Debt collection is an essential industry, stepping in when consumers default on loans and original creditors lack the resources for debt recovery. These agencies act as vital safeguards for businesses, absorbing the burden of overdue debts. However, securing a merchant account to process payments remains a significant hurdle for them.
Why Debt Collection Merchant Accounts are Challenging to Obtain
The nature of debt collection – recovering funds from defaulted or past-due accounts – categorizes it as a high-risk business in the credit card and payments industry. This perception stems from several factors, including the reliance on debtors’ payments, the industry’s regulatory landscape, and its history of disputed practices.
Governmental regulations like those from the FDCPA and CFPB, along with card brand rules, add layers of complexity. For example, card brands like MasterCard and Visa have specific regulations about using their cards to pay off certain types of debts, often leading to ambiguity and challenges for debt collection agencies.
Risks and Regulations in Debt Collection Payment Processing
The high-risk status of debt collection agencies is compounded by a high incidence of chargebacks and the potential for legal issues. This risk, alongside stringent regulations from both law and card brands, makes banks hesitant to offer merchant services to these agencies. As a result, many banks classify debt collection agencies as prohibited merchant types.
Finding a Path to Reliable Merchant Services
Despite these challenges, acquiring merchant services isn’t impossible for debt collection agencies. It requires partnering with processors that are prepared to handle and specialize in high-risk accounts.
Expanding Payment Options for Debt Collection
Modern debt collection agencies now have more payment options, including recurring billing, to mark debts as paid in full. The key is to offer payment methods that are convenient for customers to increase the likelihood of successful collection.
Specializing in high-risk payment processing, we provide customized solutions for debt collection agencies, enabling them to accept various forms of payments such as debit cards, ACH, eChecks, and even Bitcoin. These methods offer flexibility for debtors and reduce the risk of chargebacks for agencies.
Advantages of ACH and eCheck Payments
ACH and eCheck payments stand out for their reliability and affordability. Unlike card payments, these methods are less prone to expiration or loss, and they do not incur the typical interchange fees associated with credit card processing. Additionally, the impossibility of chargebacks with these methods makes them particularly attractive for debt collection.
Embracing Bitcoin in Debt Collection
Bitcoin payments offer instant transactions with no chargeback risks. Agencies can choose to convert Bitcoin payments into their preferred currency immediately or maintain a portion in Bitcoin, reducing transaction costs compared to traditional payment processing.
Partnering with an Experienced High-Risk Merchant Service Provider
Choosing a merchant service provider with high-risk expertise is crucial for debt collection agencies. Our experienced team ensures that your business is placed with the right payment solution, compliant with regulations like the Fair Debt Collection Practices Act.
At Bankcard International Group, we prioritize the success of our clients, especially those in high-risk industries. Our strong banking relationships and transparent, dependable services make us a leading provider in high-risk merchant services.
Experience reliable and specialized merchant services with Bankcard International Group.
