Merchant Accounts for Credit Repair Companies
These days, obtaining merchant accounts for credit repair companies has several demands. They include having a proper license, a good bond, and being in line with the Federal consumer law. However, adhering to such requirements is still not a guarantee towards the successful acquisition of such credit repair accounts. The merchant account providers have their risk assessment criterion carried out before assigning a company or business a credit repair account. Let us engage with some of these high-risk industries.
High-Risk Industries under Merchant Accounts for Credit Repair Companies
Do you profile yourself as an uncategorized merchant? Then the phrase ‘Hard to Place Merchant’ is what you are seeking. The credit card payment processors’ viewpoints are responsible for the onset of this term. An example is a merchant involved in the interior decoration and furniture sales businesses. The payment processors will consider such an individual as a higher risk merchant. The onset of this term or phrase has several underlying factors that propel its existence. A common one is the sales transaction’s typical ticket size. If high tickets and expensive items have a direct relation to your business sales, then you fit the criteria. The underwriter’s role will thus try to minimize potential losses through identifying and eliminating such losses. The first step is to assess the merchant account’s applied carefully. Therefore, what can then cause such an application to hit the decline mark?
Card processing companies only thrive in profits. Hence the merchant accounts for credit repair companies should be in line with this vision. If not, the industry’s proposed business operations will only look like a bid for creating potential losses. Thus, it becomes a high risk; hence the feedback, application declined! Such an outcome, however, is not the end of the road. Navigating through this process will require the helping hand of high-risk specialists or merchants.
Business Risks in Merchant Accounts for Credit Repair Companies
Processing card payment looks like a safe transit. Moreover, each successful transaction has the processors remaining with a substantial portion in the form of transaction fees. We can also add the extra charging fees to this math. Thus, you are right to question the existence of risks in this docket. Hence it is impossible to believe that the processors are in any way making a loss. The answer to this parable in the merchant accounts for credit repair companies lies in specific scenarios. They are the scenarios where the tides might not be in favor of the card processors. The biggest enemy of card processors and banks is a fraud. A successful scam can bring the banks and processors to their knees. The processors and banks thus have to carry the overall burden left. It can be financial, in the form of reputation or both.
Thus, some common fraudulent causes need the limelight for the well-being of the merchant accounts for credit repair companies. A business owner should not be put under compromise just because the industry is high risk. Such an owner should learn the ropes on how to navigate through these unsafe tides. The hard to place merchant accounts quested by the high-risk merchants should turn to unique payment processors. Such processors should speak the same business language as them.
Reasons for High Risk in Merchant Accounts for Credit Repair Companies
- The first apparent reason is running operations in a high-risk-characterized industry against the merchant accounts. These industries’ candidates include the likes of affiliate marketing, advertising services, gambling, and tobacco. The full list is retrievable here.
- If the charge back ratios scale too higher, climbing over 2% is a high-risk red flag.
- If the ticket transactions are excessively huge, an example is a transaction exceeding $500.
- The transaction volume is alarmingly high. An excess of $100k each month is a considerably tall figure.
- Recurrence in the billing facility. It applies to the monthly membership subscription fees.
- Sales fluctuations increment each season.
- The issue of Card Not Present (CNP) or Cardholder transactions being persistent. They could be online sales.
- International sales are also a contributing factor.
- The involvement of foreign currency sales is also a risk.
- Carrying out operations in counties prone to fraudulent transactions is also a red flag. Other characteristics of such countries are poor internet security and the unmetered use of stolen credit cards.
- There might be inadequate or non-existence data to profile or characterize the card processing history.
- Finally, the absence of a reliable credit history or poor credit history is also a red flag.
Fraud Perpetration on Merchant Accounts for Credit Repair Companies
The success of a credit repair company directly ties itself to the understanding of how fraudulent cases come to life. Such companies should familiarize themselves with how crooks navigate the system. Thus, such knowledge will secure your business and its reputation concerning a high-risk merchant account. The fraud cons always have something up their sleeves, but some red flags are evident if you know where to look. Let us have a glimpse:
Fraudulent Charge backs on Merchant Accounts for Credit Repair Companies
Fraudulent charge backs as a type of fraud should not be news to you. Moreover, it is the ordinary consumers that are the prone perpetrators. This type of fraud takes place as follows. A consumer will first benefit from requested goods and services. However, when it comes to making payments for the same products and services, the customer disputes the transactions. This attempt to get away without making payments often initiates a charge back. Thus, the card issuer ends up incurring the cost of goods and services the customer denied to have received.
Stolen Credit Cards on Merchant Accounts for Credit Repair Companies
It is a preferred technique for criminals. A typical success scenario of carrying out this type of fraud is as follows. The criminal will first request for some goods. The merchant then initiates the shipment of the products in good faith. The payment service provider, thus, detects the fraud at a later date and reverses the payment transactions. Hence the merchant ends up being on the losing end.
The card processing company, therefore, should have a valid high-risk fraud detection methodology. Some scenarios trigger potential fraud on merchant accounts for credit repair companies.
