Merchant accounts are designed for businesses to process their credit and debit card transactions. The ease of having one takes away the hard work for the business. They keep track of the transactions from who and how much.
The collection agency merchant account falls into the high-risk pool of merchant accounts. Which should not surprise anyone. They have large amounts of chargebacks and no guarantee month to month that those payments due from people will actually come in. But don’t be dismayed by this if you have chosen to start your own collection agency. Just keep telling yourself, that the airlines and the movie theatres, as well as the travel agencies, sit right with you in the high-risk pool. It’s not impossible to find someone that will take on your account.
Searching
Being a collection agency has a stigma all its own. No one wants to hear from you and no one wants a letter from you. But like any industry, it’s a necessary evil to finish up bills that aren’t quite paid for. The business is lucrative and needed. Some folks don’t have the time or the desire to go hunting for those that don’t want to pay, or those that can’t. So, herein lies the need for the collection agency.
When searching for a merchant account servicer, do the wild thing and go online. Check with your local institutions first to see if they can help with your collection agency merchant account. If that doesn’t pan out, the web is loaded with answers to your questions.
Seek and ye shall find
Many merchant accounts will present themselves to you. Your job will be to find the one that has the least amount of fees and will work with your agency. Do not be afraid to ask a lot of questions and make deals. In other words, negotiate. The more you work with the merchant account servicer, the better things will be for you.
Be prepared
As a collection agency, the merchant servicer will hold back a percentage each month until you have proven you are a good risk. They are held responsible for the money that you can cover if you have more chargebacks than what you can pay. If you go out of business, they are left holding the bag and get to return the money to your customer. So, they keep a percentage for the first three to six months, until you have proven you are a good risk. It’s kept in an escrow account, if you will, until the time period is up. Once that is over, your money is returned to you in full. So, be prepared to not have all your money until then. Come prepared for some shortfall at first.
Collection agency merchant account
It’s not an easy row to hoe. The need is there to help people collect their unpaid receivables, and the industry doesn’t exactly give you a warm welcome. People don’t want to hear from you and getting a merchant account is not the simplest thing to do. So, have a lot of patience, and a good set of morals for what you do. If you can stick it out, you will be among a pretty elite group of business owners. Good luck on your quest.