Pawnshop Merchant Account – The Need Of Pawn Businesses
In today’s time, there are over 11000-13000 pawns shops in the USA, and the revenue and the industry have over $14 billion in revenue as in Statista. And most of the livelihood depends upon the pawnshop to meet their financial need. The pawnshop seems to be an attractive option for those who are looking for a quick loan in exchange for their valuable item, that pawn shop takes as collateral, and even pawn shops didn’t check for credit history before lending. The pawn shops are growing like a fire in the USA and also making its way to online pawning. Due to the increase in demand for pawnshops, the business owner is looking for a robust Pawnshop Merchant Account to better lead in the competitive market.
We at Quadrapay helps pawnshop merchant owners with a high-risk merchant account that best suits to their business requirement. We have processors partners from the USA, Canada, EU and other global countries who help you in the smooth onboarding process.
Stay connected with us to know why your business requires a high-risk pawnshop merchant account and what merchant services will best suit you.
How Much Do You Know About The Pawnshop?
A pawnshop is also known as a pawnbroker is a business either a motor-bricks or online who loan you money on your valuable item, also known as collateral. The collateral can be anything like jewellery, gold, electronics items such as television, computer and even on your expensive watches and camera. The pawnshop is not only about pawns but to sell. People come to the pawnshop to pawn their item as collateral or take out money by selling their valuables to a pawnbroker.
There are cases when a thief comes to the pawnshop to take out money on his stolen item. In this case, the pawnshop has to sell the merchandise either online or in his brick and mortar store. Selling the merchandise online sometimes led to chargeback disputes, and hence the pawnshop business is flagged as high-risk industries.
Why Is Pawn Industry Flagged As High Risk? Is It Challenging To Get A Merchant Account?
There could be many reasons a business is flagged as a high-risk industry. The reasons are not always true, but unfortunately, the acquiring banks and processors considered the business model as highly risky. The pawnshop owners face challenges when it comes to accepting payments on their brick and mortar. They even face challenges to accept payments through their website because it requires a payment gateway and a merchant account to authorize the transaction and settle the funds onto their business account. Lets first discuss some of the reasons why they labelled as high risk?
- The pawnbroker sells the merchandise online either through his own website or sales channel or through auxiliary channels to other brick and mortar stores. Many times selling online merchandise leads to chargeback disputes
- The pawnbroker deals with very large transactions, and hence their average monthly volume is so large that it is labelled as high risk.
- Pawnshops are subjected to certain rules and regulation, and hence the processor has to pay proper attention in the underwriting process to onboard pawn shop merchants with a credit card processing solution.
- Card Not Present Transaction(CNP) over 15%
- Poor credit history
There are many more factors which may label your business as high risk. The processor evaluates the risk in the underwriting process and based on the risk, the merchant may approve to onboard, or they reject the application. What happens if a pawnshop merchant is rejected and not getting any payment solution just because of flagged High-Risk. Don’t worry! High-risk industries are still getting a high-risk merchant account. Though there are very few processors who deal with pawnshop merchant accounts, Quadrapay is one of them. Our partner processor from the USA, Canada, the European Union, will help you with one of the best merchant services for your business. Stay connected with us to know how we can help you to thrive your business.
Pawn Shop Merchant Services
No matter whether you are labelled as high-risk, or you have faced rejections with other processors, We at Quadrapay are experienced, and we have helped legal pawn merchants from your industry type and know what solution best fits your business requirement. Let’s discuss some of the payment solutions which helps you to accept real-time payments from your customers
- Point-of-Sale: A POS or abbreviated as a point of sale is a physical device which helps your business to receive credit/ debit card payments from your customer on your pawnshop. Pos device not only helps you to accept payments but also it has invoicing features and analytics, which makes your work so easy.
- Mobile payments: A mobile payment solution comes with a swiper which plugs into your android or iPhone and helps to accept in-person payments.
- Virtual Terminal: A virtual terminal is a web or desktop-based payment solution which helps you to accept payments over the phone. You fill the customer’s card details into the virtual terminal form, and payment request goes to the customer. And once the customer confirms the transaction request, the payment gets processed. The solution can also be used in your tab or big screen mobile phones.
- Recurring Merchant Account: This is another best way to accept the payments from your customer on a recurring basis. It helps your business to receive your repayment against collateral timely. You just have to create a recurring series for the customer from whom you want to accept payments on a recurring basis.
- E-commerce Payment Gateway: An eCommerce payment gateway required for your online pawn shop’s website. It helps you to accept credit/debit card payments online. The payment gateway helps to authorize the transaction and helps in a smooth settlement in the merchant bank account
- Chargeback Alerts: this is the additional merchant services which help the pawnshop business owner to reduce the chargeback ration and increase the sales. We recommend merchants to avail chargeback alerts and notification service because it makes a positive impact in your ongoing business.
Laws & Regulation On Pawnshop
A pawnshop business is a finance-oriented business, and hence it has certain laws and regulations to protect both the merchant of pawnshop and customer. The pawnshop undergoes both the federal and state laws. Let’s have a shower of light on some points
State Laws:
- The pawnshop must have proper licencing and registration with the state agency. In almost all jurisdictions, a pawn shop license is required, and after proper licencing and registration, a pawnshop may legally begin to operate. And if a pawn shop is operating his service without any legal contract with his customer, it is not considered as legal.
- The pawnshop cant take interest more than a particular threshold value. The interest should be capped in every state or province.
- The pawn shops are also subjected to report all the items they buy or taken as collateral to the police. This helps the police to identify the stolen item or goods as most of the thieves find pawnshop as the best place to make money on their stolen product.
- A pawn shop has to maintain a descriptive record of all the items they had taken by the customers. The record book contains records such as name, model number, metal/non-metal/ price/ rate of interest and more.
Federal Laws:
- Truth in Lending Act (TILA): Under the act, a pawnbroker should be transparent in terms and conditions on your loans such as rate of interest, final price, penalty fees and what if a customer is not able to pay the rental under a specified time.
- Federal Trade Commission (FTC): It is a privacy rule which safeguards the consumer information line name, card details, contact number or any consumer information.
- Revenue Service rules: A pawnbroker has to report the transaction over $9,000, or it might be somewhat less or more depending on other factors.
- Background Check: Pawnshop is supposed to do a background check of the customer to whom they are lending money in exchange of collateral or from whom they are buying an item in return of money.
There are obviously many more rules and regulations by FDACS. We have also attached some of the reference reading for your better understanding.
Apply Today For Your Legal Pawnshop! The Wings To Digital Payment Processing
Let the world have a better experience with your pawnshop. Nowadays, a pawnshop business needs a robust payment solution which helps you as well your customer with a better experience. To get started, fill the pre-approval form onto our site, and we will get back to you. It’s easy and smooth, and you will really enjoy the onboarding. Believe Us!
Get in touch with us at [email protected]
Happy Processing!!!
