Quick Approval for Collection Agency Merchant Account
A collection agency merchant account is a specialized payment processing solution that allows debt collectors to recover funds from customers by accepting credit and debit card payments over the internet or by phone. Additional payment modes available with a debt collection merchant account include electronic check processing, bank transfers, split payments and ACH. Debt collection agencies can also utilize subscription payments through the credit card merchant account. These payment solutions are optimized to work efficiently despite the industry’s reputation for high chargebacks and regulatory scrutiny.
Debt Collection Laws That Impact The Availability Of Merchant Services.
Debt collection agencies in the United States of America must follow several laws and regulations to ensure that consumers’ rights are protected. The key laws that must be followed by debt collection agencies include the FDCPA, TCPA, FCRA, and EFTA. These laws help debt collection agencies collect debts legally and ensure that consumers are not harassed or pressurized.
The Fair Debt Collection Practices Act (FDCPA) protects consumers from wrongful debt collection practices, including abusive behavior, deceptive practices, and threat tactics. This law also restricts debt collection agents from using violence or repeatedly calling consumers to annoy them. Additionally, debt collection agencies cannot offer false or misleading information, nor can they impersonate a government official or an attorney. Debt collection agents can only call debtors within approved working hours and are restricted from communicating with consumers at their workplace.
Another important law, the Telephone Consumer Protection Act (TCPA), applies to debt collection and telemarketing companies. The TCPA regulates automated calls and unsolicited text messages. Agencies must obtain prior consent from consumers before making automated calls or sending text messages.
The Fair Credit Reporting Act (FCRA) ensures that credit reporting is accurate and gives consumers the right to reach out to creditors and dispute false credit reporting.
All of these regulations are meant to ensure that the debt collection industry operates properly. However, these laws make it extremely complicated for credit card processing companies to onboard debt collection agencies. Various merchant services companies outright decline applications from debt collection agencies. Fortunately, some acquiring banks and payment processors are willing to onboard debt collection agencies. These companies are generally known as high risk merchant account providers for debt collection agencies. QuadraPay has extensive experience in supporting debt collection agencies with credit card, debit card, echeck, and ACH processing solutions. Contact us today for a free quote and savings analysis.
Types of Debt Collection Agency Merchant Services
With Debt collection merchant services, agencies can access a variety of payment methods, allowing them to easily collect payments from debtors. Let’s look at some of the main types of debt collection merchant services:
Credit Card Processing for debt collection agencies: This solution enables debt collection agencies to accept payments through various types of credit cards. Many debtors find this payment method extremely convenient, and it also provides quick transaction processing. Across the United States, credit card processing is the most popular payment method in the debt collection industry.
Debit Card Processing for collection agencies: It is common for a large percentage of debtors to have a bad credit score, which may result in the unavailability of a credit line. In such cases, debtors may not be able to pay off their debts using credit cards. Instead, they can use debit cards, which directly debit funds from the debtor’s bank account.
Electronic Check (eCheck) and ACH Processing: In situations where debit cards or credit cards are not available, debt collection agencies can use alternative payment methods like eChecks and ACH. These payment methods are generally suitable for larger payments and significantly reduce the risk of chargebacks. ACH payment processing also offers recurring billing facilities, allowing debt collection agencies to schedule regular debits from customers’ bank accounts.
Virtual Terminal for Debt Collection: Some debt collection agencies may need to accept card payments over the phone. For this purpose, they can use a virtual terminal. With this solution, a debt collection agent can collect credit card details from the customer over the phone and input them into the virtual terminal.
Depending on the unique payment processing requirements of the debt collection agency, they can choose either one or all of the above-mentioned merchant services solutions. Feel free to ask questions to QuadraPay if you have any queries about the above-mentioned services.
KYC Documents for Collection Agency Merchant Account
For the approval of a payment processing account for your collection agency business, you will be required to send some documents to the payment processing company for review. These documents must be copies of the original documents. The main documents that are part of the KYC (Know Your Customer) requirements in the payment industry include:
- Business registration documents
- Identity proof of all directors
- Bank account statement
- Utility bill
- Processing history
- Letter of good standing from the bank
- Any industry-specific licenses that you must have
Along with the above-stated documents, merchants are also expected to submit a filled merchant account application form.
