In today’s world, more business is conducted online, and fewer consumers are holding cash. Companies understand the benefit of having additional, versatile paperless payment options. Collection agencies are no different.
With payment cards accounting for almost one-quarter of all sales, collections credit card processing is a win-win situation for all involved. It is in both the agency’s and the customer’s best interests to make payment as fast, easy, and comfortable as possible to clear the debt quickly and conveniently. Overall, if a collection agency is unable to receive fees, it will cease to exist.
Although credit card processing makes business sense for collection agencies since they work in a high-risk market, obtaining a merchant account can be difficult. Since many established financial firms cannot underwrite debt recovery companies, these enterprises must seek a payment management vendor with expertise and experience operating in high-risk markets to secure a merchant account.
Why Do You Need a Merchant Account?
This type of private account held directly with a bank allows a business to easily and quickly accept credit and debit cards for payments. A merchant account verifies the card information, including the cardholder’s verification, and confirms the payment, assuming there are no problems. It keeps the money in the merchant account, and then the money can be withdrawn and deposited into a company’s bank account.
Credit card processing may be suitable for some companies, but these solutions do not mean the same for high-risk merchants such as collection agencies. If they detect anything suspicious, they can freeze your seller account and jeopardize your company’s ability to collect payments and stay in business.
Chargeback Issues for Collection Agencies
Chargebacks, or the return of money to a payer, are the most challenging problem for collection agencies. Chargebacks affect all businesses, but they are far more prevalent in high-risk sectors such as collection services, CBD chains, and Native American businesses. A chargeback may occur if the cardholder contests the payment, the payment was made fraudulently, or there was a purchase mistake, such as an expired card.
A chargeback is an invoice denial, which means that the money is refunded from the company’s merchant account before the transaction is considered valid. A buyer can object to a product after months. The merchant’s responsibility to claim the transaction was not illegal, requiring a significant amount of time and effort.
Since collection agencies often manage significant transactions, a chargeback can be catastrophic for both the business and the bank that offers merchant services. As a result, many financial companies refuse to do business with debt collectors, requiring them to look for merchant account solutions.
High-risk Merchant Accounts for Collection Agencies
Standard merchant accounts are not sufficient for high-risk firms, but some advanced merchant services companies partner with collection agencies. High-risk lenders with expertise and knowledge of the industry would have no concerns working with debt collectors and are unlikely to discontinue credit card payment services.
There are clear organizational benefits of working for a provider specializing in high-risk merchant services, but the most significant disadvantage is that they usually demand higher rates. These merchant accounts are more expensive, and they provide helpful credit card payment services in an ostensibly risky market.
Any lenders threaten high-risk merchants and manipulate them by charging exorbitant fees, recognizing that these companies are struggling to accept credit cards and cannot run effectively without processing facilities.
You must investigate the contractor’s choices to identify a legal, reliable, and knowledgeable lender while simultaneously offering outstanding customer support and less costly payment solutions.
Why Collection Agencies Need a Merchant Account?
Different lenders have different specialties, including high-risk payment providers. Collection agencies need to search for someone who already has more market experience and knowledge of the business’s particular realities like other debt collectors. With this insight, the processing providers will be less likely to withdraw.
Avoid lenders who tie you into an extended deal with a tight pricing structure if at all necessary. Of course, lower fees are essential but don’t forget customer service. Chargebacks and refunds are common but look for a cooperative partner that is acquainted with, accommodating, and capable of resolving these problems.
Even if they charge more, specialist merchant account providers with outstanding customer support can save you money in the long run.
We Offer Payment Solutions for Collection Agencies!
The quicker and more straightforward the fees a collection agency will accept from its debtors, the best for those concerned. It is very convenient for most businesses to find a credit card provider. Still, it is not that convenient for companies with high-risk labeling, CBD stores, local lenders, and collecting agencies.
Some professionals are ready to assist. Credit card processing that works seamlessly with the infrastructure, complete clarity on fees, and 100 percent enforcement are supported by our specific regulatory history and expertise in high-risk industries.
Pay-by-phone voice and text payment services are also available from processors. Our merchant services are open to every legitimate business form, including consumer loans and collection agencies, and we guarantee outstanding, 24-hour customer support.
We aim to provide our clients with the custom production tools they need to run their businesses effectively, allowing them to save money and expand their businesses.