Is your credit repair business struggling to get a fair deal on a merchant account – or even to be accepted? NMA can help. Read on for our expert view on the challenges you face and then get in touch for more information about how we reduce your risks and costs.
Currently worth $2.8bn, the credit repair industry has experienced a -6.4% annualized growth since 2015, shrinking from a value of more than $4.0bn in 2014. The biggest challenge is that free credit repair services and guides are now more readily available online. Many savvy consumers prefer to rely on these guides rather than approaching a credit repair business.
Despite this, credit repair is still popular. Many consumers rely on these services to help them access more or cheaper credit, make a large purchase (for example, a car or home), or improve their chances of getting a job.
Why Are Credit Repair Companies Considered High-Risk By Banks and Credit Card Processors?
Credit repair services are considered high risk by credit card processors and banks because of the industry’s high chargeback rate. This is for two reasons:
First, customers looking for credit repair are likely to have pre-existing financial issues and may have used up all their available credit. This increases the chances that a customer will either not want to pay or be unable to pay.
Second, many customers pay a monthly fee for credit repair services and then cancel when done with the service. The chances of a chargeback increase if the cancellation process is difficult or if customers are not happy with the results.
In addition to these issues, some businesses’ negative practices have damaged the industry’s reputation in customers’ eyes. This creates reputational risk, and therefore many traditional banks will want to avoid these businesses.
How To Reduce Your Risk
With the credit repair industry shrinking, businesses must use best practices to reduce their risk and ensure they remain competitive. We recommend you:
- Make the cancellation process easy and quick to use so that customers don’t have to resort to a chargeback when they want to stop your service.
- Avoid billing confusion by ensuring your charge is clearly from your business when it appears on a statement.
- Manage expectations by providing clear communication – before and after the sale – on what you can and cannot achieve, and how long it is likely to take.
- Keep good records and save receipts so that you can effectively combat unfair chargebacks.
Finally, you should work with a card processor who understands your industry and can help you further reduce your risk.
How NMA Can Help You Manage Your Risk
Unlike a typical bank, we can help seemingly high-risk companies to manage their risk effectively through a combination of careful underwriting, relationship building, and ongoing monitoring. By taking care of the small details, we turn “high risk” accounts into “managed risk.”
Together, our payment processing solutions and global network of strategic partnerships enable your credit repair company to save money, reduce risk, and help you get funds deposited safer and quicker than with other competing solutions.
Contact NMA today to learn more about our expertise in providing high-risk merchant services for credit repair businesses. We Work For You™