How to deal with your high risk business?

Often businesses run into the problem of being labeled as a high risk business for processing electronic payments and are forced into unconventional processing agreements. Many business owners have no idea that their industry falls into a high risk category.
Shades of Grey and Red:
High Risk businesses fall into either the gray area between a normal business and a definitive high risk business, or fall into the red zone for truly high risk businesses.
What determines if a business is high risk?
There are several factors that determine if a business is to be considered high risk for credit card processing. The main reason that a business is considered high risk, is the type of business that it is. Risk is based on the merchants probability of chargebacks, returns, the businesses history, and the planned method to accept credit cards. Yes, returns are a large factor in determining the risk of a certain business type. Processors assume that if there is a lot of returned merchandise, then the merchant isn’t doing something right.

I believe the exact opposite of this, as merchants who accept returns are doing what is required, to keep their customers happy. To me this equates a lower risk business.
Certain business types are considered high risk no matter what the individual businesses history is. These businesses are in the red zone. They must find an international method to help them accept credit cards. Businesses that land in the gray area, are either high risk due to their own processing history or their business is determined to be high risk on a case by case basis.
Businesses that fall into the gray area that have good processing and financial history can usually find an American provider to help them accept credit cards, while new businesses or businesses with poor history are more likely to be considered high risk.

Common High Risk Businesses (Red Zone):
Travel and Advanced Booking
Products requiring a long term commitment (magazines, subscriptions, etc.)
Adult Products
Online Pharmacies and Supplement Websites
Telemarketing
Debt Collection
Gaming, Gambling, and Sports Booking
International Businesses
Common High Risk Businesses (Gray Area):
Electronics
Custom Products
Inbound Telemarketing
Ecommerce & Card-Not-Present (in general)
Short Term Businesses
If a business lands in the gray area, the businesses history is going to play a large roll in what types of credit card processing is going to be available to them. New businesses are always at a disadvantage, especially for card-not-present businesses. Fraud on the internet has created close scrutiny of all potential online businesses.
The most unfortunate incidence for an existing business is for their business type to be changed to high risk even though they are currently processing and have a successful, honest history. While rare, this does happen from time to time and is generally applied for all businesses within a certain industry.

If you are high risk:
If you are a high risk business, your options are a third party processor or using an offshore merchant service provider. Either way, make sure that you shop around to find the best possible solution for your business. If you business is in the gray area and you are having trouble at one place, check all of your domestic options before moving onto an offshore provider. The most expensive domestic provider is generally cheaper than the cheapest offshore provider.

A construction and tools writer can be reached at skype:goodluck3801 and paymentgateway@yahoo.cn

High-Risk Products

Counterfeit products are so common in today’s marketplace that many people take them for granted. Indeed, some consumers are happy to purchase cheap imitations of expensive designer clothing and accessories and knockoff watches bearing prestigious brand names. Others purchase counterfeit goods, thinking they are genuine, and are disappointed or outraged when they discover they have been duped with a fake. Of course, these kinds of counterfeits pose no safety risk. However, counterfeit electrical products—their number rapidly growing—bring serious performance issues and safety hazards that can result in injury and death.

Product performance and safety are not considerations of counterfeiters who use inferior materials and assemble products made to fail, enabling them to sell their goods at prices far below genuine products. Counterfeiters focus on products that can be easily mass produced at low cost. Furthermore, they often use well-known names and include unauthorized Underwriters Laboratories (UL) marks to further mislead buyers.
Categories of electrical products identified as high risks for counterfeiting by the Electrical Safety Foundation International include control relays for industrial equipment, circuit breakers, fuses, electrical receptacles, ground-fault circuit interrupters, conduit fittings, electrical connectors, lamps, electronic lamp ballasts, dry cell batteries, lithium-ion batteries, smoke detectors, power strips and surge suppressors, electrical extension cords and power cords for computers and other equipment.
Counterfeit circuit breakers have become a global problem, said Clark Silcox, legal counsel for the National Electrical Manufacturers Association (NEMA). 

“We are seeing knockoffs of several well-known North American brand names of residential circuit breakers. In the Western Hemisphere, the problem is present from Canada to the end of South America. The source of the counterfeit residential breakers appears to be exclusively China, where Chinese counterfeiters are even making knockoffs of well-known Chinese brand name circuit breakers,” Silcox said.
In addition, the industry is seeing knockoffs of well-known brands of larger molded-case circuit breakers used in commercial settings.
“Some of the larger circuit breakers are from China,” Silcox said, “but others are genuine products believed to be destined for export but which were diverted and labels adulterated to remove valuable product information, including information that could be critical to a product recall or relabeled for the domestic market. In some of these cases, the circuit breakers have been ‘up-amped’ to misrepresent them as products they are not in order to resell at a higher price.”