Fraudulent Scenarios on Merchant Accounts for Credit Repair Companies
- An end-user performing numerous credit card transactions under the same IP address but using different credit cards. It is highly probable that this individual is using stolen credit cards to make illegal purchases.
- An end-user might make multiple bulk purchases within short period breaks. The user might be using a single stolen credit card and trying to make the most out of it.
- A single address location can also facilitate fraud. The user on this address might make bulk purchases using different credit card user information.
- An end-user might also try to be smart and beat the system. This user will make multiple purchases on a single card but receive the goods at different addresses.
- The transaction values from a single user will seem too high and above the average norm.
- An end-user might make a purchase. However, the delivery addresses might appear to have false details or other forms of inconsistencies.
- A typical red flag should be if the delivery address points to a foreign country. The card own might not have a travel history into the mentioned country.
- Another easy to ignore a red flag is if the end-user orders something unusual. The order might not be in line with the purchase history of the credit card.
Charge backs under Merchant Accounts for Credit Repair Companies
It is critical to upholding the concept of charge backs in line with merchant accounts for credit repair companies. A terminated merchant account has a direct link to high ratio charge backs. Moreover, the credit card regulations law offers more protection to the consumer than the merchant. Hence the consumer has immediate power and access to initiate a disputed charge. It is a case when the consumer fails to receive an order or even feels disadvantaged. An ideal world setting would allow the consumer to resolve the issue with the merchant directly. Such an environment would create a room for an amicable if a not satisfactory resolution of the matter. Since its not a perfect world, the card issuer will receive a charge back from the user. Hence the merchant is left out of the loop and only finds out when the charge back is in effect.
The credit processing company thus should carry out a review. The completion of this review can lead to the issuance of a refund. This charge on the merchant leaves the card company in good terms with itself and its customers. However, what if the merchant is out of business and the bank account is inoperable? It will be impossible for the payment service providers to access any funds for refunds. Hence it becomes a loss incurred. Another issue is charge backs processing. It is a labor-intensive process. The staff will have to handle the charge back and then handle the negotiations with an unhappy merchant. It is time consuming when dealing with such irregularities. Thus, it will need the input of an extra hired staff, which is more money down the drain. Hence higher charge backs force the card processors to opt and pull the plug.
Navigating through High-Risk Merchant Accounts for Credit Repair Companies
The high-risk industries’ list perpetuates some innocent businesses under the merchant accounts for credit repair companies. A good number of these businesses are not only honest but also legitimate. However, numerous payment service providers and card processing services are quick to decline them. It should, however, not worry you if you seek prospects in any of these industries. The high-risk merchant industries are an attraction to some providers with unique specialties. A single provider cannot navigate all the segments of these industries. Thus, its good news for merchant accounts for credit repair companies. It thus forces the providers to specialize in the select few industries. Hence, they have more time to analyze the inherent hazards and work on their resolution. The companies in this segment have links with card payment processors and banks that embrace the high-risk sector.
Their specialty is the high-risk merchant accounts for credit repair companies is simple. They match a provider in favor of the select high-risk merchant account.
Consumer Service of the Merchant Accounts for Credit Repair Companies
Little effort is needed to create an altercation on the credit score of an individual. Moreover, such little turbulence also affects the FICO score of the merchant accounts for credit repair companies. For example, an individual can quickly lose as much as 100 points off the credit score. The reason can be as simple as failing to make the necessary transaction payments on time. Thus, it is conclusive to state that 35% of an individual’s credit score is from the payment history. Hence credit-worthy individuals will end up losing valuable credit score points based on this short assessment.
Another angle of looking at credit score points is from the consumers’ utilization ratio. It assesses the availability of used-up credit by an individual. For example, a $10,000 credit card ceiling should not have a monthly charge exceeding $3000. The high credit scorers will have a 10% or less credit utilization ratio. This generalization also speaks on behalf of loans and overdrafts. However, the stated two elements (loans and overdrafts) have the power to affect almost 60% of a user’s credit score.
However, the same credit agencies are prone to error-filled data. The frequency of such incorrect data has an unforgiving impact on the credit score of an individual. Such errors can affect over 70% of user data records.
Final Note:
It is conclusive to state that a typical American will not afford a healthy lifestyle without a high credit score. A high credit score is a direct ticket to mortgages, home remodeling loans, and auto credit. Thus, these demands make the need for a credit repair service the go-to venture. They provide a balance between the consumer market demand and the user preparedness to meet such requirements. On the other hand, credit repair services have time to understand the business models in practice. They have to tailor their services in regard to the industrial operations. However, it comes with risks and challenges they have to face or find a suitable workaround.
Reading Sources
https://secureglobalpay.net/get-merchant-account-credit-repair-credit-counselor-business/
https://secureglobalpay.net/what-industries-are-high-risk-merchants/
https://instabill.com/ecommerce-industries/credit-repair-merchant-accounts/