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The Best Merchant Accounts For Collection Agencies & Debt Collectors

These merchant account providers offer high-risk businesses like collection agencies a square deal when it comes to payment processing.

    Noah Miller
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Do you feel like it’s the right time to start a collection agency? You’ll need a robust suite of hardware and services to accept payments online and over the phone, if so. Whether you’re building your agency from the ground up or already have a business that needs to switch to a better merchant account provider, your agency’s success depends on multi-channel payment support, systems to combat fraudulent chargebacks, and transparent pricing plans and contractual requirements.

The debt collection industry is a high-risk one, which means that business owners who want to start a collection agency may face a few hurdles when looking for a merchant account that’s right for them. There are also several risk factors and legal issues that can complicate your decision when choosing the proper payment processor. That’s why we’ve broken down the basic features of the best merchant accounts for collection agencies and debt collectors. Take a few minutes to get comfortable with the process of choosing a provider for your debt collection agency and learn how to decide on a provider with minimal frustration.

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CompanyBest ForNext StepsBest For
PaymentCloud

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Excellent provider for collection agencies with a strong eCommerce presence. High-risk specialist with anti-fraud and anti-chargeback protections.
Excellent provider for collection agencies with a strong eCommerce presence. High-risk specialist with anti-fraud and anti-chargeback protections.

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Host Merchant Services

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Specialized account support for multiple collection agency types. Flexible and transparent pricing suits high- and low-ticket agencies.
Specialized account support for multiple collection agency types. Flexible and transparent pricing suits high- and low-ticket agencies.

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Durango Merchant Services

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Ideal for collection agencies with a history of excessive chargebacks. Provider of affordable payment processing hardware that can streamline various debt collection operations.
Ideal for collection agencies with a history of excessive chargebacks. Provider of affordable payment processing hardware that can streamline various debt collection operations.

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Soar Payments

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High-risk specialist for U.S.-based collection agencies. Offers automated account application and custom quote processes.
High-risk specialist for U.S.-based collection agencies. Offers automated account application and custom quote processes.

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Read more below to learn why we chose these options.

Why Is Credit Card Processing For Collection Agencies Considered High Risk?

Collection agencies need a stable merchant account to let their customers pay off past-due debts with a credit card or e-check. But the majority of merchant-acquiring banks reject applications from debt collectors because of the collections industry’s complicated reputation. Banks consider collection agencies as high-risk for several reasons, the first of which being the sometimes-negative public perception of the debt collection industry.

A handful of debt collectors employ scare tactics such as calling debtors around the clock or harassing them in person for collections. These actions contribute to a negative public perception of the industry and demonstrate to some banks offering merchant accounts that the businesses in the collections industry are high-risk. What’s more, the debt collection industry is regulated by federal authorities including the FDCPA and CFPB, and is subject to legal requirements that vary on a state-by-state basis. As is the case with other industries that fall into the high-risk category, collection agencies operate in an unstable regulatory climate and unfortunately experience a higher risk of unreliable streams of income.

Speaking of unreliable income streams, most collection agencies struggle with customers who dispute the validity of past-due payments with banks and credit card companies. These customer chargebacks can make acquiring banks wary of approving merchant account applications from debt collectors. When banks determine a business’s risk status, they consider that business’s complete history of chargebacks. Excessive chargebacks are relatively common to the collections industry, so merchant account providers that service high-risk businesses like collection agencies should offer features such as payment gateways with fraud detection tools that minimize the long-term damage done by fraudulent chargebacks.

Types of Collection Agencies

All debt collectors track down past-due debts that businesses and consumers owe. The types of collections that different agents and agencies deal with, though, can vary widely. Here’s a quick list of some of the most common debt collection agency types: 

  • Medical Collection Agencies: Health care credit collection agencies assign agents to collect past-due payments made to health care providers. It’s common for businesses to work with outside collection agencies to minimize interruptions to their patient care.
  • Student Loan Collection Agencies: Federal agencies commonly employ student loan collection agencies to track down defaulted payments. Although student loan collection agencies are an essential component of the U.S.’s student loan system, they also charge expensive fees on top of student loan balances already owed and are often high-ticket businesses compared to other collection agency types.
  • Bad Check Recovery Agencies: Certain agencies collect debts owed due to fraudulent checks or checks made with insufficient funds. The business of bad check recovery is innately risky to collection agencies since it can interrupt reliable streams of revenue, meaning bad check recovery agencies are considered especially high-risk, even in the debt collection industry.

