A collection agency has a tough row to hoe. The act of getting a merchant account is not as simple as it seems on paper. They fall into the high-risk area of the merchant accounts and unless you can prove you have started that legitimate business, you have a lot of work ahead of you.
A lot of the merchant account servicers will not do collection agency accounts. But, don’t be dismayed, if you take the time to shop around, you are likely to find what you are after.
• Start at your local bank and shop with them. See if they will work with a collection agency and find out what their percentage is for processing credit/debit cards.
• Then, go online and begin your search from there. Find out if they have a per-transaction fee and if they don’t, then you want to know if they have an account fee. Follow all the leads to know what you are going to be paying.
• Since you have a heads up, find out what the reserve amount is going to be on your collection agency merchant account. If you are not comfortable with it, keep looking. The amount is worked out with your application as you get your account.
• That amount put into the reserve is an insurance policy for the merchant account servicer. If you have a chargeback, they will use the amount to return the money to the customer. A chargeback is no more than a refund that has come through the customer’s bank.
• Take care of your chargebacks as soon as you know about them and the merchant account servicer and you will continue to do business. Too many and you end up in merchant account jail. Also known as merchant account suicide, so don’t go there. You usually cannot find your way out.
A collection agency business is not the most loved on the planet, but it can be very lucrative. Follow the rules put forth by the merchant servicer and you will be out of your trial period in three to six months. Once that is over, you will receive your reserve money back in full and they put into the designated account.
If you need to grow
As you are growing your own business with your collection agency merchant account, the merchant servicer has other things to help you out. A lot of banks are not loaning money to anyone and your merchant account servicer is willing, and usually able to loan out some money to you when you need it. You can work out a deal to pay it off with a traditional loan or through your daily credit card receipts. It’s up to you and your servicer and how they operate to come up with the agreement.
Treat your merchant account with kid gloves and it will pay you back tenfold. Follow the rules and check on every chargeback. Take care of your customers by having this account and your business will be open all the time. Good luck with your venture.