Debt Collection & Recovery Credit Card Merchant Services

Merchant Account for Debt Recovery Acccounts Industries


We now have options for startup companies, newly formed collection agencies, new businesses, newly established collection agencies! Opening a merchant account is quite a simple task for most businesses. There are some industries however that are classified and listed in the high-risk zone. There are a number of reasons associated with each of these businesses that make them higher risks for the credit card processors. This would make the process of opening a merchant account for these businesses a bit more difficult than the normal cases.

Why are Debt Collection Agencies Considered High Risk?

A dependable, reliable merchant account also at an affordable rate would be the requirement for any online or physical collection agency. But that is tougher than it sounds. Collection agencies have topped the list of high-risk cases for credit card processors.

The more popular options like Strike and Paypal are best known for their quicker underwriter reviews. They also charge pretty less. This is one reason why several businesses approach them first. But this cannot be the case with the high-risk businesses like collection agencies.

In the initial stages, you might be able to go live in no time. The integration might be quicker than you imagine. But later as your business grows, if your transaction volumes significantly rise, you might have to face a situation where your merchant account would be frozen. Here are some of the reasons why collection agencies are considered high risk:

  • The chargeback rate has been the highest for the collection agencies.

  • The fraction of fraudulent businesses in the collection agency sector is also pretty large.

  • Remember that with the collection agencies, the payments done are all done by people who do not really want to pay them. In fact, people even find many collection agencies rude. They are forced to make the payments. This is another reason why these businesses come associated with larger rates and chargeback

  • The amount of debt an average household holds has been steadily on the rise. The overall amount of debts remains in billions of dollars. With this significant increase in the debts, the collection agencies have also been expanding.

No matter how much the people might loathe collection agencies, these are steadily growing. The risks faced by these agencies keep growing too.This gives you many more reasons to support the fact that you should specifically look for high-risk credit card processors for debt collection businesses.

Being Denied Services by Conventional Credit Card Processors

The most popular credit card processors that most businesses approach for collection agencies, in general, are banks, agencies like Paypal, Square, Stripe, First Data and these types of credit card processors . But these often are not the ideal choices for collection agencies.

Banks straight away hesitate to allow their credit card processors to help open a merchant account for collection agencies. But this should not hinder your process of getting a merchant account. Not getting one can have an adverse effect on your business. This can significantly affect the cash flow.

Collection agencies, in particular, rely more on credit card payments. This is because the collection agencies would come in picture when there are some major payments pending. This is why there is always a lot of pressure on the debt collection agencies. So approaching the right high-risk merchant account provider should be your prime focus.

Also, since there are several types of collection agencies, make sure that the merchant account provider you choose caters to the needs of collection agencies similar to yours. So how do these high-risk credit card processors manage to do it?

  • They partner with other processors and banks and have a smart contingency plan in place to handle the high-risk situations.

  • Their experience in handling several similar high-risk clients gives them an edge over the others in maintaining the merchant accounts of these high-risk businesses.

  • These vendors can help all types of businesses including the smallest ones and startups. This makes them a go-to option in all the high-risk cases like those of collection agencies. They are better efficient in handling the higher chargebacks incurred by these businesses.

New Collection Firms the Startups and New Agencies Welcome

As a general scenario, startups face much more difficulty in getting a merchant account than bigger flourishing businesses. Several credit card processors downright reject the requests from startups for merchant account opening. This has lead to several cases of startups shutting down.

There are many businesses who have found it impossible to continue without a merchant account. And with all the major credit card processors turning them down, they have no choice but to shut down. This further puts the industry in the high-risk category. So it is a two-way process more or less.

Well, the situation can’t be blamed given the risks involved. So a vendor who specializes in handling such high-risk businesses is the one who can solve the issue at hand. They can help bring the failing businesses back on track by getting their merchant account live in a considerably shorter time at a reasonably lower price as well.

Domestic vs. overseas options:

If opening a domestic merchant account would solve the purpose, you can stick with this option due to several reasons:

  • Domestic options are relatively less expensive.

  • The overall time for the underwriting reviews would also be comparatively less. This would makethe overall process of getting your merchant account much quicker.

  • Some even find this a much secure option.

But some businesses would call for an overseas merchant account. There are credit card processors who also offer overseas solutions besides offering the usual domestic merchant account services. These can make your work much simpler.

In general, the aspects of your business your underwriter would evaluate would depend a lot on the underwriter.They would be reviewing all previous financial records, history of unpaid chargebacks, the rates mentioned and lots more. This would give them a clear idea of what amount of risk they would be in when they help you in your credit card processing.

Evaluate the check processing criteria of the credit card processor you approach to understand the requirements better. This would help you in getting your merchant account approval easily.