The different types of collection agencies all require a payment processor that can provide support for payments made over the phone as well as online. But some payment processors may provide only limited support for brick-and-mortar payment processing or may only provide specific processing hardware on a lease. Different benefits and drawbacks that come with high-risk merchant account providers make it particularly tricky for new agencies to find a merchant account that’s the right match for them.

4 Best Merchant Accounts For Collection Agencies

Collection agencies require a merchant account provider that supports over-the-phone as well as online payment processing and facilitates timely consumer payments to prevent interruptions to revenue streams. The collections industry demands compliance with federal and state-level regulations, and payment processors should be able to facilitate easy compliance for debt collectors.

1. PaymentCloud

PaymentCloud



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Pros

  • Card-not-present & card-present options
  • Chargeback & fraud prevention
  • PCI compliance assistance

Cons

  • Non-transparent pricing
  • Poor website navigability

PaymentCloud’s repertoire of POS solutions, card-present and card-not-present processing options, and focus on eCommerce makes it a great choice for both new and slightly more established debt collectors. PaymentCloud provides users with advice on choosing a chargeback management service and fraud mitigation service. They even familiarize you with techniques and systems that keep customers satisfied and less likely to initiate chargebacks. The company’s chargeback and fraud prevention assistance is a huge help to high-risk collection agencies and can go a long way toward making your customers more satisfied with your customer support systems and less likely to initiate chargebacks.

Help with PCI compliance is a godsend for businesses that operate in the highly regulated collections industry. PaymentCloud helps merchants navigate the necessary steps to become PCI-compliant within 90 days and without charging a PCI compliance fee.

PaymentCloud doesn’t publically disclose its pricing on its website, which can make it more difficult for new collection agencies to accurately project their startup costs. Its website can be hard to use as well. Many may find PaymentCloud’s organization of products on its website to be less than navigable.

For new business owners who place a particular focus on hands-on customer service, PaymentCloud offers dedicated account representatives available to you throughout the lifetime of your account. Although their website’s navigability can be clunky, PaymentCloud’s history of few public complaints and excellent track record for customer support suggest that overall, it is a helpful and easy-to-work-with payment processor.

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2. Host Merchant Services

Host Merchant Services



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Pros

  • Well-rounded payment processing options
  • Transparent pricing plans & flexible fees & rates
  • Strong brick-and-mortar & eCommerce support

Cons

  • Expensive for low-volume merchants

Host Merchant Services is an ideal payment processor for new agencies operating in the debt collection industry. Its range of POS systems and card readers provide solutions for both card-present and card-not-present payment processing, which creates flexibility for various collection agency types. Host Merchant Services caters well to collection agencies with various business models due to its specialized accounts with customized pricing for large- and small-ticket agencies as well as nonprofits.

There are zero termination penalties or contract fees for agencies using Host Merchant Services, and disclosures of processing rates and account fees online provide a welcome amount of pricing transparency. That said, Host Merchant Services’ exclusively interchange-plus pricing plans may be cost-prohibitive for low-ticket and very new agencies.

The merchant account provider’s POS systems and card readers as well as its excellent integration capabilities are thankfully easy to navigate with a strong reputation for standout customer service. Payment plans, too, are transparent and predictable enough for even very small debt collection businesses to quickly parse through and understand.

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3. Durango Merchant Services

Durango Merchant Services



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Pros

  • Great support for agencies with excessive chargebacks
  • Credit card terminals & payment gateways directly for sale
  • Strong fraud protection

Cons

  • No online disclosures of pricing

High-risk specialist Durango Merchant Services’ ability to place accounts for merchants with histories of excessive chargebacks is invaluable to new collection agencies. In addition to its support for merchants who may be on the TMF or MATCH List, Durango also works to prevent chargebacks in the future with multiple reputable anti-fraud services. Fraud protection should be high on the list of priorities for a debt collector of any size and type, and Durango is well-placed to handle instances of fraud that are common to the collections industry. Durango combats consumer-related fraud with anti-fraud protections such as Verified by Visa, Mastercard SecureCode, Fraud Scrubbing, and EMV 3d Secure 2.0.

On the downside, Durango doesn’t disclose its pricing plans to the public on its website, which can be frustrating. This lack of transparency in pricing is typical of the industry in general. That said, rather than try to sign you up for an overpriced equipment lease, Durango offers terminals, PIN pads, and mobile card swipers for direct sale on its website, and its payments gateway is a proprietary product. Many other high-risk merchants are notorious for offering card readers and monthly gateway fees, but Durango helps new collection agencies set themselves up for affordable success by making its hardware directly for sale online.

