Payday Loans are Huge, But Taking Payments Can Be an Issue for Merchants

Jan 25, 2016

Payday loans are usually the last resort for consumers, and it takes a dedicated merchant to successfully operate a payday loan company. While consumers may keep you busy, many payday loan merchants have a tough time accepting plastic card payments. The government, banks, and processing industry turn up their noses at this lucrative industry, and because of this it is hard to find a payment processor.

There is no doubt that this is a risky industry. Many times consumers default on their loans, and too many defaulted loans look back on the merchant. With more and more Americans turning away from banks and traditional loans, payday loan percentages are expected to grow. With this growth brings an even higher chance of defaulted loans. This is something that cannot be helped many times, and it can unfairly cast a bad light on the merchant. To merchants, this may seem unavoidable, but there are ways that you can make sure that your payday loan customers are more likely to pay back their loans.

First off, do not loan more than the customer can afford. It is common practice to do so in many companies, and this hurts the customer and merchant in the end. Also, make sure that you practice good ethics when it comes to interest rates. Interest rates commonly top 300% of the original loan amount. By attempting to keep this rate low, you can better ensure that the loan will be paid back.

You also need to make sure that your payday loan merchant account is housed by a processor who understands the industry. While some claim to be for all “high risk” companies, they do not all understand the intricate workings and issues within the payday loan industry. While there are many things that merchants looks for when obtaining a merchant account, high risk merchant accounts must look for one that specializes in their specific industry. While a low processing rates are high on the “most wanted” list, sometimes this must be put on the backburner in order to find a knowledgeable processor.

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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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