Optimize your ARM business with the right payment processor!
One characteristic of collection agencies that complicate payment acceptance is the nature of their business. Not only are these agencies in a highly regulated industry, but they are also unfairly classified as a high-risk industry and lumped in with gambling, nutraceuticals, and cryptocurrency companies to name a few.
That’s why we’ve outlined the 8 must-have requirements for payment providers in the Accounts Receivable Management industry. You will learn what to look for when evaluating payment providers and what you should insist your current provider has
Because the industry continues to change and evolve, a payment provider that has been operating for at least 15 years is optimal to ensure they have the track record and experience to handle payment acceptance in the ARM industry.
This goes without saying, but your payment vendor should have deep experience with the ARM industry. With the Consumer Finance Protection Bureau (CFPB), the Fair Debt Collection Practices Act (FDCPA), plus card brand rules, there is much to keep up on in the ARM payments space. Payment providers that don’t stay current with regulations and industry rules put your business at risk.
With a multitude of payment providers and platforms out there, it takes a lot to earn a seat at the table with American Express®, Discover®, Mastercard®, and Visa®. Having direct relationships with the card brands ensures your payment vendor is in on pricing changes, compliance news, and ever-changing rules around payment channels. In addition, direct relationships with ACH providers is crucial to helping out with issues in ARM that arise or new processes that come up. If your payment vendor doesn’t have these relationships, they may not understand, or even be aware of, important changes and adjustments.
Going hand-in-hand with the card brand relationships are the limits they sometimes set with certain payment processing models. For example, with the Payment Facilitator (PayFac) model, there are strict card brand limits for each merchant of $1,000,000 per year. This may not seem like a big issue, but for large and growing collection agencies, exceeding $85K in transaction volumes per month is pretty easy to achieve. And for top agencies, it can be way more than that. That’s why picking a payment processing model that fits the ARM industry is vital to an agency’s success. And if there are any limits set, they should be based on the underwriting process and will be specific to you.
Your ARM payment provider should have PCI-DSS Level 1 compliance, in addition to HIPAA if you deal with medical collections. However, some agencies don’t look further than that, even though certifications such as SSAE 18 (SOC I and SOC II) and NACHA are important to the operation of your payment provider. It’s always a great idea to ask your payment processor for their AOC (Attestation of Compliance) and certifications because many of them require annual or sometimes quarterly audits to recertify, so it’s important to make sure they are up-to-date. Also, best-in-class payment providers will help you become PCI-DSS compliant and maintain your compliance through partners like SecureTrust.
As mentioned before, collections are considered a high-risk industry, and that comes into play with the sponsor bank. The sponsor bank is the entity that funds the merchant’s bank account, clearly one of the most important steps in the payment process. So, you not only need a sponsor bank that will take on the perceived risk of sponsoring a collection agency, but you need more than one to ensure you continue processing if one bank goes offline.
Another seemingly obvious one is integration with your core system. This is important because a seamless integration between your payment processor and your core system will make accepting payments super simple. Extra bonus points if your payment provider has a homegrown payment platform equipped with SOAP and REST APIs. And if they have a technical staff to build custom components if necessary, all the better.
Having several dedicated MIDs, or Merchant IDs helps to de-risk your business and be sure you’re not sharing a MID with companies that are not associated with yours. There are some payment processing models out there that have pooled MIDs, where you are sharing a MID with several other companies that are not associated with yours.
Takeaways
The ARM industry is changing drastically, and you need to ensure that your payment provider is offering everything available for your business to succeed. Get started by requesting a free demo, today!