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4. Soar Payments

Soar Payments



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Pros

  • Quick & automated account application process
  • Chargeback management & fraud prevention
  • Wide range of hardware options
  • Fast underwriting

Cons

  • Unavailable to international merchants
  • No public disclosure of pricing
  • Sizable early termination fee

Soar Payments is a great choice for high-risk debt collectors that are looking for a quick-yet-thorough underwriting process as well as customized quotes after their application phase. Soar offers an automated application process online that takes minutes to complete and provides merchants with a quote after the fact. As is the case with our other top choices for debt collection merchant account providers, Soar supports systems for chargeback management and fraud prevention that can make or break the long-term success of any type of collection agency. Soar partners with Chargeback.com to offer anti-chargeback features such as chargeback alert emails, services for fighting illegitimate chargebacks, and the iSpyFraud filter to detect fraud and suspicious transactions.

Soar Payments works exclusively with U.S.-based agencies and therefore doesn’t support payment processing to offshore accounts that international merchants may need to handle. And, like several other merchants we’ve covered in this article, Soar doesn’t publically disclose its pricing plans on its website.

Although Soar’s $495 early termination fee (for some accounts) may be steep, the termination fee is voided after the initial contract period. All in all, the payment processor’s high-risk contract terms are reasonable even for lower-volume debt collectors.

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Looking For One Of These Merchant Accounts For Collection Agencies?

The collections industry is a particularly high-risk one, and some high-risk merchant account providers still don’t suit the needs of new and growing debt collection businesses. The following vendors don’t currently make the cut for our list of best merchant account providers due to drawbacks like fees and rates, contractual obligations, and relative lack of products and services provided.

eMerchantBroker

Business owners starting a collection agency need to thoroughly account for their startup costs and potential interruptions to future revenue due to customer chargebacks and instances of fraud. eMerchantBroker’s strictly long-term contracts and expensive early termination penalties can significantly hinder the ability of a new collection agency to flourish, and the payment processor’s reputation for misleading sales gimmicks doesn’t help matters much. The payment processor’s tiered pricing plan increases processing rates for non-qualified and mid-qualified transactions as well, which can be particularly constricting for very new collection agencies. eMerchantBroker lacks options for agencies to integrate payment platforms with processing hardware and payment gateways, which limits the speed at which a debt collector can collect the past-due payments it’s tracking down.

PaymentKings

The drawbacks that render PayKings a less-than-perfect merchant account provider are similar to the drawbacks that come with eMerchantBroker. PayKings, although a high-risk specialist, ironically exacerbates issues with reliable streams of revenue that are common to the debt collection industry. PayKings comes with exclusively tiered pricing plans and only applies lower processing rates to certain qualifying transactions. Although users may request an interchange-plus pricing plan, PayKings’ non-transparent pricing and early termination fees can actually work against up-and-coming collection agencies that may not have a consistent stream of revenue.

Instabill

Instabill‘s main draw is its services to high-risk international merchants that process offshore payments, although its support for brick-and-mortar agencies that need on-site payment processing leaves something to be desired. Instabill offers credit card terminals albeit with little information concerning specific terminal models or features on its website. It’s likely that Instabill offers terminals through a lease, which is nearly always more expensive than purchasing a terminal of your own in the long run. The mobile POS solutions that Instabill offers can be relatively time-consuming to begin using as well since Instabill requires its users to create a separate account with its mobile processing partner, CardFlight, before they can accept mobile payments from multiple devices.

What Debt Collectors & Collection Agencies Need To Know About Payment Processing

Ready to integrate payment processing solutions into your new business? You’ll first need to navigate the logistics of processing different customer payment types with different pieces of hardware.

Collection agencies that process mostly credit card payments should keep an eye out for merchant account providers that support virtual terminals. Virtual terminals let business owners access a secure web page to process their customer payments with a built-in dashboard that’s similar to a physical card reader. Although most of these terminals can only process card payments, they also typically include smart features like recurring billing and options to automatically collect funds.

Debt collectors that typically process credit card payments rather than alternative transactions such as ACH payments should nevertheless choose a payment processor that supports options for electric check processing and fraud detection. Credit cards are, relative to ACH/EFT payments, more prone to chargebacks. If you’re interested in securing a virtual terminal that you can integrate with your business’s payment processing solutions, we recommend that you choose an online payment processor with systems to combat card-related consumer chargebacks that minimize interruptions to your revenue stream.

