Huge Consumer Debt Payoff Means Big Business for Collection Agencies

Jun 17, 2015

In the first quarter of 2015, it is estimated that US consumers paid off $35 billion in card debt. This number seems astronomical, but it shows that the economy is growing. Credit card default are also declining, with numbers showing $350 million less defaults in the first quarter of 2015, as compared to the first quarter of 2014. While these numbers may look like bad business for collection agency merchants, they mean just the opposite. While payoffs are up and defaults are down, US consumers closed out 2014 with $57 billion in new debt, and this new debt will eventually have to be paid off, by payments either to the companies, or through a collections agency.

Collections agencies are a tough business, but they are necessary in an environment that thrives on credit cards. The US economy does so, and has for years. Collection agencies often get a bad rep from those who take their jobs too far, from threatening voicemails to threatening letters. A reputable collections agency merchant does not behave this way, and there is always room in the US market for fair and balanced collections agencies. However, while it can be a great and lucrative business, there is a downside to the industry. Namely, the “high risk” label that the banking and processing industries have placed on the businesses.

This label can cause a great deal of difficulty when it comes to finding a collections agency merchant account. While they are offered, they are not all created the same, and it can take a lot of time and research to find the right collections agency merchant account from your business. Every processor has its own specialty, and many who claim to work with collections agency merchant accounts do so for the profitability. The industry is tough, and while lucrative, it can bring a lot of issues that other companies do not. Namely fraudulent charges and chargebacks. You need to make sure that you have an experienced and reputable collections agency merchant account, like EMB, to help your business succeed.

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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 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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