Steps to Secure Credit Card Processing for Your Collection Agency

Sep 24, 2020

Collecting overdue debts and payments on behalf of your clients is not an easy feat—first, considering that most lenders turn to your after failing in all their efforts to make the borrower repay.

But the job is not the only challenge for entrepreneurs serving in this space. A collections agency must worry about other critical stuff, like securing a merchant account. This account matters because it helps the agency accept borrower payments made via credit cards.

Getting a collections credit card processing account is a challenge because of the tricky arrangement of the debt collection business.

Many regular payment processors will turn down your request because the banks they work with have one or two worries about your collections company.

Why Banks Avoid Collection Agencies                     

Industry reputation is a major obstacle for collection agencies. The public notion that debt collecting companies are ruthless and dishonest in their activities makes your business a no-go-zone for many underwriters.

Dealing with tricky borrowers also exposes merchants to chargebacks or reverse charges. These happen when phony borrowers pay via their credit cards and later call their bank to dispute the payment.

Though a chargeback’s liability falls on the collection agency, banks like to avoid businesses in sectors with a history of high chargeback ratios.

Besides a tainted reputation and reverse charges, debt collectors are highly controlled by federal regulations like the CFPB and FDCPA. Collection agencies must strive to keep up with the still-changing rules and regulations of the industry.

Finally, banks and payment providers like to consider a business’s stability before accepting a merchant account request.  Collection companies are known to suffer high staff turnover triggered mainly by work-related stress and lack of morale.

How to get a Collections Credit Card Processing Account

Collection agencies stand a chance with high risk merchant account providers.

Entrepreneurs must consider payment providers who work with collection agencies. Past experiences with your industry matters because such partners understand your problems and special needs better.

Though requirements vary by provider, many payment services will ask for the following;

  • Business’s EIN Number
  • 3 Months of the latest Bank Statements
  • Voided Business Check
  • An authentic Driver’s License
  • Business License or Company Articles of Organization

For business already processing, a chargeback ratio below 1 percent is almost a must-have.

The application and underwriting process should last a few days. Thanks to digital underwriting and onboarding, your agency could can start enjoy processing approval in a day or two

How to Increase the Chances of Approval

Reputation is priority number one. Be ready to prove that you’re ready to run or run a perfectly legal business. Research and fall in line with all laws and regulations.

Below are other ways to ensure a bank accepts your collection agency merchant account request.

  • Get a valid state license
  • Build a Visa/MasterCard compliant Website
  • Create a Solid business plan
  • Work on your personal credit score

You could also show your past credit card processing background, if applicable.

Final Words

Collection businesses must prepare adequately before applying for a merchant account. Gather all the credentials and fall in line with all regulations to increase the chances of acceptance.

Let us help you get a high risk merchant account today!

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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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