Merchant Services for Credit Repair Business

Having a bad credit score can prove to be very costly. If you are applying for a new credit card, the chances of getting approved are less. If you want to take a loan, you won’t quality for low interest rates and your borrowing capacity will be restricted. Not only this, employers nowadays also probe into the credit history of prospective employees before hiring them. The bottom line – It is important to have a high or good credit rating.

Unfortunately, the figures from the credit industry don’t look promising. Bad credit has become very common. This is where credit repair companies step in. They analyse a customer’s credit report thoroughly looking for negative marks such as charge-offs, tax liens, bankruptcies. They try to dispute any inaccurate information or try to negotiate with the concerned authorities. Ironically, while credit restoration businesses work to help small businesses and startups secure financial help, traditional financial institutions shun them for their high risk nature; their applications for merchant accounts are rejected.

Credit Repair and High Chargebacks

The main reason merchant processing banks are reluctant to underwrite credit repair businesses is a high chargeback ratio. So what exactly is a chargeback? And, why is the rate high in the credit repair industry?

In the first place, customers approaching a credit repair business are those with a poor credit rating. It is obvious they have defaulted on previous loan payments and are more likely to do it again in the absence of funds. It has also been noted that people with a lower account balance, initiate false chargeback claims against valid credit card transactions. At times, customers with honest claims are unable to contact the retailer for clarifications. Hence, they try to resolve the issue by contacting the credit card company and requesting a refund. A recurring billing cycle is another cause for chargebacks. Customers easily forget that they have purchased a service and need to make monthly payments towards the same. When the payment reflects in their statement, they dispute it and issue a chargeback. Adding to the problem is the inexperience of startup and small credit repair businesses. They do not have a refund policy in place which disgruntled customers can use as an alternative to initiating chargebacks. If they do, it is not properly communicated to customers.

If you specialise in credit repair and restoration, a merchant account is indispensable to your business. It not only enables you to accept card and eCheck payments but also helps reduce the chargeback risk associated with your business. It offers chargeback support in the form of real-time chargeback alerts identifying and curbing possible threats before they affect the chargeback ratio. It also integrates fraud prevention features to contain all kinds of suspicious activity.

Types of Credit Repair Merchant Accounts

There are different types of merchant accounts available depending on how you operate your business.

1. Retail accounts – Designed for brick-and-mortar businesses, a retail merchant account allows you to process payments using a POS or a credit card machine.

2. Mobile accounts – These accounts enable retailers to process electronic payments on-the-go using their mobile phones. There are Android and iPhone apps facilitating the same.

3. Virtual Terminal – By far the most popular and preferred payment gateway, it allows customers to pay using a computer, by mail or over the telephone. Merchants can also authorise multiple terminal users to the payment gateway.

4. eCommerce – The payment processor system integrates with the shopping cart and payment gateway enabling ecommerce sites to process card payments at the checkout page.

Payment Gateway Options

Credit repair merchant account providers also offer an array of payment options.

1. Card payments – It allows you to accept payments made via debit and credit cards. It processes card-not-present payments as well. Visa, MasterCard, American Express and Discover are the major card brands accepted. International credit repair merchant accounts may also offer a facility accepting the client’s local card or local currency.

2. Electronic checks – Customers can also make payments using an eCheck or electronic check issued against their bank accounts. The transfer of money takes place through ACH processing. There are several benefits of using eCheck processing. They permit a higher chargeback rate than credit cards. Moreover, it is more difficult to issue a chargeback claim against an eCheck than a card.

3. ACH Processing – ACH processing, which involves an electronic transfer of funds is yet another of the approved payment options.

Getting Approved & The Approval Underwriting Process

The underwriter is the final decision maker on your credit restoration merchant account. Knowing what they look for will have you better prepared when you submit an application. Here’s what you need to focus on:

Accurate application

Provide honest details

Stable account balance

Reduce outstanding bills and debt

Fair credit history (Minimum 500 FICO Score Needed)

Business ownership and management

Privacy and refund policies

Business’ compliance with rules and regulations

A reliable credit repair merchant account provider understands the needs of your high risk business. Scour the market for one that secures your business and gives it a competitive edge.