Why It’s High-Risk
It’s difficult for payday lenders to acquire merchantA business that accepts credit cards for goods or services. processing due to many factors.
The payday lending industry has an extensive regulatory history, involving consumer financial protection laws and restrictions on facets of short term loans, such as APR caps and outright prevention of such loans in various states.
These substantial regulations cause stakeholders in the payments industry to tread lightly when considering the liability of approving payday lending merchantA business that accepts credit cards for goods or services. accounts.
Banks are wary of the clientele, who may have bad credit and a history of making damaging financial decisions. This can lead to non-payment on loans, transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... disputes and more.
Financial institutions are also cautious in light of the numerous Consumer Financial Protection Bureau (CFPB) lawsuits against bad players in the payday industry. The intensity of these alleged abusive business practices has caused acquirers to place payday lenders on the prohibited list for merchantA business that accepts credit cards for goods or services. processing.
The high-risk label doesn’t have to be a scarlet letter for payday lenders. It’s just a signal to the real experts in payment processing, who have expertise in what really matters – approving and maintaining high riskA merchant that is considered a high risk based upon the credit, product, method, ticket size or volume. Examples of high risk merchants are telemarketing, adult and travel related industries. merchantA business that accepts credit cards for goods or services. accounts.
Challenge:
Regulatory and compliance concerns prevent some acquirers from approving payday lenders for merchantA business that accepts credit cards for goods or services. accounts.
Solution:
NMA never declines a high-risk merchantA business that accepts credit cards for goods or services. due to industry type.
Challenge:
Many merchantA business that accepts credit cards for goods or services. processing solutions catered to high-risk businesses aren’t extensive enough.
Solution:
NMA offers a wide range of services catered to the needs of a payday lending business, including check services, ACHAutomated Clearing House (ACH) is an electronic payment Network that exchanges funds via Electronic Funds Transfer (EFT) throughout the U.S. Over 98% of the nation’s banks including the Federal Reserve belong to the ACH. ACH is the paperless funds transfer system maintained by the Federal Reserve or other entities that have networks to exchange electronic funds transfer items...., PINPersonal Identification Number used by a cardholder to authenticate card ownership for ATM or debit card transactions. The cardholder enters his/her PIN into a PIN pad. The PIN is required to complete an ATM/debit card transaction. debit, merchantA business that accepts credit cards for goods or services. cash advances, recurring billing and high volume payment solutions.
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