If your business deals with bail bonds it may be difficult to secure a merchant account from a traditional bank and institution. The bail bond business is another one of those industries that banks shy away from due to concerns over inconsistent cash flow.
During the past five years, the bail bonds services industry has grown steadily. The $2 billion industry rose 2.7% since 2011, according to a report by industry market research firm, IBISWorld.
A combination of the industry’s very small loss ratio due to laws that permit bail bonds agents to use any tactics to ensure defendants show up for court dates and a decline in individuals’ personal savings rates, the sector’s prospects are expected to continue to improve.
The problem is that these businesses are moving away from operating as cash-only enterprises. Unfortunately, banks don’t make it easy for a business to secure a bail bonds merchant account. Traditional financial institutions label them high risk due to the history and background of the industry and their reputations for having excessive chargebacks. Chargebacks are when a credit card provider demands a merchant refund the loss of a disputed or fraudulent transaction.
A legitimate business that wants to process credit card payments efficiently and effectively must turn to EMB, a high risk credit card processor, for a bail bonds merchant account.
Eligible merchants can get approved within 24 and 48 hours. Additionally, merchants can count on EMB for chargeback management tools, PCI-compliant payment gateways, and fraud filters. To succeed, bail bonds merchants need to be able to accept credit card payments. Begin the process now by filling out EMB’s quick and easy online application today.
Bail bonds services
To get out of jail while they are awaiting trials, criminal defendants often need to post thousands of dollars in bail money. They put up the money as an assurance that they will show up for future court appearances. Most defendants don’t have that kind of cash, so their families or friends often go to bail bonds business, which fronts the money for a fee.
Bail bonds merchants provide security bonds, which are backed by insurance companies that cover the risk involved in releasing a defendant who is being held in jail until a trial is concluded. The defendant forfeits the money if they fail to appear in court. Bail bond agents guarantee to pay the full amount of the bond if defendants skip out on appearances.
Of the 24,700 businesses in the bail bonds services industry, there is no major player in the sector. The industry is a competitive market in which small or independent players dominate the field. Bail bond agents must obtain a license, follow all state regulatory requirements, and possess assets or surety insurance to pay for any potential losses. To stay ahead of the competition, savvy businesses accept credit card payments.
Get a bail bonds merchant account from EMB to accept credit card payments for these services:
- Selling secured and unsecured bail bonds
- Providing financing for bail bond premium fees
- Hiring bounty hunters to locate individuals on bail who fail to appear at their court dates
Bail bonds merchants that think they are too risky or are unsure of accepting credit card payments should begin the application process today to learn more. High-risk merchants of all sizes and with different backgrounds are EMB’s specialty. Start the process by applying for a bail bonds merchant account now.
Documents needed to get a bail bonds merchant account
To obtain a bail bonds merchant account, businesses must begin by filling out EMB’s simple online application. Along with the application, merchants will need to provide the following items:
- A valid, government-issued ID, such as a state-issued driver’s license
- A bank letter or a pre-printed voided check
- 3 months of the most recent bank statements
- 3 months of the most recent processing statements, if applicable
- A SSN (Social Security Number) or EIN (Employer Identification Number)
- A secure, fully-operational website with clear privacy and refund policies
- Chargeback ratios must be under 2%
Though no approvals are guaranteed, EMB does promise applicants a fair, secure application process. The team at EMB is dedicated to helping customers succeed. Apply today and get approved as little as 24 hours and begin processing credit card payments.
Guilty of being too risky
Merchants involved in bail bond services often are turned away from banks due to excessive chargebacks and inconsistent cash flows. There are always plenty of criminals who are sent to jail before their trials, but they don’t always have the funds to post bail or pay bail bond fees. The ebbs and flows of this type of industry makes it nearly impossible to accurately determine the amount of money a bail bondsman will have at any given time.
Friendly fraud, which is when a customer disputes a charge because they changed their minds about the purchases, is common in this industry. It is not rare for people to contact a credit card company and dispute transactions after a defendant has posted bail and released from jail.
Bail bond merchants also are especially risky considering the number of people who fail to show up for court appearances after they are released. Though agents are required to have funds insured, excessive payouts raise premiums. Higher premiums mean more money out-of-pocket for agents.
Bail bonds merchant accounts versus low-risk accounts
High-risk merchants, such as bail bonds businesses, often are subject to higher processing fees than those considered to pose lower risks to merchant account providers and banks. Depending on the specific circumstances of a business, an account also may have other restrictions such as funding delays, monthly credit card volume caps, and a rolling reserves.
Fortunately, since EMB always is working to provide customers with the best possible payment solutions, most of these limits can be removed from an account after the first three months. Merchants must prove they have low chargeback ratios and no outstanding bills.
An underwriter’s review of a bail bonds merchant account application
Since underwriters’ main jobs are to assess risk, they will thoroughly review applicants to ensure they are operating responsible, law-abiding businesses. Underwriters accept or declines applications based on their risk assessments. Merchants can prove they are operating legally by giving underwriters valid disclosures and restrictions that help support their claims.
