Collection agency merchant accounts are essential for companies whose goal is to track down debts. Because of the unique nature of this industry, the rules and regulations around collection agencies are often strict when it comes to payment processing. Moreover, there are federal regulations on how and when to reach out to people who have a debt. As a result, collection agencies are categorized as high risk by banks and payment processors.
Luckily, companies like Zen Payments provide secure and convenient ways to accept payments from debtors. In this article, we’ll delve into the world of collection agency merchant accounts, covering everything from the basics to the application process.
A collection agency merchant account is a specialized type of merchant account that allows collection agencies to accept credit card payments from debtors. As you know, any form of payment as a collection agency is a good one, and being able to accept all credit cards at any time is critical.
Overall, high risk accounts are more lenient when it comes to what they allow. From high chargeback rates, high ticket transactions, and inconsistent history, these accounts are custom made for business with situational payment issues.
Furthermore, in-person transactions (also known as card-present) aren’t practical for many agencies because payments are usually over the phone or online. As such, there is added risk when a merchant cannot see and verify who is making the transaction.
As a collection agency, you know that handling payments from debtors can be a complex and time-consuming process. There is a wide range of payment types you can accept, but some are better than others. Cash and check payments can be inconvenient and risky, and most people will want a more convenient way of paying that involves as little effort as possible.
Having a custom account ensures compliance with payment processing regulations. For the most part, we’re talking about maintaining fraud-free transactions. Collection debt is a transfer of money from one person to another with no real product or service. Because of the nature of this exchange, it’s monitored more strictly by legal entities.
Having a collection agency merchant account comes with a range of benefits that can positively impact your business operations. Here are some key advantages:
Secure and Convenient Payments: With a collection agency merchant account, you can accept payments from debtors using credit cards, providing a secure and convenient way for them to make payments, whether it’s in person or online or over the phone.
Increased Payment Options: Accepting credit card payments expands your payment options beyond cash and checks, allowing debtors to pay using the method that suits them best. This can result in higher payment rates and improved cash flow.
Payment Gateway: A payment gateway for your business is the management tool that allows you to track payments, generate reports, and reconcile transactions. This can help you see who is paying when and generate forecasting to expand on new business models.
Applying for a collection agency merchant account is a relatively straightforward process. Here are some general steps to guide you when you decide to make the move to a custom solution:
Research Payment Processing Companies: Look for payment processing companies that specialize in providing collection agency merchant accounts. Contact them directly to learn about their services, fees, and the many resources you can use along with your account.
Gather Required Documents: Payment processors typically require certain documents for the application process, such as proof of ownership, business registration documents, tax identification number, bank statements, and financial statements. Gather these documents in advance to ensure a smooth application process.
Submit Your Application: Fill out the application form located either online or sent to you by a representative, and submit it along with the required documents they request. Make sure you’re thorough and accurate in providing information to avoid delays in the approval process.
Wait For Underwriting: Once your application is submitted, the payment processing company will review your application and conduct underwriting. Some companies offer instant approval merchant accounts, while others take a little longer.
Approval and Setup: You’re approved! After review and approval, they’ll send you a confirmation email and let you know how to start using your account. You’ll also want to install the payment gateway on your website that will link your bank account to customer transactions online.