Debt Collection

Find Out Why You’re Having Problems Getting Approval For A Debt Collection Merchant Account?

In business, reputation is vital, and there’s no other way to stay safe. A good reputation can push your business to higher, sometimes even beyond your dreams; and ill repute can destroy your business before you even get started.

For a collection agency, the bank that offers the merchant account will begin by looking at your reputation when reviewing your application.  And the bitter reality is; many providers will turn you down without having a second glance.

Why the banks view your collection agency as a risk

Well, on giving it a second thought, you will find out that banks often foresee trouble with collection agencies. A debt collection agency plays the “good guy” by helping other businesses get compensated by partners or buyers who either unintentionally or illegally fails to pay for certain goods or services. Therefore you will need a credit card to make these collections since people who accumulate debts will use credit cards or automatic payments to settle them so if you can’t process these credit cards; your collection agency is at the risk of failing.

Regrettably, your application for a debt collection merchant account may be turned down due to the actions of other collections agents who tarnish the reputation honest dealers. Ruthless collection tactics like calling debtors all day, all night, and harassing defaulters gives a general impression that that debt collectors are deceitful and troublesome.

Chargebacks will work against your collection agency

Chargebacks- most merchant account providers view debt collectors as susceptible to chargebacks due to experience with other companies, and this negative attitude is enough to have your application rejected. Debt collectors have reported, plenty of people who pledge to make a payment, and then later contact the bank or credit card company to cancel it. Such a process will entail a lot of flow of cash to and from a business, most banks feel that you may lack adequate funds to pay your customers and that becomes a liability to the bank.

This chargeback factor also exposes your agency to the risk of stability. Due to job-related stress, you probably have or will experience high employee turnover, and since debt collection agencies pay employees based on bonuses, most of them will leave if a more stable opportunity shows up.

Now you know why getting approval for a merchant account may be a search for a needle in the haystack for your collection agency and the only way round it is ensuring a desirable reputation for your debt collection business.