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The Steps to Open a High Risk Merchant Account for a Collection Agency

Merchant Accounts for a Collection Agency

starting a credit repair business in Florida

According to the Federal Reserve, the total American consumer debt already reached $4.2 trillion in November 2019. For most Americans, taking out a loan or paying through credit cards has been a part of their lifestyle. But this is also the same reason a lot of people are drowning in debt.

With such a huge amount of debt, businesses usually hire a collections agency to take care of collecting the money that customers owe from them.

If you’re one of those running this type of business, you know that the nature of your work involves a lot of risk, which is why it’s also harder to get a merchant account to make your processes more flawless.

This guide will help you understand why your business is categorize as high risk and how you can open a high risk merchant account:

Why Do Banks Categorize You As High-Risk?

As a collections agency, you’ve probably been declined by banks for a few times solely because of the negative reputation that’s perceived by the public against your business.


Although your business is helping other organizations gain back the earnings they lost because of credits, you also take the most hit from consumers who don’t want to pay off past due bills.

There are also a small percentage of collection agencies that don’t work honestly, which affects the greater number of businesses that follow proper regulations.

Things like harassing consumers or reaching out to their workplace have been common practice for some agencies and it’s what tarnishes the reputation of the entire industry.

How Do You Apply For A High-Risk Merchant Account?

If you’re ready to apply for a high-risk merchant account for your collections agency, here are some of the documents that you need to prepare:

  • 3 months of your most recent bank statements
  • Voided business check
  • Verification of the company’s EIN number
  • Valid driver’s license for all application signers
  • Company articles of organization or business license

To give your business a better chance at getting an approval, you should make sure that your chargeback ratio is less than 1%.

Verify all documentation and work with your merchant provider in making sure that you have all your paperwork right and submitted on time to the bank.

What Merchant Fees Should You Expect?

If you get approved for a high-risk merchant account, you can expect some general fees that are either collected on a monthly or annual basis.

These include per transaction fees, discount rates, monthly minimum account fee and monthly gateway fee. You may also be charged with other fees depending on the bank that gives you the account.

The Bottomline

Although you’re classified as a high-risk business, you can still get approved for a merchant account with the right documentation and if you prove the credibility of your business.

If you do get the approval that you need, you have to make sure that you keep up with payments and keep your chargeback ratios as low as possible.

Ryan Kemp Zulu Shack Creative
( Director of Digital Marketing )

I am passionate about delivering results and helping my clients succeed. With my expertise in SEO, branding, and marketing, I lead the agency’s efforts to create and implement effective strategies that drive business growth. Our all-inclusive approach sets us apart from other digital media companies and ensures that our clients receive the full range of services they need for online success. If you can think of it, we can build it!

Zulu Shack Creative team members thrive on momentum. Like Zulu warriors, we strive to spearhead your idea with speed and quality.

When I’m not helping my team implement new digital marketing strategies, I enjoy playing music, hosting poker nights, reading Stephen King novels, and spending time with my wife and baby daughter.

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