Payday loans companies provide a very valuable and essential service for many people, with the industry being worth a lot of money and growing bigger all the time as more and more people find themselves in need of these quick cash injections to get to the end of the month or pay off unexpected bills and cover their costs.
However, in order to run a payday loan company, you have to have your own payday loan merchant account. This is what enables you to receive secure digital payments from borrowers. Getting a payday loan merchant account is essential in this business, but, as many entrepreneurs quickly discover, payday loan merchant accounts aren’t always easy to obtain. Shark Processing can help with this.
The concept of payday loans has been around for many years now, and these loans have proven to be hugely popular with borrowers all over the globe. As the name implies, a payday loan (also sometimes referred to as a short-time loan) is a quick, easily accessible loan that is designed to be paid off when payday comes and the borrower receives their wages.
Payday loans are basically a sort of stop-gap for people. For example, if someone is due to receive their monthly wage at the end of the month but finds themselves halfway through the month without the necessary cash to cover certain costs like food and essentials, they can take out a payday loan, use it to buy what they need, and then pay it back at the end of the month with their own money.
It’s a simple concept, and it works well for a lot of people. Payday loan businesses, too, can make a lot of money in this industry, as payday loans tend to have high-interest rates, due to the fact that they’re so short-term. However, as covered in the introduction, you need to be able to have your own payday loan merchant account in order to offer payday loans and receive payments. This isn’t always easy.
Before we examine the challenges and problems associated with applying for payday loan merchant accounts and getting payday loan merchant accounts, let’s first focus on a simple merchant account definition: in basic terms, a merchant account is a special type of business account that allows businesses to receive digital credit and debit card payments.
These days, a lot of business is done online, in the form of card-not-present transactions. This is basically a technical way of talking about payments that are carried out digitally, with the buyer and the business not in the same location. Merchant accounts help to facilitate this process, serving as a go-between; they receive money from customers, process it, and then send it to the business’ main account.
Payday loan businesses do almost all of their business digitally, with borrowers paying back the cash they owe via digital credit/debit card payments when the time is right. So, it’s clear to see that you need to have your own payday loan merchant account in order to be able to accept those payments and operate in the payday loan industry.
So, when it comes to the question of why do you need payday loan merchant accounts, the answer is clear to see. However, many business owners quickly discover that applying for a payday loan merchant account isn’t easy; in fact, most banks and payment processors will turn you down on the spot as soon as they learn what your business is about.
Why is this? Well, it’s mainly due to the fact that payday loans are regarded as a high risk payment processing business. There are two main factors behind this. The first factor is that payday loan companies have a reputation for handing out loans to almost everyone who applies, without putting too much care or consideration into things like credit scores and credit history.
This means that the payday loan business, in and of itself, is regarded as suspect by many banks and payment processors: if loan companies hand out loans to anyone who applies, there’s a high chance that some of those loans won’t be able to be paid back, which can cause problems for all concerned. This generates risk for banks, too, so they prefer not to get involved.
The second major factor that makes it hard to get payday loan merchant accounts is the high rate of chargebacks in the payday loan world; this basically means that borrowers who take out payday loans can sometimes dispute the fees and charges on their card statements if they aren’t happy. Again, this causes problems for everyone involved, including the banks.
As we can see, banks and payment processors have their reasons for not wanting to get involved with payday loan companies. But what can you do if you want to run a reputable payday loan business and need to get your own payday loan merchant account in order to get started? Well, that’s where Shark Processing comes in.
We work specifically with high risk businesses, like payday loan companies, to provide the merchant accounts you need for high risk credit card processing. We can help you get your own payday loan merchant account, with great rates and competitive terms for all, so that you can start doing business without having to worry about the account side of things.
We have years of experience in high risk payment processing and high risk merchant accounts, working with trusted banks and payment partners across the world to meet our clients’ needs. We also offer exceptional standards of customer support and fully secure accounts for your protection. Reach out to our team to find out more about how we can help with your payday loan merchant account.