Are you having difficulties getting a merchant account for your collection agency? Have you enquired at big banks and found that they either charge too much or outright refuse to work with you? There is a reason for this.
Reputation matters in the business world. A great reputation can allow you to build your business to the levels you would like to achieve while a bad reputation can damage your business before you even open the doors.
Reputation also matters when you attempt to secure a merchant account for your company’s credit card processing. But not your reputation, no matter how perfect it might be. Banks and credit card companies that offer merchant accounts look at the reputation of your industry when they review your application.
Why do banks view collection agencies as a risk?
Why is that? Because collection agencies are considered a “high risk” industry and conventional banks do not like to assume a lot of risk.
One factor in the risk is the number of charge backs that a collection agency experiences. As most agency owners know, there are plenty of people who make a payment with a credit card and then call the bank or credit card company afterward and cancel it. Since this involves a lot of cash flow to and from a business, banks get worried that the collection agency will not have enough money to pay its customers and that repayment will become the bank’s problem.
Another factor is, unfortunately, the actions of some collection agencies tarnish the reputation of the ones who do their work honestly and fairly. Tactics such as calling debtors at all hours of the day and night, calling them at their place of employment and harassing them in person lead to a publicly-shared opinion that collection agencies are deceitful, underhanded and troublesome.
What kinds of merchant account providers accept high-risk businesses?
But while some providers see only “high risk” when they evaluate collection agencies, others see agencies as honest companies run by honest people who provide a needed service. These companies are willing to work with agencies in order to help them achieve their goals. This working together produces benefits for both.
This is where BillingTree can help you. BillingTree provides continuous merchant services to our clients to assist them in maintaining compliance and best practices. Merchant account approval is based on a combination of factors assessing overall financial stability, creditworthiness and principled business practices. If you are interested in learning more, contact BillingTree today.