Credit scores can be incredibly complicated to the average consumer, and identifying and disputing errors can be downright daunting. Enter credit repair companies, who simplify this process for their clients and produce higher credit scores. Since your credit score can pretty much decide your fate for as long as you carry the score, fixing credit is essential. American households carried about $136,000 in debt as of 2016, and plenty of people are struggling with their credit scores. Despite the value of credit repair services, the industry is considered “high-risk,” preventing most companies from obtaining standard merchant accounts. E-check merchant accounts help credit repair companies collect more payments, more reliable payments, and manage the cost of operating a merchant account.
If you’re a credit repair company, you will likely need a high-risk merchant account provider to process payments. Why?
Banks and payment processors deny merchant account applications to credit repair due to industry-wide risk. This risk is a result of an exclusively indebted clientele with a history of neglecting financial obligations.
Considering the legal risk associated with an industry subject to stringent laws and regulations, many banks and standard-risk merchant account providers turn away honestly operating companies because of an unfortunate legacy of dishonest credit repair companies. Reputable companies facing the consequences of the actions of companies before them are left with no option but to obtain a merchant account through a provider that specializes in high-risk industries.
What does this mean?
A high-risk merchant account means higher processing fees and rolling reserves, but it also means your payments are being handled by someone familiar with the nuances of your industry, and even how to mitigate the risks your company faces.
A solution that saves money, lowers risk, and benefits both your company and your clients is to open an e-check merchant account with a high-risk provider.
What are the benefits of e-check merchant accounts for credit repair companies?
Less expensive processing fees
E-checks are cheaper and easier to process than credit card payments, so they’re cheaper for merchants to accept.
Convenience
There are several reasons why e-checks are convenient for merchants. E-checks are cleared more quickly than paper checks because the Federal Reserve places a higher priority over electronic checks. The administrative costs of accepting electronic payments are low, and it’s easy to set up recurring payments. Strategically scheduled recurring payments can help credit repair companies receive payments. Payday occurs at the end of the month for many people, for example.
When an e-check doesn’t clear because of non-sufficient funds, you can automatically resubmit the check (your merchant account provider should be able to do that for you) so you don’t waste time trying to rescue bad payments—especially when your clients are often already known for their bad payments.
Your merchant account should provide cloud reporting, so you can access your account from anywhere. But the entire process—bulk processing, check resubmission, recurring payments—can all be automated, so you won’t have to monitor the status of your payments.
E-checks are convenient for credit repair companies, but also for customers, who already have trouble clearing their debt and may not have any room on their credit card to make payments. Accepting e-checks offers clients several venues through which they can submit payments. And if their payments are recurring, it’s one less thing for your clients to think about while going through the stressful process of repairing credit scores.
You can accept e-checks from multiple sources…
Online
Phone
Mail order
Tablet/smartphone… to make it as easy and convenient as possible for customers to make payments.
Security
E-checks aren’t processed without identity confirmation and verification that the issuer’s bank account is open and in good standing. Of course, e-checks can still be returned despite precautionary measures, but automatic re-submission and fraud prevention go a long way in protecting your business’ cash flow.
Less Risk
Chargebacks—the bane of any merchant’s existence—are less common among e-check payments than credit card payments. To initiate a chargeback through their credit card company, a customer only needs to make a quick phone call to have the funds removed from your account without your knowledge. Customers can do this within 180 days of the payment.
Initiating a chargeback for an e-check payment, however, requires the customer to provide supporting documentation and visit their bank’s local branch within 60 days of the payment. Funds deposited to your business bank account are more secure when paid with an e-check than with a card.
E-checks also offer more stability than cards. New credit cards, with new information, are issued frequently, but bank account information rarely changes.
It takes about 3-5 business days to process and settle an e-check payment, but the recent introduction of Same Day ACH will soon make these longer wait times obsolete, and payments will be settled the same day they are submitted. This will also make it easier to solve a case of NSF within the same day the issue is identified.
Conclusion: is a high-risk e-check merchant account worth it?
E-checks offer several benefits, the most important of which are saved time and money. E-checks are less likely to decline or be charged back, and automated recurring payments from accounts that don’t often change relieves the merchant of having to follow up with customers about their payments as much as they would have to with credit card payments.
Of course, some credit repair companies can become disgruntled over their “high-risk” industry classification and the higher expenses for merchant accounts that follow. But the additional cost pays for a merchant account provider who knows and understands your industry’s needs—and these providers can help you mitigate your risk.
Apply for an e-check merchant account with National ACH today. Your account can be approved in as little as 5-7 business days. To apply, you will need to submit documentation like bank statements and proof of any payment processing history. Card merchant accounts are also available for high volume merchants with payment processing history.