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MLM Businesses: Why Is Your Company Considered High-Risk?

MLM businesses can struggle to find a good high-risk payment processor. Learn more about how Zen Payments can be the perfect solution today!
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Kolby Nielson
October 24, 2022


Approximately one out of thirteen adults the age of 18 or older have taken part in at least one MLM business (or multi-level marketing business). Sometimes you may hear the terms “network marketing” or “direct sales” instead of MLM business.

Further, at a minimum, half of MLM representatives in their first year of work will drop out. In five years, 90% of representatives will drop out.

MLM businesses are a challenging work environment. They do not have the best perception in terms of their reputation, because of their model and that it is difficult to achieve success. You need thick skin to work in this industry.

Further, an MLM merchant account is often labeled as high-risk for payments . Why is it considered “high-risk” and what can you do to fix it?

To discover the best solutions, keep reading. All will reveal itself shortly.

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Get in touch: (877)-511-3402

Get an MLM Merchant Account

MLM merchant processing is risky if you do not have the right payment processing solution. Financial institutions view MLM businesses as more challenging clients for a few reasons.

One reason is that their legal procedures are blurry. The second is that their growth is quite unpredictable. Last, they could incur a high rate of chargebacks .

Here is a deeper dive into these three variables.

Legal Procedures Are Blurry

Unfortunately, it can be difficult for a financial institution to distinguish between a business that is legitimate and one that is an “illegal” pyramid scheme. The illegal pyramid schemes give the entire industry a poor reputation. So, many businesses, like financial institutions, will choose to avoid working with a company that sells in this model.

This means that as an MLM merchant, you must seek a partner that specializes in MLM merchant processing, as they often will have a relationship with a financial institution that will give you the support you deserve.

Before they approve your MLM merchant account, they will know what they need to look for and what to request from you to ensure you have success together.

Uncertain Growth

To make money, MLM businesses rely on their distributors’ sales efforts, which is why it is difficult to predict their finances for the future. It could seem nearly impossible.

This is another reason that a financial institution or credit card processing company can view MLMs as a substantial risk in terms of a customer. In their eyes, how could you manage a company efficiently when you are unsure what your revenue will be next month?

Further, most people who work for MLM businesses are independent contractors. This is not a “legitimate” full-time or part-time employee. Independent contractors have an incentive to work for the company if they wish, but they are not under any specific obligation.

High Rate of Chargebacks

Again, MLM businesses follow a different kind of model. This model is prone to a high number of chargebacks .

What is a chargeback? This happens when a customer does not come to you for a refund. Instead, they choose to circumvent the process, avoiding settling the matter with the MLM merchant and going straight to their bank for a refund .

When chargebacks occur, the MLM merchant does not have an opportunity to make the customer whole or offer a refund. Rather, they are in a position where they must accept consequences from the customer’s bank, as the institution imposes it on their MLM merchant account.

If you think about it, that makes everything up for grabs. Anything your sales team will sell could encounter a chargeback. Some cases can be fraud, and other cases can be an error internally.

No matter the reason that it happens, it puts your company in jeopardy. However, there are ways you can prevent chargebacks.

Preventing Chargebacks

If you are a new MLM merchant, each chargeback is important. You do not want a high chargeback ratio, because you may incur an excessive number of financial penalties.

Also, too many chargebacks could mean the processing vendor is justified to end your MLM merchant account. When you have an account termination, it makes it more challenging in the future to open a new account.

How can you run your MLM business if you do not have a merchant account? You could still run it, you just cannot accept credit card payments, which is a nuisance for potential customers.

You could miss a ton of profits. Everyone who does not want to pay by check or cash, that is.

MLM Businesses Need the Right Processing Provider

It is not all doom and gloom. You must find the right payment processor to help you on the road to success. There are payment processors that can offer you the benefits you need to grow your business.

You want a payment processor that offers the best terms, lowest rates, and fastest approvals . When vetting a provider of MLM merchant processing, look for the following services:

With these critical benefits, you will have the partner you need to help you build your MLM business from the ground up.

Payment Gateway for MLM Merchants

If you are just starting out, there is a lot to navigate. With an MLM merchant account from Zen Payments, this will be one less burden for you to bear.

MLM businesses can focus on growing their business, not worrying about their high-risk payment gateway. That’s what we specialize in .

Do you still have questions? We have answers!

Get Started With
Zen Payments


Our merchant service specialists are the best in the business and will work with you from start to finish to get your account approved!

Ready to Start Proccesing?
Fill out this form and a merchant services representative will be in touch!

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Kolby Nielson is a dedicated sales representative at Zen Payments, specializing in approving merchants and assisting businesses in their payment processing needs. His expertise and commitment have made him a trusted partner for countless businesses, ensuring smooth and efficient payment solutions.


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