Silcox noted that, while there is evidence of counterfeit brand names on wire and cable, the bigger problem is products that bear counterfeit certification marks primarily on extension cords and power strips sold through deep discount retail outlets and at flea markets.
“These products are dangerous,” Silcox said. “The common thread and threat is that the cord is substandard and does not meet the listing agency’s specifications. Almost always, the copper wire gauge is thinner than that called for by safety standards that the test labs test to. Because copper has become very expensive, using less copper enables the counterfeiter to sell the product at a lower price by creating an unsafe condition.”
NEMA members estimate approximately 750,000 counterfeit ground connectors were imported from China and India in 2007.
“The safety standard calls for a minimum 10 mils of copper to be applied evenly across the 8-foot steel rod to protect the rod in the ground from degradation due to corrosion,” Silcox said. “Ground rods meeting the safety standard will typically last for 40 or even 50 years in the ground, providing building owners and utilities with long-term protection from the risks of power surges due to events, such as lightning. The counterfeit rods that NEMA has seen have 2 to 3 mils of copper, which means they will last five to eight years in the ground, at which time the risk of corrosion sets in.”

Label issues
In legal terms, a product is counterfeit if it bears a mark identical or substantially indistinguishable from a genuine trademark registered with the U.S. Patent and Trademark Office. Unauthorized use of the UL or Canadian Standards Association International mark places a product in the counterfeit category. Typically, the term has come to be used to include inferior equipment that has no name or marking, labeling that misrepresents the product’s specifications, and look-alike knockoffs that do not carry the imitated product’s name but are designed to look like the genuine article. Silcox said court cases have held that the practice of label adulteration is counterfeiting.
“Producers of counterfeit products, including circuit breakers, use inadequate materials and manufacturing processes, often without a thorough understanding of the products’ necessary design specifications or intended use,” said Jim Pauley, vice president, industry and government relations, Schneider Electric North American Operating Division, Palatine, Ill. “Most counterfeiters have no knowledge of how the product works. They use reverse engineering to attempt to replicate the genuine article. But after disassembling counterfeit circuit breakers, we find they are made of inferior materials and may include parts that would never be used together—parts from different models, for example. Tests confirm counterfeits will not function properly and cannot pass basic tests as circuit breakers.
“Counterfeiters do not care if their products work,” he added. “They are not looking for repeat customers. If a recall of a counterfeit product is issued by a government agency, the original counterfeiter never bears the burden of that recall effort. Suppliers have no recourse, and buyers get what they paid for.

“In our experience, most counterfeit products are manufactured in China, but we also have discovered entities in the U.S., Mexico and South America that are distributing counterfeits,” Pauley said.
“Counterfeiting is a significant problem, and it’s growing as counterfeiters become more sophisticated and more brazen,” said Kevin Yates, vice president, Residential Products Division, Siemens Energy & Automation, Alpharetta, Ga.. “The problem is especially troubling in the residential and commercial construction markets, as electrical components like circuit breakers are easy targets. A recent survey in ELECTRICAL CONTRACTOR magazine found that almost 86 percent of those responding could not tell the difference between real or counterfeit breakers. Counterfeit circuit breakers pose serious safety and business issues beyond the economic impact. They put lives at risk. Safety standards are not being met, and no warranties or guarantees back them up.”
Yates said Siemens’ primary interest in this issue is the safety of its customers and channel partners. However, Siemens also wishes to protect its brand. To address the situation, the company is focusing on education, identification and prosecution if necessary.
“Counterfeiters make copies. They are not the designers,” said Kevin Harris, international policy manager, European organization, Eaton Electrical Group. “They use inferior or recycled materials. And they may eliminate certain components, and they miss out on quality control. The products may look okay and very often can be quite difficult to identify as counterfeits. But they do not work and rarely perform to the specifications on the labels, so reliability is greatly impaired, which can result in severe health and safety issues to the public.

Larry Wilson, senior communications manager, Fluke Corp., Everett, Wash., said Fluke is facing a different problem.
“We aren’t seeing counterfeits of our testers, but cheap look-alike units whose makers attempt to make their appearance through face design and color combinations appear to be Fluke equipment,” he said. “To protect our brand, we own rights to the color combination and faces of our testing units and are very vigilant about taking legal action against those who violate our copyrights.
Wilson said Fluke tests all of its meters before they are sold, subjecting them to high voltage spikes to make sure they exceed industry standards. It is unlikely look-alike equipment meets industry specifications, and those Fluke has tested fail to withstand spikes.
“The insidious thing about this is that, to make a buck, people are put in danger,” Wilson said.

