Operation Choke Point has finally come to an end. At this point, you may be asking yourself exactly how will this affect businesses that are considered high risk from a banking and payment processing perspective? The answer is a simple one. It means that the ability to conduct business has been restored for many companies across the country. Operation Choke Point was a federal government initiative that began in 2013.
What was Operation Choke Point?
It gave the United States Department of Justice the right to investigate banks, lending institutions, and payment processing specialists at their discretion. For example, if the Department of Justice considered a specific industry as high risk for fraud and money laundering, they were, in essence, blackballed from banking and payment processing services. When Operation Choke Point first began, the federal government did not announce it to the public or the industries targeted.
The Department of Justice forced the banks and lenders to close long-standing accounts without notice and little explanation. When business owners and operators inquired with their banks, they did not receive a clear-cut answer. Instead, they were informed ]their business was considered too high of a risk. Freezing individual companies from having the ability to maintain a bank account had a domino effect. Payment processing specialists like Payment Savvy were forced to stop partnering with these so-called high-risk businesses.
That meant that many industries could no longer accept credit and debit card payments from their customer base. Most consumer and business-to-business transactions are conducted with credit and debit card payments. This holds especially true for businesses dealing in more significant ticket items. A great deal of these legitimate companies could not survive. They ended up closing their doors which certainly is not suitable for the local and national economy. The few types of legitimate businesses dealing in cash had nowhere to deposit their money.
It became challenging to manage daily operations. Other organizations gave up and closed their doors. However, businesses that deal in fraud and money laundering prospered due to the nature of cash. The road to Operation Choke Point may have been paved with good intentions, but it was a complete and absolute disaster in reality. As of August 2017, Operation Choke Point is a thing of the past. This is excellent news for legitimate businesses that were formerly blackballed.
They include firearms and ammunition dealers, pawnshops, payday loan companies, online gambling sites, home-based charities, online sellers of alcohol, tobacco, pharmaceuticals, fireworks stands, and the adult industry, to name a few. The only good thing that came out of Operation Choke Point is the lesson that it provides. Businesses should have the right to offer products and services to any other company they choose to work with. That is, as long as both organizations are operating legally.
Payment Savvy specializes in providing businesses of all types with the ability to accept credit and debit card payments in person and online. Please contact Payment Savvy today to review your options, apply for a merchant account, and obtain answers to your questions. We look forward to hearing from you and working with your company.
If you have enjoyed reading this article and found it informative, please share it with all of your contacts on social media. Payment Savvy greatly appreciates your efforts in this manner. Please stay tuned for more exciting articles in the days ahead.