Multi-level marketing operations are among the many industries that require high-risk credit card processing, and so they must seek out merchant service providers that are willing to accept high-risk accounts. Finding the right merchant services partner that suits the needs of a multi-level marketing business can be challenging, however, a basic knowledge of why the industry is considered high-risk will be helpful in the process.
What Is Multi-Level Marketing or MLM?
Multi-level marketing is also known as MLM. This is a type of company that uses direct selling as a way to sell their products. There are MLM companies for all types of things—from kitchen tools, to apparel and cosmetics, and even travel.
The structure of an MLM involves an individual who becomes a product distributor. This distributor earns profits based on their sales. Product distributors frequently sell products over social media or by hosting parties. They also recruit other distributors and then earn commissions based on the sales of those recruited distributors. This inclusion of levels of distributors with higher levels earning commissions led to the name multi-level marketing.
Many people see multi-level marketing companies as a way to start a business with a great deal of flexibility as you can choose your own hours as well as your investment level. This also means that the initial investment for MLMs can be as low as you need.
As mentioned, MLM companies require high-risk credit card processing, but why are they considered high-risk? There are a few factors that play a role in this designation.
To begin, there are legal risks associated with MLM companies. Specifically, multi-level marketing companies are legal but there are very vocal opponents to this company structure, which may result in gray areas of legality in some cases. For now, multi-level marketing companies are perfectly legal, but given the strong opposing views, including FTC investigations into specific companies, payment processors are not all certain they will remain legal.
Another risk associated with MLM is the high level of chargebacks. Many payments for multi-level marketing companies involve cards that are not present at the time, which increases the chance of chargebacks. There is also the risk of buyer’s remorse, which can also lead to chargebacks.
Additionally, some multi-level marketing companies have monthly subscriptions. In this case, it is possible for buyers to forget previously opting into the services or products offered. That also results in chargebacks.
There is also the simple fact that due to the structure of MLMs, marketers need to be able to accept payments online or over the phone as well as in person. The fact that many of the sales take place over the phone or online can increase the chances of fraudulent charges. Those charges also lead to the need for a high-risk merchant account. Unfortunately, there is no way for MLM marketers to get around offering these purchase options. Without them, they would lose a large portion of their customer base.
Challenges of Finding a High-Risk Merchant Account
It is possible to find a high-risk merchant account, but the process is not easy. Most merchant services providers actively avoid working with high-risk merchants. This can lead to multiple denials before being able to open a merchant account. When you do find a high-risk merchant account, the service provider may charge exorbitant fees which you’ll have no choice but to pay if you want to work with them.
High-Risk Merchant Accounts with BankCard Services
Finding a high-risk merchant account as a multi-level marketing company can be a significant challenge. Many will refuse to offer high-risk credit card processing, which is essential for sales. If they do offer these services, the application process will be time-consuming, and the rates tend to be expensive.
By contrast, BankCard Services specializes in offering high-risk merchant accounts. This makes us perfectly suited to assist multi-level marketing companies as well as their product distributors. With BankCard Services, distributors and companies alike are able to begin processing payments right away.
Other payment processors will turn their backs on multi-level marketing companies and other high-risk merchant accounts, but BankCard Services is eager to work with them. At the same time, we equip high-risk merchants with the tools they need to do things like protect against fraud and reduce chargebacks.
High-Risk Reseller Program with BankCard Services
Yet another advantage of BankCard Services for high-risk merchants like those in MLMs is the high-risk reseller program. High-risk resellers are able to use this program to offer high-risk credit card processing and other merchant services to their distribution partners. This saves those partners time and effort, letting them take advantage of the same BankCard Services tools as your MLM does.
For all of your payment processing needs, including high-risk credit card processing for multi-level marketing companies, contact BankCard Services.
We specialize in helping high-risk merchants earn approval for their high-risk merchant account quickly, and helping them maintain approval.