However, while some people have no problems keeping up with repayments and paying off their debts, many others encounter issues along the way. Changes in personal circumstances, like a sudden decrease in salary, increase in personal costs, or job loss, can completely change an individual’s financial situation and make it very difficult for them to pay off the debt they owe.
This is where debt collection companies come into play. The main role of debt collection companies, as their name implies, is to collect payments from individuals that they owe. The services and actions these companies undertake can vary from one company to the next, but their main aim is to collect debt and get loans paid off as quickly and efficiently as possible.
A lot of people across the United States have debt. Indeed, statistics show that the average person has in excess of $90,000 of debt, most commonly caused by the likes of home loans, student loans, and credit cards. The debt collection industry exists to collect the debts that people owe but have not been paying back on a regular basis.
These companies can use various methods and means to collect debts. At the outset, they may simply contact borrowers to remind them of their repayment responsibilities, as there are some situations in which people are unaware or have forgotten about certain debts they owe. But, if the debts continue to remain unpaid, these companies can take more drastic actions.
Some debt collection companies may offer repossession services, for example, which involve repossessing property, like cars, from people in debt to cover the costs of the payments they need to make. The companies may also recover collateral, file credit reports, and potentially take legal action against individuals who won’t pay.
In order to run a debt collection business in today’s world, you’ll need to have a debt collection merchant account. But what exactly is a debt collection merchant account and how does it work? Well, it helps to have a basic understanding of merchant accounts in general before looking at the specifics of debt collection merchant accounts.
In simple terms, merchant accounts a special form of business accounts that allow businesses to process and receive electronic card payments from their clients and customers. In other words, a debt collection merchant account is what makes it possible for a debt collection company to get paid online or over the phone by people who owe money or businesses paying for the company’s services.
If you want to be able to receive credit and debit card payments from people on the internet or over the phone, you have t have a debt collection merchant account in place. These accounts are crucial in the debt collection industry nowadays, as the vast majority of payments and repayments are made online, electronically.
It’s clear to see that you need a debt collection merchant account if you want to run a debt collection business. However, if you simply visit your local bank and request debt collection merchant accounts and services, you may find that they refuse to work with you. Indeed, a lot of banks and financial institutions don’t want to work with these kinds of companies, as they deem them to be too risky.
So why is the debt collection industry classed as “high risk” and associated with high risk credit card processing? Well, one issue is the fact that this industry, by its very nature, involves a lot of people who are not in the best financial situations and may be considered to be unreliable customers; debt collection companies work with people who can struggle to make payments, and this can lead to a lot of hassle for any banks or merchant service providers who work with these sorts of companies.
There’s also the fact that the debt collection industry involves a high rate of chargebacks. Chargebacks are initiated by cardholders when they want to dispute payments or get refunded for a payment they have made with their card. Debt collection companies often have to deal with chargebacks if customers forget about payment plans they signed up for or try to commit “friendly fraud” by getting refunded for payments they know to be legitimate.
The high risk payment processing and risks of chargebacks involved in the debt collection industry make it difficult for companies in this sector to get the debt collection merchant accounts and services they need. So what can you do when all the banks around you are refusing to work with you and it seems impossible to find the right debt collection merchant account?
Well, Shark Processing can help. At Shark Processing, we’re experts in high risk credit card processing and high risk merchant accounts, and we work closely with a network of trusted, reputable banks and merchant service providers who are willing to offer the services you need. In short, we can help you get a debt collection merchant account with the best rates and services, without delay.
Get in touch with the Shark Processing team today to find out more about what we can do for you and how we can help you get the perfect debt collection merchant account to suit your business.