Application Process for Debt Collection Merchant Services
With QuadraPay, the process of applying for a debt collection merchant services account is quite user-friendly. It starts with the initial inquiry, where the debt collection agency fills out the basic application form on our high-risk merchant account website. With these details, the collection agency expresses its interest in obtaining a high-risk merchant account for debt collection through us.
The debt collection payment processing experts at QuadraPay conduct an initial pre-qualification by evaluating the merchant’s basic details, such as whether the company has a valid license, operational history, and compliance with industry regulations. Most of the information is available on the merchant website, but if these details are not available, our team will get in touch with you and ask for the same.
Once the application is pre-qualified, our merchant services team will contact you and request your KYC documents and the filled application form. These will be submitted to our partner processing company, which will initiate the underwriting review.
The underwriting team will conduct a comprehensive review of your KYC and the application, considering various factors including the financial stability of the company, chargeback history, and compliance with industry regulations like FDCPA, TCPA, and others.
After a thorough evaluation of your profile by the underwriting team, the processing company will determine whether to approve or decline your agency’s application for credit card processing. We want to assure you that our processing partners have a very high approval ratio, and there is a very high possibility that your account will get a payment solution. Just in case one provider says no, we can take your application to another provider. If your account is approved, you will receive a merchant account agreement outlining the terms and conditions related to your debt collection merchant services account.
Upon account approval and the signing of the agreement from both parties, you will be given the details of the account setup, which include access to the merchant account and integration documents. Merchants will have regular access to support from the credit card processor. If you have any further questions regarding the application process for a debt collection merchant account, feel free to email us at [email protected].
FAQ: Collection Agency Credit Card Processing
What type of businesses require collection agency merchant processing accounts?
Several types of businesses may be approved for a collection agency merchant account. Let us look at some of these:
Debt Collection for Lending/Loan Agencies: Financial institutions that offer various types of loans often struggle to retrieve the principal and interest amounts. Initially, they attempt to recover the funds directly. However, if unsuccessful, they may seek assistance from professional debt collection agencies.
Student Loan Debt Collection: Education is a significant sector in the United States, but many students fail to repay their loans after completing their courses. Debt collection agencies assist in recovering these unpaid student loans.
Medical Debt Collection: Healthcare companies sometimes face challenges in recovering medical service charges. Professional debt collection agencies can help these healthcare service providers and medical companies recover their dues.
Automotive Debt Collection: Consumers often purchase cars using credit lines provided by banks or private lenders. If customers fail to pay their monthly installments on time, debt collection agencies can assist automotive finance companies in recovering the outstanding payments.
Why Debt Collection Merchants Should Choose a Processor Wisely?
Sometimes getting approvals for a debt collection merchant account can be extremely time-consuming and frustrating. Processing companies may reject the application without giving any specific reason. This may motivate merchants to try working with payment processors that are located offshore or may not have a good reputation. However, this may not always be a good decision.
These processing companies may not be able to offer a good transaction success rate. This means a majority of the transactions processed on the gateway might be declined because of cross-border issues. Offshore solutions are generally more expensive than domestic options.
Another problem is the holding of funds and delayed settlements. Sometimes these processors take up to 3 weeks to make the payment settlement.
Because of the wrongdoing of the processor, merchants may be at risk of getting penalties and also being listed on the TMF or MATCH list.
What is the MCC Code for Debt Collection Agencies?
The exact MCC (Merchant Category Code) will be assigned by the payment processor after a full application review. However, these are the commonly used MCCs for debt collection-related services:
- MCC 7322: Collection Agencies, Real Estate Agents
- MCC 6051: Quasi-Cash – Merchant
- MCC 6012: Financial Institutions – Merchandise and Services
- MCC 7277: Debt Repayment – Prepaid or Court-Ordered
