FDIC Withdraws Hit List of High Risk Merchants

Nov 02, 2015

The Federal Deposit Insurance Corp (FDIC) has withdrawn a list of merchant types that it had formerly labeled “high risk.” The list included merchants like debt collectors, payday lenders, adult entertainment and others the FDIC felt needed heightened scrutiny. The list was developed as a way to monitor certain types of merchants from taking advantage of the FDIC system. But legislators and business owners claim that placing specific businesses on the list has deprived legitimate merchants of payment processing by banks. The FDIC has refuted this allegation, claiming that the list has been misinterpreted.

Richard Osterman, the FDIC’s acting general, admits that the list has been “misinterpreted” by financial institutions. The FDIC states that the merchants on the list were just example categories and were not to be prohibited from payment processing.  In fact, the policy encourages financial institutions to work with any type of business that is in compliance with applicable federal and state laws.

Republican lawmakers and others have publicly targeted the FDIC over the list. At a recent hearing, Rep. Patrick McHenry, R-N.C., grilled FDIC representatives over the list. Republicans claim that the creation of the list is just another move by the FDIC to keep certain businesses away from the payment system. Even though the FDIC has recalled the list, the organization still encourages banks and payment processors to be selective when dealing with new accounts.

Even though the FDIC has removed the merchant list, the banks are still highly critical of businesses labeled as “high risk.” The recall may allow a few more merchants to be granted access to bank payment processing. Still most legitimate businesses that were on the list could be subjected to stricter guidelines than most by banks and traditional payment processors. Entrepreneurs of high risk businesses should consider newer alternatives to traditional payment processors. Owners must research and vet reputable third party payment processors that know how to navigate their particular type of high risk industry.

EMB is the number one payment processor of merchants in the high risk industry. We offer high risk credit card processing, plus a variety of processing services that will protect your client transactions, and boost your revenue through strategic payment processing.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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