A construction and tools writer can be reached at skype:goodluck3801 and business24@ecpss.com

Check Verification Service Providers

Check Guarantee – What It Is, How It Works and Fees Involved

Check Guarantee is a program in which you are guaranteed to be paid on your checks. It is a type of insurance provided to merchants. A fee is charged to the merchant in exchange for the service of paying the merchant on any checks that are returned. There’s no need to worry about accepting checks or collection on returned checks. Usually, the cost for this solution is about the same as credit card acceptance, however, some may offer it for a lower price. Check with your Merchant Account Provider for further details.

How Check Guarantee works is each check that you accept is verified. The check guarantee company lets you know whether the check writer has any outstanding unpaid bad checks. This is completed by running the check through a check reader or keying the check information and/or check writer into a terminal. If it shows that there are no outstanding checks in the system, the check guarantee company issues approval or an authorization number which means you are guaranteed payment for that particular check. You are also responsible for getting certain information about the check writer such as driver’s license number and phone numbers.
Check Guarantee has been around for a while and it’s nothing new; the Guarantee Processor charges the merchant a Discount Fee (percentage) on ALL checks they accept, usually around 1.50% (or in the range), and agrees to cover all returned checks, provided that the merchant has followed the Processor’s Check Acceptance Rules. The fee scale varies by merchant type and the associated risk, but is rarely lower than 0.99%. A per item Transaction fee of around $0.15 to $0.35 is also charged. There IS often times a Monthly Minimum fee and always a Statement Fee, especially when dealing with retail check processing accounts. There may be a sign up/application fee, and also a programming fee to put the service on the merchant’s Point of Sale Terminal (if applicable). A point of sale terminal and check reader is required if you’re processing using a retail hardware solution – but there are also online/virtual terminal solutions that are now available if this is what your business needs instead.

Check Guarantee with Conversion means that not on is the check Guaranteed but it is also “converted” into electronic funds, this means that you do not have to deposit the check into your checking account; the funds will be deposited into your checking account for you automatically.

Check Verification – What It Is, How It Works and Fees Involved

Check Verification is a process that screens checks and check writers against a “negative database” of “bad check writers”. This is done at the point of sale when the customer presents a check as payment. This service is performed using a point of sale terminal (or a real-time internet process) to access one of these large negative databases and compare the new transaction against the list. If the customer has a history of bad checks, the transaction will be declined. If they are not in the database for bounced checks, they are approved. Verification transactions usually cost around $0.15 – $0.35/per item. There may be a sign up/application fee, and also a programming fee to put the service on the merchant’s Point of Sale Terminal. There IS often times a Monthly Minimum fee and always a Statement Fee, especially when dealing with retail check processing accounts. A point of sale terminal is required if you’re processing using a retail hardware solution and a check reader is optional – but there are also online/virtual terminal solutions that are now available if this is what your business needs instead.

When accepting checks and debit cards a verification service should be all that you need. Check guarantee, in addition to using a verification service can actually cost you more money to process. Unless you yield a high sales volume each month to cover the extra cost for using a guarantee service, just stick with verification.
Check Verification with Conversion means that not on is the check Verified but it is also “converted” into electronic funds, this means that you do not have to deposit the check into your checking account; the funds will be deposited into your checking account for you automatically.

Who Needs These Solutions?

Check guarantee/verification is a benefit to any retail-type business that accepts checks. If your business cannot afford check losses, you will want to consider getting the check guarantee solution.

How Do You Get The Best Deal In Check Guarantee?

• Look for the most reasonable monthly minimums and statement fee.
• Look for the most payment times per month possible, this varies from one to four times per month.
• Look for online reporting.
• Look for the most liberal check acceptance policy out there.
• Make note of which checks ARE NOT COVERED under the program.
• Consider stop payment coverage.
• Try to get a system with a check reader that can automate the verification process (if you’re using retail hardware).
• Find out if the provider has a set number of “bad checks” that they will consider before labeling your account as high risk.
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How Do You Get The Best Deal In Check Verification?

• Look for the largest National Negative Database possible, there are fewer than 10 companies that are really big
• Make sure that the Negative Database has a large following of merchants in your geographic region
• Look for a verification system that provides not just negative data, but also positive data
• Look for a verification system that has sophisticated “Rule Sets”; these are programs that use logic to analyze many variable to screen out adverse risks as defined for specific business types
• Look for online reporting
• Try to get a system with a check reader that can automate the verification process (if you’re using retail hardware).