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High Risk Merchant Accounts For Debt Collection Companies

Securing a merchant account for debt collection companies is difficult, given the high-risk status of businesses in the industry. Most merchant banks will refuse to work with you directly, making it difficult – but not impossible – to get the payment services you need. In this article, we explain how to secure a debt collector merchant account in the UK and look at the best practices for increasing your chances of being accepted by one. debt collection agency merchant account

Why Are Debt Collector Agencies Considered High-Risk?

There are four main reasons debt collector agencies are considered high-risk by merchant account providers:
  • Chargebacks: Debt collectors typically incur a high level of chargebacks with individuals calling their banks to reverse a payment.
  • Missed payments: People in debt also often miss payment deadlines.
  • Procedures: The debt collection industry has a bad reputation for harassing individuals and using unlawful procedures.
  • Losses: As a result of all of the above, many debt collector agencies face regular losses.
The aforementioned reasons are red flags to merchant account providers, making it difficult for the following types of businesses to acquire payment services:
  • Bailiffs (enforcement agents)
  • Debt collection agencies
  • Debt buyers
  • Payday loan debt collectors
  • Student loan debt collection
  • Commercial debt collection agencies
  • Collateral recovery and repossession services
Over time, you can mitigate this high-risk status by managing chargebacks, taking care of business finances and having strict procedures in place to build a positive reputation for your company.

How to Get a Debt Collector Merchant Account For Your Business?

Getting your first merchant account as a debt collector agency is difficult, as very few merchant banks will take the risk of working with you directly. Your best bet is to secure the services of a payment service provider that specializes in your industry and has a track record with similar high-risk ventures. These providers have existing relationships with banks, making it easier for you to secure a high-risk merchant account. The merchant account application process varies from one service provider to the next but the vetting process takes longer for high-risk accounts and requires a lot of paperwork. You should expect the following information to be requested when you apply for a high-risk merchant account: Business details: Business name, registered address, contact details, company tax number (UTR), etc.
  • Bank documents: Letters showing business details, the most recent account and balance statement, as well as statements for the previous three months.
  • Financial documents: Business tax returns and/or financial statements with balance sheets.
If your company has already processed card payments, you may also be asked to provide a profit and loss statement, card processing statements for the previous 3-6 months and your chargeback ratio for the same period. Securing a merchant account for debt collectors can be challenging but, if you build a good reputation for your business (and have the numbers to prove it), more options will open up to you in the future.

How to Increase Your Chances of Getting a Merchant Account For Debt Collectors

To increase your chances of getting a high-risk merchant account, take the following steps before and during the application process:
  • Apply to a payment service provider that specialises in working with debt collectors or high-risk businesses (or use us to find one).
  • If you’re already accepting card payments, try to reduce your chargeback ratio as this will likely affect if you are approved and the processing rates you are offered.
  • Get all of the requested information and documents together before submitting an application.
  • Ensure all information provided is 100% accurate before submitting.
  • Respond quickly to any requests from your payment service provider during the application process.
You don’t win any favours by holding up the application process further by failing to provide information or official documentation. Even if you think your financial situation isn’t as strong as it could be, your best chance at getting accepted is to be upfront with your service provider and give them access to all of the information they need. We can help you find the right provider for your needs and negotiate the best deal for you – simply fill out the form on this page to get your custom quote.

The Most Common Payment Methods For Collecting Debts

As a debt collector, you want the flexibility to accept payments at any opportunity where you can establish contact with a debtor. Here are some of the most common payment methods bailiffs and debt collectors require:
  • At the door: Mobile card readers or virtual terminal apps facilitate accepting in-person payments at the debtor’s address.
  • Over the phone: This payment method is made possible by virtual terminals for taking card-not-present payments over the phone.
  • Interactive voice response (IVR): A machine calling system for automatically collecting card payments from people over the phone.
  • Online payments: This is ensured via a payment gateway for people to complete payments on your website.
  • Recurring payments: This payment method provides the ability to accept payments in instalments.
You can learn about the fees associated with these payment methods/services in our guide to card processing fees.

Using IVR Payments Facilities For Debt Collection Company

Interactive voice response (IVR) payment systems are increasingly used by debt collectors as they automate contact and payments with debtors. Before this technology was available, agencies relied on human teams to manually contact individuals and attempt to secure payments. This meant every unanswered call and failed attempt was a drain on valuable resources and debt collectors were limited to making a finite number of call attempts, depending on the size of their team. With IVR, these calls and payment collecting attempts are all automated. This means there’s no drain on resources or limitation on the number of individuals you can call. You either get the payment or you don’t and the machine tries again at the next designated time. Aside from cutting expenses by not paying for an army of phone staff, you can take on more clients and build your agency without resources holding back growth. IVR also enables you to:
  • Take payments from clients 24/7, 365 days per year
  • Increase sensitive data security by not taking card details directly by your staff
  • Allow clients to pay from anywhere, with no need for an internet connection
Our experts work with IVR partners to provide this payment method to debt collector firms. We can help you accept and process debt payments using IVR or connect you with the best high-risk merchant account providers – all you have to do is simply fill out the form here.
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