What is a collection agency merchant account?

Sep 24, 2013

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.


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.

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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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