Setting Up A Merchant Account For The Credit Repair And Credit Restoration Business

In today’s economy, it is common for one to have bad credit. This has given rise to the demand for credit restoration and credit repair companies. The credit repair companies have made a profitable entry in the market and they have a number of customers, still, the banks do not want to take the risk of approving their merchant account.

If you have poor credit then you will struggle to get a credit card or get your loan application passed. The credit repair companies come into picture here and they help to improve your credit score in exchange for a fee. All that the company does is to revise your report and they address the negative accounts with the credit bureau.

Why do you need an online merchant account for your credit repair business?

For this, you first need to understand that with the increase in the use of the internet among the masses, online purchases have seen a big boom. This is true for any products or services that are offered. Similarly, the credit repair service when offered online lets the company get more customers and better visibility.

The online market lets the business expand and increases their customer base. The flexibility for the client to pay for your services online means that you can offer them services from anywhere in the world.

The online business market is lucrative because even though the business lets you approach customers from across the globe you do not need any, one to one interaction with the client. Since the credit repair services are done online, you need a merchant account to carry out the transactions. This lets you do payment processing and billing for your services.

Reasons why the credit repair companies have been denied by the credit card processors

Those days are long gone when you needed to have a small outlet and approach the local lender for a loan to start your business. The borrowers would also be okay and let you pay when you had money. However, that does not stand true now. Today, the banks do not lend you money if you do not have the ability to pay for it.

The credit repair companies are categorized under high risk because these operate on high risk and high volume. The credit repair and credit restoration business has been categorized as high risk by the merchant account provider because:

• It has a high chargeback rate

• The customer in this business has been offered a credit risk when they are in a difficult financial position and thus increases the risks of chargebacks

• The reputation has become bad because of some companies who worked without knowledge in the past and had high chargebacks because of their ignorance

• Some customers just ask for the service even when they know that their credit history is bad. This too increases chargebacks

• The service is a high ticket service and it is sold as per the recurring billing plan that is prone to frauds

• The payment is accepted through a payment gateway setup and not in person

• The service requires multiple underwriting banks

In fact, most of the merchant account service providers label the credit repair and the credit restoration companies as restricted or prohibited. So even if your companies financial history is good and even if you have a strong customer base or your business model is highly successful, if you are in this service even then there is a very high chance that your application will be denied.

Merchant account service for a startup or a new business that is into credit restoration and credit repair

The new business into the credit repair and credit restoration business needs the same level of support as an established business in this industry. However, the trouble is that even the high-risk merchant account providers deny the new companies because of no credit history.

A little bit of research can solve your troubles. When a startup is entering the business, they do have budget constraints and they look for a merchant account provider that does not charge then an application process fee. The high-risk merchant account providers offer the feature and let the business to receive payments through a number of gateways. They can accept payments through Visa/Mastercard/Discover/Amex.

The fees for the services provided is based on the businesses history that is a bit higher than the charges for an established company.

Should you opt for a domestic or an offshore account?

The companies that are categorized into the high-risk category like the card repair and the card restoration services are declined the merchant account by the domestic institutions.

The domestic account is favorable because it is cheap and safe and offers better security options. The rate of interest is also lower.

The offshore accounts charge higher interest rates but hold it as an option if your application has been rejected by the domestic accounts. Paying a high charge and having a merchant account is better than not having an account at all.

The advantages of choosing an offshore account are:

• There is no issue with chargebacks of high volume

• It is ideal for a high-risk business that is a startup

• A business that has bad credit benefits with it

• There is no volume capping or the volume is very high

• The underwriting rules are not stringent

Conclusion

The merchant account providers view the credit card repair and the credit restoration business to be high risk. If you wish to accept a credit card from your clients who want to avail your services then you need to approach a merchant account provider who specializes in this account type.