5 Tips to Reduce Collection Costs with Card Processing

Collection agencies are constantly looking for ways to reduce their collections costs, and card processing is one of the best ways to do so. If you’re a collections agency or work in collections, then this blog post is for you! This post will discuss five tips that can help decrease your collections costs by using debit cards and credit cards. These tips include:

  • Understanding how to process payments with different types of cards
  • Using an online payment processor
  • Preventing fraudulent transactions
  • Processing recurring payments
  • Setting up partial payments

Understanding how to process payments with different types of cards

– Debit Cards: When collecting from a debit card, collections agencies must use the Authorization Code method. This authorizes the transaction before processing, so collections could still get paid for their service if any issues arise. If collections agents can’t accept debit, you could be missing opportunities to lower your customer’s monthly payment, which typically decreases the likelihood of on-time payments, hindering your revenue cycle.

– Credit Cards: When collections agencies can accept both credit and debit cards, they can use the Authorization Code method on collections for card payments. This protects collections from payment processing errors or fraud that could occur in a merchant account system.

Using an online payment processor

Payment portals can help collections remove the need for a merchant account, and collections agencies can take advantage of this by using an online portal, like BillingTree’s Payrazr solution.

The biggest benefit to using an online portal is the cost. The rates are usually much lower than what you would pay with credit card processing for collections on your own or through an outside company. Not only that, but the convenience of using an online portal typically relieves a lot of the burden from your staff and increases the likelihood of on-time payments.

Preventing fraudulent transactions

If collections agencies are not using an online portal, they need to monitor all transactions for fraud, which isn’t ideal. For example, collections could create a rule that only lets certain credit cards through the system or denies orders exceeding $500. However, parameters are easily set with an online portal, and added security with the right vendor ensures that you keep your customer’s information safe from hackers.

Processing recurring payments

Recurring payments, like collections from past due accounts or monthly child support collections, can be processed through an online portal to set up auto-payments on agreed terms and dates for the customer. This eliminates collections staff manually processing these transactions by phone or email, which is time-consuming and costly to your agency.

Setting up partial payments

Partial payment is another way collection agencies can reduce the cost of collections processing.

Partial payments, which are typically in monthly increments to pay off a debt over time, help customers budget and get back on their feet faster with fewer fees associated with collections. This is an attractive option for many collections agencies as it reduces the number of past-due accounts that would otherwise be abandoned by someone who simply can’t make the payment.


By working with a payment processor to accept card payments and allow your customers access through an online portal, you can significantly reduce the cost of collections processing.

Giving people more options to pay has always proven to increase the number of on-time payments. Collection agencies can reduce the costs associated with hunting down card info or by working out an arrangement with customers to pay in installments over time rather than all at once.

Learn what BillingTree’s Payrazr solution can do for you today!