Collection Agency Merchant Account

Collection Agency Merchant Account

Collection agencies are one of those industries that, well, let’s just say people have a strong reaction when you tell them that that’s the line of work you’re in. Ironically, the regulations that collection agencies abide by mean that they actually make life a lot easier for people who owe money. Collection agencies have a certain reputation but if they closely follow (FDCPA) they might be eligible for merchant processing.

Of course, it’s not just because of the reputation that precedes a collection agency that it can be a difficult line of work.

Most banks and processors have to deal with on-going regulations and compliance, therefore they shy away from touching the industry altogether. However, Maverick stays current with compliance and regulations and they can assist the merchant with on-going management this is what sets them apart from the rest. 

Again, It can be difficult for people in this line of work to open a merchant account but if they follow The Fair Debt Collection Practices Act (FDCPA) there is a good chance Maverick will be able to consider them.

Banks and other merchant account companies might not even answer your phone calls if you’re in the collection industry but as long as you don’t disrupt people during unusual times or places, and or harass them you should be fine to be considered for high-risk processing. 

Long story short: the collection industry isn’t the easiest industry to work in.

But, we understand this and we are here to work with you… 

collection agency chargebacks

Defining A Collection Agency Merchant Account

“Collection agency” will generally be defined, by merchant account providers, as a company providing services including mortgage debt, credit cards, medical debts, personal debts, family or household debt and credit reporting. While not all credit reporting companies work in debt collection, there is enough overlap that, to merchant account providers, one is pretty much as good as the other.

So, yes, you can be listed as a debt collection agency, and be treated accordingly by payment processing companies, without ever having tried to collect a debt in the line of business at all.

What is the Fair Debt Collection Practices Act? (FDCPA)

The Fair Debt Collection Practices Act (FDCPA) is the main federal law that governs debt collection practices. The FDCPA prohibits debt collection companies from using abusive, unfair or deceptive practices to collect debts from you.

The FDCPA covers the collection of:

  • Mortgages
  • Credit cards
  • Medical debts
  • Other debts mainly for personal, family, or household purposes.

The FDCPA does not cover business debts. It also does not generally cover collection by the original creditor to whom you first became indebted.

Under the FDCPA, debt collectors include collection agencies, debt buyers, and lawyers who regularly collect debts as part of their business. There are also companies that buy past-due debts from creditors or other businesses and then try to collect them. These debt collectors are also usually called debt collection agencies, debt collection companies, or debt buyers.


State laws

Most states have laws about debt collection practices, many of which are similar to the FDCPA. Some of those state laws cover the original creditor, while others don’t. States also have Unfair and Deceptive Acts and Practices laws that may apply to debt collection. Contact your state attorney general’s office to learn more about the laws in your state.

A Solution For Being A High-Risk Merchant

The upside to being ranked as a high-risk merchant is that you can now shop for a high-risk merchant account provider. This sounds like a curse at first, but it’s more of a blessing. Merchant account providers who do not specialize in high-risk industries do not understand high-risk industries as well as those who specialize in high-risk merchants do. That is to say that an account provider who doesn’t work with collection agencies doesn’t know what collection agencies need in order to run their business effectively.

We’ve all been in this position: You call a company you do business with. Maybe it’s a merchant account provider, but it could be a lender or marketing group or a supplier. Whatever the case may be, you call them up and let them know about a problem that you’re facing, and what you need to be done about it. You explain it clearly, slowly, and they act like you’re speaking a different language. They just don’t get it. They work with people in your industry, but they don’t work in your industry, so they don’t know what you’re talking about. Maybe they think they do, but that just confuses the matter more.

When you work with a specialist from Maverick, this isn’t as much of a concern. A specialist knows what you need, they understand your industry. The fact that not every high-risk merchant account provider works with collection agencies in the first place actually works to your benefit here, because those that do will be more likely to know how to provide your business with the best possible service.

Is It Hard To Sign Up For A High-Risk Merchant Account?

If your business is above board and you have all of your papers in order, getting approved for a high-risk merchant account is a pretty fast, painless affair. All it really takes is your government-issued ID, a bank latter or voided check, three months of bank statements and payment processing statements, and your SSN or EIN (Employer Identification Number).

It’s easier to sign up for a high-risk merchant account than it is to rent a studio apartment in most cities.


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