Charge backs are credit card charges that are reversed at the customer’s request. Credit card companies like American Express, Diner’s Club, Discover, MasterCard, and Visa generally side with the company unless proof can be established that the client authorized a charge. Charge backs are expensive, generally resulting in a $20 to $60 penalty that is paid by the merchant. Too many charge backs can cause an online or physical storefront business to jeopardize their merchant credit card processing account. Other issues with businesses like a collection’s agency is that a client can delay payments while battling that the charge was fraudulent, the merchandise was never delivered, or that the product was of poor quality and returned. Unless you can prove the client is lying, odds are high that the client will end up owing nothing.
Your agency is hired by another company to handle their debt collection. Most companies will spend a few months tracking down late payments by themselves, but after that they hand over delinquent accounts to a collections firm. You receive payment from the company for this service, but then the bulk of your payment comes from successfully getting payment from the client so that you can submit the payment to your client. It is a risky business and one that comes with some of the highest start-up fees out there. It is important to remember that the merchant credit card processing company that you use is often required to put aside a set amount of money into escrow to cover any amount that is not received by the client or that results in a charge back. If the processing company ends up losing their money, they will come after you to make up for it. Therefore, you must really be successful at your job while remaining in the legal boundaries. You are not allowed to threaten those who haven’t paid their bills. Doing so can put your company at risk, exceptional customer service is required to do well in this business.
Typically, from other companuies the start-up fees for a high-risk credit card processing account range from $200 to $1,000 if your application is accepted. On top of this, you will pay the credit card processing company 2.5 to 5% of every card transaction, face monthly minimums of at least $25, and may be required to create an escrow account that requires you to make a payment of 5 to 10% of your monthly profits to cover unpaid bills. Some banks also require you to provide at least 40% of your estimated monthly income starting out. For example, if you expect to earn $5,000 per month, you will be required to pay $2,000 into an escrowed account before they agree to extend credit card processing services to your company. We can typically avoid you having to pay many of the fees that other companies charge collection agencies for merchant accounts. Click Here to Apply Now.
Finally, you must be aware that many high-risk businesses are now required by the merchant processing company to verify all credit card mailing addresses are legit. If your client pays you via a credit card, you will need to call the client and the client’s credit card issuer to verify the billing address given by the client. If you do not take this additional step known as AVS, you can lose your account.