Create Your Debt Consolidation Merchant Account
Thanks to the pandemic, American household debt has hit record highs. From credit cards to personal loans, the average American has $90,460 in debt as of November 2021. This presents a great opportunity for your debt consolidation business. As more Americans seek relief from high levels of debt, there will be greater demand for debt consolidation and settlement services.
While debt consolidators relieve consumers’ payment struggles, they have payment troubles of their own. Because the industry is considered high-risk, banks are reluctant to provide debt consolidation merchant accounts. Without a merchant account, you can’t process card transactions. This will severely restrict your ability to accept payments from customers.
With over a decade of experience serving high-risk industries, SeamlessChex can help you access the online payments system within days. Browse our high-risk payment gateways for debt consolidation businesses to find the best solution for your needs:
Why are Debt Consolidation Merchants Considered High-Risk?
The debt consolidation and settlement industry were worth $2.7 billion in 2020. As consumer debt continues to soar, the industry is on its way to enjoying unprecedented growth. This growth, however, is not without its challenges. The industry is plagued with so many problems that make it too risky for banks to work with.
Here are some reasons why banks refuse to provide debt consolidation merchant accounts:
Clients in Financial Distress
Many clients that seek debt consolidation are already in financial difficulties. These consumers often have a history of missed payments and are struggling to meet their financial obligations. People in financial distress are more likely to default on loans and file for bankruptcy.
While reducing total debt, consolidating loans can be expensive. The resulting amount can run into thousands of dollars and become a consumer’s largest monthly payment. It’s common for cash-strapped consumers to dispute these charges so they can keep some of their money.
High rates of disgruntled customers in this industry is another reason why banks refuse to offer debt consolidation merchant accounts. Some debt consolidation services don’t lead to lower monthly payments or improved credit scores. This produces plenty of unhappy customers and chargebacks.
High Risk of Fraud
You need a high-risk payment gateway for debt consolidation to combat the excessive rates of friendly fraud in this industry. People with cash flow issues are more likely to practice dishonest actions like disputing legitimate transactions because they need the money.