The debt recovery agencies (also known as debt collection agencies) are firms that basically go after and pursue debts that are owed by other individuals or businesses. Most of the companies will basically operate as creditor agents. Creditors can be described as individuals or businesses that a company or an individual has a debt to.
The collection agency is normally hired by the person that needs to recuperate a debt based on a loan contract or a service contract that was not repaid. Alternatively, the agency can buy out the debt of an individual. In this case the creditor becomes the collection agency.
When referring to payment options that are available to repay amounts to collection agencies, various options are available. However, in all cases there are collection agency merchant accounts that are established. These are accounts that involve really high transaction fees as compared to the regular accounts that low risk businesses can use. As the fees are too high on a transaction basis, allowing people that are in debt to make credit card payments is practically impossible since there would be extra fees associated with this. Add this to chargeback costs that are normally often met and it is easy to understand that credit card payments are normally not offered.
The good news is that there is a current modification that appears in financial institution trends. Instead of simply trying to avoid small business collection agencies, there are financial institutions that became specialized in offering high risk merchant accounts. These bring in really interesting advantages, including the possibility of offering people in debt the possibility to make credit card payments. Fees are reduced and the company can offer this as a huge advantage and incentive to make the repayment process simpler for the people they deal with.
The only problem is that it is sometimes a little hard to find the merchant account providers that are specialized in dealing with the high risk clients. Many collection agencies end up in bankruptcy as they simply get high risk accounts from institutions that are close to where they live. This is not a good idea since there is a certainty that the fees will be really high. If credit card payments would also be offered, the chargebacks and the fees associated with every transaction will add up and lead towards bankruptcy.
What the collection agency manager needs to do is find the account providers that are specialized in dealing with the high risk accounts. Then, a comparison needs to be made in order to identify the best possible deals based on current business operation. In the event that credit card processing is necessary, extra discussions have to be made based on processing values that are expected. In many situations it is possible to save cash because of this discussion since new fees can be used.
As time passes and more collection agencies start working with the high risk merchant account providers, debt repayment will become easier and much more appealing for those that are in debt.