Credit cards are prone to chargebacks and tend to be more expensive to process on a per-transaction basis than automated clearing house (ACH)/electronic fund transfer (EFT) payments. Therefore, if you plan on accepting ACH payments online, you’ll likely need a payment gateway. Payment gateways transmit data between an agency’s point of transaction and the receiving payment processor. Certain payment gateways services support ACH payments and may be included as part of a payment processor’s list of basic services. Payment gateways offer an additional level of protection compared to virtual terminals by encrypting payment information before transmitting it to an acquiring bank. These gateways may also support online portals through which users must enter before they can submit their payments online.

6 Tips For Getting Your Collection Agency Merchant Services Approved

Now that you’re familiar with the logistics of payment processing you’re likely to navigate, it’s time to consider some tips to get your collection agency approved by an acquiring bank. Consider the following points to more easily smooth over your application process for a collection agency merchant account:

  1. Business Insurance: Every state has its unique requirements that new businesses must adhere to. Agencies in the collections industry are no exception to this fact and should purchase business insurance and a surety bond per the laws set by the state in which they operate. Collection agency owners should also choose from the different types of professional liability insurance to protect their business from lawsuits and claims of negligence that are common to their industry.
  2. Business Registration & EIN: On the topic of state-level requirements, your state likely requires you to register your business and obtain an Employer Identification Number (EIN). Remember to factor in your registration costs when you estimate your business’s startup expenses and purchase your first pieces of payment processing hardware.
  3. Licensing & Bonds: While certain states only ask that new collection agencies register their business, others may require your business to obtain a collection agency license. Double-check your state’s legal requirements for opening a collection agency and get licensed and bonded as soon as possible if you’re required to do so.
  4. Chargeback Ratio: Proof of your business’s chargeback ratio is essential if you want to apply for a collections credit card processing account. Although standards vary, we recommend that you possess a chargeback ratio that’s below one percent, historically. A low chargeback ratio instills confidence in merchant acquiring banks that your business’s revenue stream is not subject to regular interruptions due to an excess of fraudulent chargebacks or chargebacks relating to checks made with insufficient funds.
  5. Functional Website & Site Security: Your business’s website needs to be functional and accessible 24/7 if you want to process as many online payments as possible. This fact is particularly true for collection agencies that use a payment gateway and online portal through which their consumers transmit payments. Your site should also adhere to Visa and Mastercard regulations that apply to the debt collections industry.
  6. Bank & Processing Statements: Though not always required at the state level, it’s a good idea to provide financial statements or other documents such as processing statements that provide your business’s net worth in writing. Proof of a minimum net worth along with financial and processing statements provides acquiring banks the evidence they may need to recognize your business’s stability.

Which Collection Agency Merchant Account Is Right For My Business?

Business owners starting new collection agencies or even expanding existing ones need merchant account providers that minimize the stresses that come with the debt collection industry, not exacerbate them. The path toward getting your collection agency off the ground is rife with hurdles that take the form of legal obligations, a complicated and sometimes bleak industry reputation, and the constant risk of interruption to your business’s revenue. It only makes sense then that the best collection agency merchant account providers offer processing options for multiple payment types and a reliable system to fight chargebacks and fraud.

Consider whether your agency is a relatively low- or high-volume operation, whether you function as an eCommerce or brick-and-mortar business, your chargeback history, and the pricing plans you prefer before you decide on a collection agency merchant account. Even though some providers may appear to be a good fit for you at first, the best payment processors can satisfy your current business needs and grow with your future growth plans.

Wondering what else to consider as a high-risk merchant that needs a reliable merchant account provider? Check out our complete list of High-Risk Merchant Account Reviews for more traits that other top-performing high-risk specialists have in common. 

In Summary: 4 Best Merchant Accounts For Collection Agencies

  1. PaymentCloud: Excellent provider for collection agencies with a strong eCommerce presence. High-risk specialist with anti-fraud and anti-chargeback protections.
  2. Host Merchant Services: Specialized account support for multiple collection agency types. Flexible and transparent pricing suits high- and low-ticket agencies.
  3. Durango Merchant Services: Ideal for collection agencies with a history of excessive chargebacks. Provider of affordable payment processing hardware that can streamline various debt collection operations.
  4. Soar Payments: High-risk specialist for U.S.-based collection agencies. Offers automated account application and custom quote processes.
Noah Miller

Noah Miller

Expert Analyst & Reviewer
Noah is a writer and content creator currently living in Fairfax, VA. When he isn't writing about IT solutions and innovations that help his clients, he's probably sitting behind a drumkit or adding new hardware to his computer. Since 2017, Noah has worked for federal, state, and commercial clients as a proposal writer, technical writer, copywriter, and analyst. He has a BA in Creative Writing and a Minor in German from Goucher College.
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Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

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