Merchant Account for Credit Repair Services

May 27, 2020

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. 

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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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