A credit repair merchant account plays a crucial role in your credit repair business.
According to IBIS World, the credit repair industry averages $3 billion per year. The goal of credit repair services is to breathe new life into otherwise blemished and damaged credit. Some of the typical services offered by these companies include eliminating detrimental “dings’ on credit reports such as collections, charge offs, and late payments. They also assist in setting up plans for repayment with creditors as well as creating debt consolidation plans.
At first glance, there appears to be a great opportunity in starting a credit repair services business, however, the road to get there may prove difficult.
Credit Repair Businesses Are Categorized As High Risk
Most merchant service providers will be hesitant to provide a merchant account for a credit repair business because they are considered high risk.
Here are some of the more common reasons:
- Big-Ticket Services:
The typical business model used by credit repair businesses is to sell their high- priced services on a monthly, recurring basis. This increases the risk of chargebacks to the credit processor. Clients who approach credit repair business are already in dire straits financially and might be trying to recoup their losses.
- Card-Not-Present Transactions:
Many credit repair businesses have merged into the online space and now accept credit card payment via a payment gateway or a “virtual terminal”. What this means is that the customer is not present when the credit card is used. There is no way to authenticate the user of the credit card and this further increases the risk for chargebacks and fraud.
- Consumer Protection:
There are stringent and specific consumer protection regulations that must be followed by all in the credit repair industry. Underwriters would need to put extra effort and care in their underwriting in order to verify compliance.
These are the biggest reasons that traditional merchant account providers will not provide a credit repair services merchant account.
Where To Get Processing
High risk merchant account providers are your answer to this card processing conundrum. They specialize in high risk industries, especially credit repair services. Some of their most common features and benefits include having fair and competitive rates, no application fees, chargeback mitigation resources, and their own secure payment gateway, just to name a few.
If you are just getting started, it is always a good idea to do your due diligence and research high risk merchant providers thoroughly to make sure it will be a beneficial relationship.
How To Apply For A Credit Repair Services Merchant Account
Before you embark on your search for the best high risk merchant account provider, make sure you have your financial house in order. From an underwriter’s perspective, you need to ensure that you are operating legally, complying with all the consumer protection rules and regulations.
Prepare for underwriters to scrutinize your own credit scores, banks statements, your website, as well as your card processing history. On your website, you need to make sure that you have clear and concise refund and privacy policies prominently displayed.
Your chances for an account approval are dramatically increased when you have demonstrated that you have paid any debts and bills as well as having a “positive savings account balance”.
Doing all of the aforementioned will demonstrate to the underwriter that you are not posing any risk to the merchant account provider. This will also help in avoiding “processing value caps” and much higher rolling reserves.
On The Home Stretch
Every high risk merchant provider also requires specific documentation to be submitted with a completed online application. Make sure that all fees, features, and benefits are thoroughly discussed and provided in writing. Your best bet might be to hire the services of a lawyer to review the contract with you. After that, you simply wait for approval and begin accepting credit card payments.