Collection companies are among the most dangerous businesses in credit card processing. Due to the industry’s unpredictable legal climate and questionable cash sources for debt collectors, most large banks will be hesitant to lend merchant accounts to debt collection organizations.
If a bank does provide debt collection accounts, it will usually demand a long production history and a large cash reserve. Debt collection services, on the other hand, are businesses like any other, and a few merchant service companies are ready to assist even high-risk collection organizations.
We’ve compiled a list of the finest merchant accounts for debt collection agencies to aid you in finding credit card processing that can support your business. The businesses on this list provide e-commerce solutions, offshore bank accounts, marketing tools, as well as other services that can help you run your debt-collecting business.
Best Merchant Accounts for Debt Collection Agencies
To avoid income interruptions, collection agencies need a merchant account supplier who supports over-the-phone and online payments and facilitates prompt consumer payments. Compliance with state and federal standards is required in the collections industry, and payment services should be able to support seamless compliance for debt collection agencies.
PaymentCloud
PaymentCloud‘s POS solutions, card-present as well as card-not-present processing choices, and eCommerce focus make it an excellent alternative for both new and slightly more experienced debt collectors. PaymentCloud advises consumers on selecting a chargeback management solution and a fraud mitigation service.
They even train you on tactics and processes that keep consumers happy and reduce the likelihood of chargebacks. The chargeback and fraud protection advice provided by the organization is a tremendous aid to high-risk debt collectors. It may go a long way towards making your clients more content with your services for customer support and less prone to initiate chargebacks.
Assistance with PCI compliance is a blessing for heavily regulated collection industry organizations. PaymentCloud guides merchants through the processes required to become PCI-compliant in 90 days without incurring a PCI compliance fee.
Pros
- Options for card-not-present and card-present transactions
- Fraud and chargeback prevention
- Assistance with PCI compliance
Cons
- Transparent pricing
- Inadequate website navigation
Host Merchant Services
Host Merchant Services is an excellent payment processor for new debt-collecting businesses. Its POS systems and card readers offer a solution for card-present and card-not-present payment processing, giving various collection agency flexibility. Because of its customized accounts with customizable pricing for large and small-ticket agencies and organizations, Host Merchant Services effectively serves debt collectors with diverse business models.
Organizations with Host Merchant Services have no termination fines or contract fees, and online declarations of processing charges and merchant accounts provide welcome pricing transparency. However, Host Merchant Services’ unique interchange-plus pricing options may be prohibitively expensive for low-ticket and new agencies.
Pros
- Payment processing alternatives that are well-rounded
- Pricing plans that are transparent and have adjustable fees and rates
- Physical solid store and online support
Cons
- Expensive for low-volume retailers
Durango Merchant Services
The capacity of Durango Merchant Services to place accounts for businesses with a history of significant chargebacks is essential to new debt collectors. Durango works with numerous renowned anti-fraud services to prevent future chargebacks, in addition to its help for merchants who might be on the TMF or MATCH List. Fraud prevention should be high on the priority list for every debt collector, regardless of size or type. Durango is well-positioned to manage common fraud cases in the collections industry.
On the downside, Durango’s price plans are not disclosed to the general public on its site, which may be inconvenient. This lack of pricing transparency is characteristic of the sector in general. However, rather than trying to sell you an exorbitant equipment lease, Durango sells terminals, PIN chips, and mobile credit card swipers directly on its website, and its transactions interface is a patented product. Many other high-risk businesses are renowned for charging monthly gateway fees and offering card readers. Still, Durango lets new debt collectors prepare themselves for reasonable success by selling their technology online.
Pros
- Excellent assistance for businesses that have a high rate of chargebacks
- Credit card terminals and payment gateways are available for purchase directly from the manufacturer
- Strong anti-fraud safeguards
Cons
- There are no pricing disclosures public online
Tips for Getting Your Debt Collection Agencies Approved
Website security
If you want to handle as many electronic purchases as possible, your company’s website must be operational and accessible 24 hours a day, seven days a week. This is especially true for debt collectors that employ a payment system and online portal to receive customer payments. Your website should also follow Visa and Mastercard laws for the debt collection sector.
Licensing
While some jurisdictions merely need new collection agencies to register, others may require your company to obtain a collection company license. Check your state’s legal requirements for starting a debt collector and get registered and bonded as soon as feasible if necessary.
Business Insurance
Every jurisdiction has its own set of rules that new companies must follow. Collection agencies are not immune from this rule, and they should obtain commercial insurance and even a surety bond following the regulations of the jurisdiction in which they function. Collection agency operators should also consider the many kinds of professional insurance coverage available to safeguard their company from litigation and negligence claims typical in their sector.
Chargeback ratio
If you are interested in applying for a receivables processing credit card account, you must provide proof of your company’s chargeback percentage. Although associated with a higher, we advise that you have a chargeback percentage of less than 1% in the past. A low chargeback ratio reassures merchant acquirer banks that your company’s income stream will not be disrupted frequently due to an excess of false chargebacks or chargebacks linked to cheques written with insufficient cash.
Conclusion
Business owners starting new debt collectors or expanding existing ones need business account providers that reduce the stresses that arrive with the debt recovery industry rather than exacerbate them. This is because the debt collection sector is already known for its high-stress levels.
Getting your debt collector off the ground is fraught with obstacles. These obstacles come from regulatory requirements, a complex and sometimes negative industry reputation, and the possibility that your company’s revenue will be disrupted at some point.
Because of this, it only makes sense that the leading suppliers of merchant accounts for collection agencies offer processing choices for various sorts of payments as well as a dependable system to combat chargebacks and fraud.