When underwriters review an application for a bail bonds merchant account, they will look to ensure that merchants are following all applicable laws. They also look at a merchant’s credit scores, credit card processing history, bank statements, and its website. Underwriters want a clear picture of the merchant. Negative bank account balances, unpaid bills and late payments, and a history of excessive chargebacks can negatively impact a merchant. Underwriters also will check the business’ website to make sure that is has clear, prominently-displayed privacy and refund policies, as well as a secure (SSL).
Preparation likely will result in approval. Before an application goes before an underwriter, a merchant should have no outstanding debts, some money in the bank, and the person applying for the account should have an exemplary credit history. Underwriters want to see that bail bonds merchants are running trusted, legitimate businesses. Taking these steps make a merchant likely to get approved for a bail bonds merchant account without any limits, such as higher processing volume caps or lowering rolling reserves.
Businesses can defend themselves against chargebacks
When most chargebacks are resolved, merchants are found liable. This is why bail bonds merchants need to have solid chargeback/return fee policies that are clear and published on the business’ website and other documents, like contracts and receipts.
Whether won or lost, merchants get hit with fees for chargebacks. Businesses need to consider this a cost of running a business and accepting electronic payments.
If a transaction is made in person, save the signed receipt, If the services are paid for online, a merchant should use the Address Verification Service (AVS), a system used to match the billing address provided by the customer and the one the customer’s card issuing bank has on file, and Card Verification Value (CVV), the three or four-digit codes found on all credit cards, to ensure a stolen credit card isn’t being used.
Also, merchants should be collecting and storing copies of identification used, emails, and signed contracts or receipts. Service-oriented businesses, such as bail bonds businesses, should also keep records of the IP address of the purchaser, as well as the date and time of the transaction, the device ID number, name, and date and time of the transaction, and the name and email dress of the purchaser.
- A few other things that can be done to cut down on fraud:
- Use an EMV chip-enabled terminal
- Use a processor with sufficient security and payment descriptors, so merchants are easily recognizable on credit card statements
- Require customers to sign chargeback/electronic payments policies
- Offer good customer service, such as a 24-hour online or phone customer support line
- Train employees to watch out for signs of fraud
Nab chargebacks in their tracks
Businesses that want to continue operating and don’t want to jeopardize their bail bonds merchant accounts need to stay ahead of chargebacks. Keep chargebacks ratios down is important because processors can shut down merchant accounts that are not kept below 2%.
Chargebacks ratios can be slashed by 25% with by using a chargeback mitigation program, like the one offered by EMB. This means the program can prevent three out of every 12 potential chargebacks, which could mean the difference between a 2% and 3% ratio.
EMB’s state-of-the-art system for high-risk merchants, such as bail bonds businesses, helps cut down on chargebacks by alerting them of transaction disputes. EMB partnered with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system to create this system. By working with card issuers and banks, CDRN allows businesses to resolve credit card transaction disputes by dealing with the issues directly, allowing merchants to mitigate chargebacks in the most efficient way.
Bail bonds merchants aren’t locked into lower credit processing volumes forever
Due to the risk associated with bail bond businesses, many are given a monthly credit card processing volume cap. This means merchants are only permitted to handle a specific dollar amount in credit card transactions per month. Once that cap is reached, the merchant cannot take any more transactions made with credit cards. Unless a merchant only accepts cash for the rest of that month, the business can no longer operate.
The cap can be lifted in as few as three months if merchants can prove that they pay their bills, have low chargeback ratios, and some money saved.
Use these bail bonds business categories
Federal statistical agencies classify establishments uses a list of six-digit numerical codes known as the Northern American Classification System (NAICS). The data is used to collect, analyze, and publish statistical information about similar types of businesses. Also, it is used to determine the way they impact the economy in the U.S.
Bail bonds merchants often use the following NAICS codes:
- 812990: All Other Personal Services
- 524126: Direct Property and Casualty Insurance Carriers
- 541199: All Other Legal Services
Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.
The four-digit numerical Standard Industrial Classification (SIC) codes used to identify the main purposes of businesses are assigned by the United States and other countries, such as the United Kingdom.
These are the SIC codes bail bonds businesses most frequently use:
- 7389: Business Services, Not Elsewhere Classified
- 8121: Personal Care Services
- 6351: Surety Insurance
Visit the United States Department of Labor to view a complete SIC list.
Merchant Accounts For Bail Bonds
It’s difficult to create an accurate forecast in bail bonds because, while people are always going to jail, they’re not always posting bail, contacting your business, or promptly producing payment. There is also an increased risk of chargebacks in the bail bond industry. People that pay to post bail with their credit card, may call back their card company and dispute the transaction after your client has already posted bail and been released from jail.
Businesses specializing in bail bonds can sign up for a merchant account with eMerchantBroker. Get your business out of the traditional bank merchant account.
Take a Few Minutes and Start the Online Application Today
- No Application Fees
- Competitive High Risk Payment Processor Rates
- No VISA/MasterCard Required
- Multiple Secure Payment Gateway Options