7 Easy Steps to Setting Up a Successful Debt Collection Agency and Merchant Account

Apr 28, 2014

Despite the impressions you may have, debt collection is a lucrative and necessary business. The majority of debt collection agencies are reputable businesses performing a required function other businesses don’t have the time or resources for. If you’re interested in setting up your own debt collection agency and working from home, here are the basic steps you need to prepare your own start-up.

1) Research Federal and State Laws

This step is essential to understanding how debt collection works. There are strict federal as well as state laws governing the behavior and operation of debt collectors. Knowing the rules and regulations will not only keep your business running smoothly, it’ll protect you from any litigation through err on your part.

2) Permits, Licenses, Bonding

In order to own and operate a business, you will need the standard permits and licensing from your local government unit. In addition, for debt collection, you’ll need special licenses and bondings to handle and collect debt.

3) Set Your Tax Structure

This step is crucial for your debt collection agency or any other business. You will need to consult with a tax expert to set up your tax plan. Register your business with the IRS. Collection agencies can come under a lot of scrutinies so make sure your t’s are crossed and your i’s are dotted.

4) Determine Your Collection Fee Structure

Determining your collection strategy will set the tone for your business. How much risk do you want to take? If you buy already delinquent debt from companies at a percentage of the amount you stand to make a lot more money keeping whatever they pay off. Yet, you could lose money and it requires more investment. Determining your strategy, when your fees increase, and what percentages are acceptable risks is an important step in your business plan.

5) Set Up a Debt Collection Merchant Account

If you can’t accept electronic payment you are limiting the number of ways your debtors can pay you back—not a good plan. Debt collection agencies can be tricky for opening merchant accounts. Many traditional banks will shy away from opening a debt collection agency merchant account because of the financial and reputation risks involved. Look for reputable alternatives such as eMerchantBroker to help you open a collection agency merchant account.

6) Prepare Collection Methods

When it comes time to collect you’ll need the resources available to notify your debtors of collection. Basic tools are a form letter and a telephone script for calling debtors. Having a prepared method is a fundamental part of being professional and being prepared to interact with companies and individuals with out-standing debt.

7) Market, Build a Customer Base

This is the trick to running a successful collection agency; you need to have clients. Be prepared to create marketing materials and invest long hours in calling businesses that may be in need of a debt collector. Building a customer base can be a long and tedious process so be prepared to put in the hours to build your new collection agency from the ground up.

eMerchantBroker offers the best, most experienced team available for opening a collection agency merchant account. Years of experience means we already have the connections to the banks you can work with and we just have to find your business the perfect fit. Apply today and let our team go to work for you.


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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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