Merchant Accounts for Payday Loan Companies
Honest Payday Loan Companies?
If you own an honest payday loan company business and are looking for a merchant account, we may be able to help
In recent years, the payday loan industry has gotten a bad name, largely due to the actions of some unscrupulous lenders. Unfortunately, that can be extremely problematic.
Merchant services accounts – also called merchant accounts – are the type of account that allow companies to accept credit cards. In certain industries you can get a merchant account simply by going to the bank and applying. However, in industries that banks and processors consider to be high-risk, it won’t be that easy. Most banks will deny merchant accounts to all businesses in industries that they consider high risk. So what is it that makes an industry high risk? Well, there are a few things. Businesses that operate in a legal gray area – such as medical marijuana distributors – are considered high-risk. Industries in which businesses typically don’t survive very long are considered high risk, as are industries that have a high instance of credit card fraud such as bail bonds and pawn shops. Essentially, banks want to avoid offering merchant accounts to any business that may abruptly close its doors or that may have a large number of customers demanding chargebacks.
Because of a few unscrupulous lenders, the payday loan industry is considered high risk. One reason for that is because not all companies operate within the auspices of the law. Not too long ago, the Better Business Bureau issued a warning about payday lenders who claimed that state and federal laws did not apply to them. These companies would charge illegally high interest rates that were in violation of state usury laws. For instance, one Massachusetts woman reported making over $1,700 in payments on a $225 loan. The reason that some companies get away with unfair and often illegal lending practices is that they are online companies based in other countries or on reservations and thus, even though their customers are in the United States, they claim that state and federal laws do not apply to them. Although some online payday lenders are on the up-and-up, the few who are not have given a bad name to the whole industry and thus made it harder for everyone – even the good companies with fair practices – to get a merchant account.
Another reason that payday loan companies can appear risky for merchant account purposes is that some do not have solid underwriting criteria. That is, although it is a payday loan, not all companies check to ensure that the loan recipient actually has a job. Many don’t do credit checks, either. This is problematic in that it increases the risk for the company – and in turn, it increases the risk for the institution offering the merchant account.
So if you are a payday lender and you want to get a merchant account, what can you do? That’s where Rapid Financial Solutions comes in. Rapid Financial Solutions specializes in getting merchant accounts for a business that is considered high risk. That includes a merchant account solution for payday loan companies. You can avoid the repeated rejections and frustrating application process you will face if you attempt to get a merchant account through your local bank – just contact Rapid Financial Solutions today.