MLM today is generally a scam or pyramid scheme. In many cases, people are promised large amounts of wealth for investing into a new company or by purchasing products for more than they are worth and then having to turn around and try to find buyers. Because most of these programs turn out to be scams, credit card processing companies are extremely hesitant to provide processing to these firms. According to United States statistics, only 2% of those who become involved in this type of business actually turn a profit. This should clearly demonstrate just how risky this type of business is. Those who are successful are then liable for fraud investigations by the government and agencies like the Better Business Bureau. Your best bet is to steer clear of any MLM business, but there are those rare cases when a business is legit. Before joining these businesses, head to the Better Business Bureau and verify they are a responsible business with no major complaints registered against them.
After you have thoroughly researched the company, you may find out that it is legitimate and then need the capability to be able to accept a client’s American Express, Discover, MasterCard, or Visa credit and debit cards. Merchant processing companies do consider this line of work to be high-risk, so you must expect start-up fees to be extremely costly. Monthly processing fees will also be much higher. Say your company does $10,000 a month in business. From other merchant providers you should expect to pay:
- $200 to $1,000 in start-up fees. This covers installing the equipment or programs that will process the credit card information.
- $10 to $50 a month to hook up to the company’s credit card processing
- 2.5 to 5% surcharges for the total amount of each credit card transaction.
- Fees of 25 cents to $2 each time you swipe or run a credit card number.
- Charge back fees of up to $60 each occurrence. Too many charge backs can result in your company losing the ability to process credit cards, debit cards, or electronic checks.
- $5 to $10 monthly statement fees. This fee is charged so that you receive a monthly printout of your business transactions for your records.
- 10 to 40% of your monthly revenue must be deposited into an escrow account to cover charge back amounts.
Given these hefty fees, you might be paying upwards of $500 a month in processing fees, plus another $4,000 in escrow deposits, your payment to be hooked up to their credit card processing server, and the fees required for each credit card transaction. Your monthly income of $10,000 can quickly reduce to just a few thousand dollars after fees, taxes, and escrow payments. You must plan accordingly and make sure your business will be turning a profit and not driving you into debt.
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