High Risk Merchant Accounts
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Collection Agencies

How a Collection Agency Can Get a Merchant Account

The process of collecting debts can be a challenging business. In the United States, many families pay for their lifestyles using lines of credit and credit cards. According to an American Household Credit Card Debt Study by NerdWallet, it’s estimated that the debt of an average family household has increased by over 10 percent in the last decade. The average household has a credit card debt of more than $16,800. The average household debt including mortgage is over $135,000.

Credit Card Processing for Collection Agencies


Missing Payments

These types of statistics illustrate how it is easy for any household to miss a few debt payments. Many families can easily become overwhelmed with debt. These unpaid debts are often sent to collection agencies. These agencies will then try and recover the unpaid debt for a bank or other creditor. Many financial institutions do not view collection agencies in a favorable way. They usually considered them to be high-risk merchants. Collection agencies are known for their large volume of chargebacks. This is the reason many banks will not provide them with a merchant account.


Flow Payments Has Unmatched Experience in This Industry

If a business is refused a merchant account and needs a way to process credit card payments, it can obtain a merchant account from Flow Payments. Flow Payments has deep experience in working with all collection agency types. No matter if it is third party collections, medical collections or direct debt, we have the resources to get your account matched with the best solution. We also have tools to assist with fraud filters, chargeback management as well as gateways and more. Flow Payments also provides a simple online application process that is streamlined and efficient for onboarding.


Collection Industry

There are many different business models within the debt collection industry. This includes companies that try and obtain payments on debts owed by businesses and individuals. Many agencies operate as agents for creditors. There are many customized payment options available to collection agency merchants.

  • Tax collection or fee-based services
  • Debt, bill or account collection services
  • Collection services for delinquent accounts
  • Repossession and collateral recovery services
  • Debt portfolio collection services
  • Credit reporting services


Applying for Collection Agency Merchant Account

To get a collection agency merchant account, an online application is the quickest way to an approval. Once the application is completed, the merchant will be required to submit the following items:

  • A government-issued ID like a state-issued driver’s license
  • An EIN (Employer Identification Number) or SSN (Social Security Number)
  • A pre-printed voided check or bank letter
  • Three months of the most recent processing statements (if applicable)
  • Three months of the most recent bank statements (if applicable)



Collection agency merchants must be able to prove they are a reputable and legal business to the underwriters and processors who review their application. Underwriters will review possible risk by carefully viewing an application to detect anything that could financially burden the process or appears suspicious. A merchant needs to operate in areas where they are properly licensed. They will be legally required to follow collection laws like the Fair Debt Collection Practices Act (FDCPA). Their credit card processing history, as well as a merchant’s website and credit score, is used to determine risk. A merchant’s website must list its privacy and refund policies as well as provide other important information. A history of high chargeback rates, as well as negative bank account balances, late payments, and unpaid bills, impact a merchant’s risk assessment.


Increasing Chances

The chances for approval for merchant accounts can be increased. A merchant needs to satisfy its outstanding debts, bills and have a satisfactory credit score.

Many underwriters realize a debt collection business is a financial endeavor filled with significant risk. For this reason, a merchant must prove they have sufficient capital and operate as a company that is reputable as well as legitimate. Any merchant who is serious and takes the time to follow the required steps has a good chance of getting approved for an account.

Flow Payments has decades of experience working with collection agencies. Contact us today for a free payment processing quote.


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