florida business journal. That’s all I got, man. Sorry about the podcast the other day guys. I was really tired. A lot of personal stuff going on, but yeah. Back. All right. We’re back. So merchant accounts and especi, people don’t understand, they come with limits. It doesn’t matter if you have a restaurant or you have a high risk merchant account, or you’re doing eCommerce, whatever you’re doing, the banks always want to know. What’s your monthly credit card processing gonna be. Samantha’s trapped over here by Rocky. She’s here laughing. Should I wake Rocky up and you’re barking on the podcast or just sick?

What’s all this behave. What’s so saying leave sleeping dogs lie. Yeah. So your monthly volume, what’s the average sale gonna be? What’s your high sale gonna be? And then people always ask me about, oh, is there gonna be a reserve? So what is a reserve? This reserve thing was really that blew me away when I, when you, when we, yeah. When we learned about that. Yeah. A reserve. The bank could put you on a reserve where they’re holding 5%, 10%. Of your daily say was the one company had there’s holding on it over almost 20 grand. Which one was that? The guy that you had just talked to the other day, he said, oh, I’m gonna have to call Clover.

And oh yeah, the guy was on Stripe. And he sent me his thing first. He told me, oh, I’m paying 2.2%. I go, no BS. So I show, he sent me the paperwork. I go, I don’t want to like reign on your parade. But I said, It says right here, this is your sales and this is how much they charged you. Then there was a bunch of other miscellaneous fees. I go, you add all that up. And I says, and then you divide that by your sales. And it came out to almost 4%. The guy was like, what are you talking about? He was usually in shock. He actually got pissed. Yep. It, and then he didn’t even want to talk to me so we didn’t get the account, but he might come back after he calms down.

And then I showed him on the bottom. I said, do you realize that they had a 5% reserve on you? And they’re holding almost 20 grand of your money? He’s what are you talking about? He goes, there’s a reserve. And I was like, yeah, right there. It says it right there. And this, and he’s his business owner not paying attention. I don’t understand how. I have, this is time and time again. I stayed on we people all the time. If you’re gonna have a reserve, first of all, it’s negotiable. Okay. What are they gonna do? 5%, 10%. Are they gonna give you like a fixed reserve? Like we have a merchant now they are on a fixed reserve and it’s a certain percentage of their sales over six months.

And it’s a fixed thing, 20. So before it was about 16, but their sales went up. So now it’s 20 and but there’s other ones, depending on how high risk the merchant is and their history. And it’s also the history of how they’re processing. So they might start off with a 10% reserve. And then the bank will see, oh, there’s no chargebacks, everything’s smooth sailing. Okay. Let’s cap it. And they cap it at whatever they have based on those current sales numbers and the banks need the reserve because they, what can happen, chargebacks and what’s chargebacks. So somebody disputes a charge like Justin selling CBD. And I’m on a recurring thing every month. You didn’t get it and I didn’t get it.

And I do a chargeback. I need to get my 150 bucks back. So the bank, if Justin doesn’t have it in his bank account, guess what? The bank is on the hook for the 150 bucks. So that’s why they established reserves to cover themselves. Also, there could be. Like, we’re gonna, I was telling Justin, I said, I heard this morning from two different CBD clients that the FTC was going after. And MasterCard were both going after a couple of CBD companies and there was gonna be announcements and we didn’t find it on Google. But that doesn’t mean anything. If they’re talking about it, it’s probably happening. It’s probably happening. And they’ll be, it’ll end up on Google in the next few days.

We saw. So you have to, so those fines, the credit card processor gets slapped around and they’re gonna go look at the merchant to pay the fine. No. So that’s why I’m saying like with neutral merchants, let’s say they’re advertising something. The FTC comes in or the F FDA, they go, we don’t like the way the wording is on your website. So the merchant gets, slapped around. They fix it right away. . Yeah. they get, they get a letter, they get like the nasty letter in the mail. Then as long as the merchant’s proactive, they go fix it right away. Then they show it to the FDA or the FTC, and then they usually don’t find them.

Now, if there was a bunch of complaints, maybe they would get a fine and then they’re gonna come after them and they’ll come after their bank account, their merchant account, wherever they can go get the money. So the banks, when you’re in a higher risk category, want to have they want to have money on reserve in case you get some kind of fine, from either the card brands , which doesn’t happen too often, most of the fines come from the FTC or the FDA having to do with advertising. And disclaimers on your. Hence, like we were talking about like CBD as disclaimers , guns and ammo gotta have all that privacy policy. All of that condition, shipping policy, shipping and returns, cancellation policies, a visible phone number. So people can get in touch with you. I told ’em address, phone number or nap. I tell people all the time, like you have a higher risk type merchant. Hire what’s that answering thing you hear on the radio all the time.

