Even though many credit repair businesses offer credit counseling, credit education, and other methods to help those with poor credit, traditional merchant account providers classify credit repair merchant accounts as high-risk.
Many banks and major payment processors don’t want to deal with customers seeking the services of the credit repair industry. Because these clients have bad credit histories, merchant accounts for credit repair are high-risk.
There’s also the fact that credit repair companies set the expectation of improving customers’ credit, but they cannot really control that. Delivering on that promise is unlikely, and that can lead to higher chargeback numbers.
High Risk Merchants
The client base makes credit repair merchants an inherently high-risk business, in this conventional view.
For instance, credit repair companies may deal with customers who make a habit of disputing valid credit card transactions.
Regulatory agencies keep a watchful eye on credit repair services. That’s another basis for considering credit repair companies as especially risky.
Credit repair services must have the ability to accept credit card payments. To operate, you must have a merchant account and payment gateway allowing you to accept payments.
When you are in a high-risk industry, getting a merchant account and payment gateway is more complicated than for low-risk companies.
Most banks are reluctant to provide merchant services to any business with high chargeback ratios. That is the case no matter how well your credit repair company is doing financially.
The demand for credit counseling will continue to grow. A good credit score makes the difference in obtaining a mortgage, buying a car, and living a normal life.
Does PayPal Work With Credit Repair Businesses?
PayPal does not permit processing for credit repair services. It violates their Terms of Acceptable Use policy.
These terms hold true for all high-risk merchants.
Does Stripe Accept Credit Repair Merchant Accounts?
No, Stripe is another well-known payment processor that does not accept credit repair merchant accounts.
Does Square Accept High Risk Merchant Accounts?
Square is yet another popular payment processor that does not accept high-risk merchant accounts, including credit repair merchant accounts.
Does Authorize.net Network with Credit Repair Companies?
Authorize.net does network with credit repair companies. Authorize.net is a wholly owned subsidiary of Visa. It is among the oldest of payment gateways, founded in 1996.
It makes more sense, however, to use a credit card processor such as Easy Pay Direct that specializes in working in high-risk industries such as credit repair.
What to Look for in a Payment Processor
High-risk merchants need a payment processor with experience serving their particular industry.
Merchants considered high-risk run the gamut from financial planners to CBD retailers, so an understanding of your industry is vital.
You also want to work with a company that offers multiple merchant accounts. Those merchant accounts should have separate member banks.
Otherwise, if one bank decides not to continue payment processing, your business could no longer accept credit card transactions or debit card payments. Many payment processors providing services to credit repair businesses want to sign clients on to long-term contracts.
Long-term contracts benefit processors because they can lock in higher rates, but they give the high-risk merchant less flexibility.
Look for a payment processor that does not require excessively long contracts. Otherwise, if you decide to seek another payment processor, you’ll get hit with a hefty early termination fee.
Recurring billing plans are necessary when running a credit repair services company. Make sure credit card processors offer recurring billing as a feature.
Go over any payment processor contract with a fine-tooth comb – what is the time frame for renewal and the renewal terms?
You could only have a 30-day window to cancel or get stuck in another yearly, three-year, or seven-year contract.
All contracts automatically renew to prevent service interruption. It’s wise to ask about automatic renewal so you know when to give notice if you need to prevent it.
At Easy Pay Direct, we offer one to three-year contracts renewing automatically for a year. However, we are flexible about contracts if customers want to leave.
How Can I Get a Credit Repair Merchant Account with Bad Credit?
Even a credit repair merchant might have issues with less than stellar credit. Since your credit restoration work involves helping customers raise the numbers on their credit reports, you know how poor credit history can affect merchant account approval.
Take the advice you give to customers and work on credit score improvement.
Most companies offering merchant accounts require a minimum 550 credit score. Getting a merchant account with bad credit is more difficult, but not impossible.
Always work with a merchant account provider specializing in high-risk businesses.
How Do You Get Approved for a Merchant Account?
Apply online to begin the merchant account credit card processing application process. The most commonly required documents include:
- Completed merchant processing agreement
- Certificate of incorporation
- Three months of bank account statements
- Three months of processing statements
- Photo ID
Those businesses whose credit card processing exceeds $1 million annually may need to submit two years of tax returns and two years of profit-and-loss statements.
Always Tell the Truth
Always provide accurate, honest information.
If the merchant account provider discovers that any of the information provided is misleading, that will virtually always result in disapproval. The provider may even close the account if they learn the merchant provided inaccurate information.
What About Startup Credit Repair Companies?
Startup credit repair businesses can expect even more scrutiny.
In merchant accounts, solid payment and processing history is key, which is not the case with a startup. Seasoned merchant services providers can help you overcome some of these obstacles.
What are the Fees for a Credit Repair Merchant Account?
Expect to pay higher fees for a merchant account for credit repair than a low-risk business. The higher likelihood of high chargeback rates puts some industries into the high-risk merchant category.
Along with higher discount rates, or the percentage charged, there are also higher transaction fees. These are the fixed fees charged per transaction.
Does a Credit Repair Business Need a Rolling Reserve?
You may need a rolling reserve. That’s the percentage of processed credit card volume held back in case of chargebacks or fraud. The funds remain in reserve for a specified period and then get released. Some providers require it, while others do not.
Keep in mind that credit education, credit repair, and credit counseling businesses usually have lower startup costs and overhead than many other high-risk merchants. That can offset some of the higher fees associated with high-risk merchant accounts.
What About a Retail Store Credit Repair Business?
Many credit repair companies operate out of retail stores and offices. Clients can discuss their specific credit issues in person. Those credit repair services will need virtual terminals for accepting payments by credit or debit card, or a POS system.
Retail merchant accounts are less vulnerable to chargebacks and fraud, and their pricing reflects that.
Let Easy Pay Direct Help
At Easy Pay Direct, we understand the business model and business needs of credit repair services.
We specialize in industries deemed high risk and know these industries inside and out.
That’s why we are the leading high-risk merchant account company. To date, over 60,000 companies take advantage of our platform. At Easy Pay Direct, we can set up a credit repair merchant account for your business via our EPD Gateway. There’s no monthly volume minimum and no early termination fee. We’re also user-friendly!
We work with banking connections with whom we have longstanding relationships.
Merchant account approvals take between two to five business days once we’ve received all documents.
For more information, please contact us at 800.805.4949 or get started here.