Quadrapay Offers Debt Collection Merchant Account Solutions For Qualifying Companies. Powered By Top PSPs/Acquiring Banks.
The Debt collection industry is massive. We say this because credit card usage is increasing every day. Credit card brands are promoting products more aggressively than they used to do previously. Various card-issuing banks are offering different cards designed for all types of customers. Unfortunately, many customers fail to make repayments on time. Eventually, some of these accounts turn into bad debts. Debt collection agencies come as a savior to these lenders. One should not forget that various agencies use different types of tactics to collect money from debtors. The united states government has clearly defined set policies and principles that debt collection agencies must follow. Fair debt collection practices act, popularly known as FDCPA, illustrates clear guidelines that all collection agencies must follow. A section of this industry violates FDCPA, which is the key reason most banks say no to this industry. It does not mean that there are not genuine players in the industry. Companies with good financial standing and reputation that comply with FDCPA and have licenses to operate may qualify for a debt collection merchant account. Our processing partners in the United States of America are comfortable evaluating debt collection credit card processing applications on a case by case basis.
Merchants must keep in mind that the covid-19 impact on this industry is vast. As per IBISWORLD, the industry may see a heavy declined in debt collection. This also means that debt collection agencies may be bombarded with many files since the non-productive assets(NPA) have increased.
Type Of Sub-Sectors That May Require Debt Collection Merchant Processing
Let’s look at a couple of sub-sectors that may get approved for a debt collection merchant account. This list is not exhaustive, and every application is looked at on a case-by-case basis. Our US acquiring partners are free to say yes or no to any application.
- Debt Collection For Lending/Loan Agencies. Financial institutions that offer various types of loans also sometimes struggle to retrieve the principal and interest amount on the said loans. Initially, these financial institutions try to recover the funds directly; however, they take professional debt collection agencies’ assistance if they are not successful.
- Student Loan Debt Collection. Education is a significant sector in the United States. Unfortunately, many students fail to pay the loan installments after completing the course.
- Medical Debt Collection. Healthcare companies that offer related services may also sometimes fail to recover charges. Professional agencies may help these health care service providers and medical companies.
- Automotive debt collection. With consumerism at high, customers prefer to buy cars of various brands. These cars are bought mainly by utilizing a credit line either provided by a bank or a private licensed lender. if the equal monthly installment of the vehicle is not being given at the right time, then debt collection agencies may offer assistance to these Automotive Finance Companies
Additional Sub Sectors That May Be Supported With Credit Card Processing For Debt Collection.
- Debt Collection Agencies Operating In Manufacturing Industry
- Debt Collection Agencies Operating In Used Automotive Industry
- Debt Collection Agencies Operating In Energy And Utility Services Industry
- Debt Collection Agencies Offering Services To Equipment Leasing Companies
- Global Debt Recovery Companies
- Recruitment Debt Recovery Agencies
- B2B Debt Recovery Agencies
- Phone Bill Debt Collection Agencies
Whatever be the sector, when it comes to recovering payments, professional assistance may be needed. However, for these professional agencies’ optimum performance, the correct Credit Card processing account is critical. Quadrapay, through its acquiring partners, provides robust debt collection merchant accounts.
Debt Collection Merchant Processing. It Is High Risk From Banking Standpoint.
Debt collection businesses fall under a high-risk industry. If we have to analyze it thoroughly, the high chargeback is the main reason for debt collection agencies to be a high-risk industry. The purpose of the establishment of a debt collection agency is to collect payments from the customers. These are the customers who aren’t willing to pay the dues to their creditors. The prospects of the collection industry mainly include people with bad credit. When the collection agencies force these debtors to pay the dues, their first resort is always filing a chargeback. Many amateur debt collectors have expanded in the market because of the industry expansion. This is another result of globalization. These companies work without complete knowledge of the collection and recovery process.
Moreover, they work in an unethical manner. This also adds to the negative reputation of this industry. The vicious cycle of ‘lack of reliable sources’ and ‘appropriate selection of processors and gateways’ is the main problem. In other words, we can say, is the main hindrances in the development of new debt collection agencies. Lastly, what adds more negativity in this industry is the trend of following threat tactics. Some collection agencies even scare the debtors to pay their dues.
Quadrapay Brings To You Various Debt Collection Credit Card Processors.
Quadrapay.com has the best-in-class and reliable services for such high-risk businesses. We have resolved to help the debt collection industry reliably. Instead of coming up with boastful promises, we prove ourselves by our work. As we have relationships with various acquiring partners, we know which one is focused on the debt recovery industry. Many of these acquiring companies offer credit cards, debit cards, and ACH processing for debt collection agencies.
Stay Away From Shady Processing Solutions That May Put Merchants In Trouble.
A merchant must be very careful in deciding on a credit card processing company & payment gateway. Because after getting a merchant account, it is even more important to keep that account in a healthy state for the long run. Honestly, finding merchant accounts for industries like debt collection, credit repair, and network marketing is very hard. Merchants from these industries sometimes become impatient and start processing with offshore aggregators that may not be licensed. This way, merchants unknowingly are trapped in a vicious cycle. Unlicensed aggregators do more damage than help.
- First, they may not offer a massive transaction success ratio as provided by any USA-based acquirer.
- Second, they may charge twice or thrice than what a domestic acquirer will charge.
- Third, they may put an extended hold on settlements, which may be as high as three weeks.
- Fourth they may shift the liability of card brand penalty, if any, to the merchant.
- Fifth, the merchant may get listed on the TMF file and may not access card processing networks for many years.
Collection Agency Merchant Account Approval Cheat Sheet
For a payment processor or bank, your business must look legal, reputable, genuine, and profitable to the underwriters. The risk factor in your specific type of debt collection vertical should be as small as possible.
- The business frame should comply with federal laws such as the Fair Debt Collection Practices Act (FDCPA).
- Your credit history and credit score should also be in a good state. You should also have a perfectly balanced website with complete terms and conditions mentioned.
- It would help if you legally drafted your collection strategy. The chargeback ratio should not be high for the debt collection process. More broadly, the chargeback ratios should be less than 1% of the total.
- It would help if you did not use threat tactics and only follow legally permitted ways to recover the out-dues.
- If you are dealing with an offshore processor, you should negotiate to get your merchant account’s best deal.
- Once you have a merchant account, follow the underwriters’ guidelines to keep your account for the long run.
KYC Documents For Debt Collection Merchant Processing
These are the set of essential documents that any processing company will ask for. The requirements are mostly the same for the card, ACH, and Echeck Processing companies specializing in debt recovery payment acceptance.
- Company Registration Documents
- Id proof of directors
- Utility bill for company address
- Utility bill for directors address
- Bank Letter or Void Check
- License copy if required
- The last 3-6 months’ processing history with chargeback and returns data.
MCC Codes Related To Debt Collection And Debt Recovery Counseling Sectors.
Here is a list of related MCC codes closely related to the debt collection and debt recovery counseling industry. Processing companies maintain a list of restricted and prohibited MCC codes. It will depend on the acquiring bank/PSP/IPSP/MSP viewpoint and card scheme guidelines to choose the most accurate MCC for your business type.
- MCC 6051
- MCC 6012
- MCC 7277
- MCC 8111
Quadrapay has been assisting hard to place merchants from industries like debt collection since 2016. Helping you find the best processor and service provider is our goal. Please fill the contact form on the site, and one of our account managers will contact you.