Oh, whatever, Susie always answers the phone. It’s whatever. It’s like a online company that provides answering services. You hire a company like that. Oh, so yeah. So after hours, you’re not there. You want your phone answered, you don’t want the person running to their, you can like a customer service, but I’m saying can just get simple. Machine answering company where they just answer the phone for you after hours so that you don’t get people that just go make it so easy. Now, especially since COVID just go on your bank app. Boom boom. I wanna do a chargeback and guess what it’s done. You gotta chargeback.

And so you don’t want people to do that. So have the phone answered all the time, make it so you. Get chargebacks says, listen, I started in the business 20 years ago, the chargebacks was 3% . Then it went to 2%. Then it went to 1%. Now it’s 0.7%, but the banks would really like you to be around a half a percent. So it’s pretty crazy. Plus they measured against basis points on high volume merchants. So you gotta really watch what you’re doing. And if you have a hundred chargeback. in a 30 day period and they don’t do it in a calendar. I don’t like, I really hate how the credit card branch treat the charge back.

It’s a hundred chargebacks in any 30 day period. So it’s a floating 30 days, so I get one on a Thursday of the beginning of the month. But I don’t get one until the end of the. It’s still, that’s gonna start over to no, it doesn’t start over. They could just any 30 days they could pick out a section and go, oh, during, from July 14th to August 14th, you had 120 yards. That’s terrible. Yeah. I know. It’s their rules are floating, which I don’t like, apple does the same thing that doesn’t make any sense. It’s a living agreement. Eh you would think they would just do it on a calendar basis, but they. And then, oh, so Rocky decided to get up and give us a jingle, so chargebacks and fines, that’s why they have those and, keep the chargebacks down and, there’s specific rules when it comes to advertising for certain industries, disclosures you’re required to have on your website, different things.

So you, you wanna work with somebody like. Who has knowledge of all multiple industries? Like I was meeting with the guy this morning, also they were selling, they want, they’re launching a website that does visas, so you can get a visa into a foreign country. And they deal with a whole bunch of different countries. Obviously you can go do it yourself, but maybe you can’t do it. And then you need to do different things. Like you need a certain size picture. So you can get a rail pass or, I people can do it themselves, but I think what it, I think those types of services are aimed for people who are not technologically savvy.

You might not. And also, they might be asking for a specific size picture and the picture you have is too big, so they’ll size it down 40. So as meeting with him, so I said, oh, I said, oh yeah, this is like a doc prep. And then the guy was, I said, yeah, we know what doc prep is. We know banks that are friendly with doc prep and we can help you with that. So he was pretty impressed. So the same thing, you wanna make sure that you’re explain, the person who’s, you want to know that person that you’re dealing with. Is telling you all the things that you’re gonna have to do.

Quarterly reports have to be filed by some merchants. Some merchants have to file compliance statements once a year. Usually the bank sends out the compliance statement or the audit, like travel merchants now or under a microscope. That’s another high risk category. So one of, we work with a couple banks that do travel. We. Few travel merchants and they’re really on top of them. Oh, we need to do our financial audit. We wanna see your tax returns. We wanna see your, audited P and L statements and all kinds of stuff, fresh bank statements. And it’s due by this date. And. Even though the due, date’s not till the end of August.

They’re like sending out an email once a week. Where’s this stuff, where’s this stuff. They want to get it right way before the end of the month. You have to understand, what ongoing compliance are you gonna have to deal with? Cuz merchant, I don’t like I tell merchants all the time I go, I’ll tell you the truth, right? Like I told that guy with all that crazy stuff on his website, you might not like. You gotta understand, like certain merchants have to pay registrations, tobacco, merchants, so on and so forth. So getting approved is like preparing a good package. We’re gonna interview you. You need to interview whoever you’re working with.

If it’s me, let’s say you wanna work with me? You can text the word book V O K to 9 5 4 8 2 7 9 8 1 8 and you’ll get back a text message from. With a link. So you can book an appointment. Yes, sir. We give a free 15 minute appointment and we go over what your needs are. And if it lasts a little longer, lasts a little longer. So that’s, today’s podcast, everything you wanted to know about high risk credit card processing, but you were afraid to ask. That’s probably too long of a. Eh, we might put it in there. We’ll see how works. Okay. I’ll see. Could be the subtitle, but we’ll see how we’ll see how that works out. So everybody have a great day.

If you want to find out more, you can go to, you can either text the word book to 9 5 4 8 2 7 9 8 1 8. It’ll be in show notes or visit the website. B2B vault.info. You can fill out, apply now or fill out a form. And set up an appointment with us. Everybody have a great day car. Dim peace out.

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