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Top Things to Know about Collections Credit Card Processing

Top Things to Know about Collections Credit Card Processing

Collections Credit Card Processing, an agency’s tool for success!

In an ideal world, a customer would pay the amount they owe after using credit to make a purchase. However, the real world doesn’t operate so neatly.

If a customer can’t or won’t pay the money they owe, that’s when a business involves a Collection agency to implement their own set of methods and negotiate an agreement with the customer that works for all parties involved.

Bottom line, companies don’t want to lose money, and individuals don’t want bad credit. Collection credit card processing is a tool that collection agencies can use to solve many issues facing the industry today.

Clearing Bad Debt

Collection agencies don’t have any more authority than the business that initially contacted them for help. All they can do is reach out to the customer and negotiate a final settlement, usually involving a lower amount or a payment plan that makes both parties happy (somewhat).

If a debt Collection agency can’t make any progress with a customer, that agency might pass on the responsibility to another agency that specializes in people that jump states, change addresses, or try to allude payment in various other ways. Eventually, the agency will have no other option but to write off the debt or take the customer to court.

The entire process can be timely and cost more than the Collection agency first thought.

High-Risk Card Payments 

Collection agencies are known as “high-risk merchants.” Which makes sense since they work exclusively with people that didn’t pay their debts.

Why Collections is a High-Risk Industry

In any business, like retail, there’s always going to be chargebacks. Still, in high-risk industries, like Collections, chargebacks are a lot more common. Chargebacks can happen because:

  • There was an error at the point of transaction (expired card)
  • The cardholder disputes the transaction
  • The purchase was made fraudulently

As a Collection agency, it’s essential to keep in mind that payments will be rejected and withdrawn from your account whenever chargebacks happen due to the high-risk nature of your industry. To rectify that, you’ll need to spend time providing relevant proof that the transaction was not fraudulent. Again, this makes a time-consuming process take even longer.

Merchant Accounts for Card Processing

This brings us to merchant accounts! Merchant accounts are a particular type of account held directly with a bank. To put it simply, the merchant accounts allow a business (like a collection agency) to accept debit and credit card payments.

If you’re a small business or start-up, you might use a provider like PayPal to process your card payments. However, providers like PayPal won’t work for collection agencies. PayPal is an aggregate provider, which means they operate one large merchant account for millions of individuals and businesses. High-risk accounts are not their target business partner. They tend to freeze high-risk accounts at the first sign of trouble to protect themselves. Again, this works great for businesses selling a product or service, but it’s terrible for Collection.

If a collection agency’s account is frozen, customers can’t pay their debts/payments, which means everything comes to a halt, and your business would most likely crumble. That’s why they need a provider that understands the nature of the industry so you’re never left in the wind. 

How Credit Card Processing Helps the Collection Industry

It’s proven that when you provide your customers with more ways to pay, THEY ACTUALLY PAY! Businesses that implemented a credit card processing portal (previously not having one) found their rate of on-time payments increased by roughly 60%. 

By making convenience a focus, you significantly cut the downtown for payment and the number of resources spent tracking down each and every customer.


We’ve established that Collections credit and debit card processing is a necessary tool for an agency to be successful. You can offer your customers more ways to pay at their convenience.

Choosing the right provider helps your customers pay you on time and helps avoid freezing your account needlessly.

The real deciding factor is how your provider handles your account regarding the high-risk nature of Collection. Since REPAY was founded, Collection has been a cornerstone of our business. We know the industry and are proud to partner with some of the biggest names in the space.

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