Debt collection has become the new redheaded stepchild of the payments industry.
Wendy Jacques, sales manager at Instabill, is very astute when a banking shift has occurred in certain industries. That’s when the leads from particular merchants come rolling in. As a payment processor for high risk industries, Instabill prides itself on offering credit card processing for nearly any industry. At the moment, debt collection has us stumped. We currently do not have an option — very few PSPs do.
We think there are very big changes in store for debt collection merchants, particularly those who buy debt, then try to collect.
Debt Collection: End of an Era?
The debt collection industry used to be a money-making machine. For years, collection agencies bought debt from hospitals and other agencies, slapped a high interest rate and pursued – sometimes unscrupulously – consumers who owed. Over the last three months, that has all changed. The days of buying debt and marking it up are likely over, and new regulations are forthcoming.
“It’s almost impossible to get done right now,” said Ms. Jacques, who said she has fielded an influx of inquiries for debt collection merchant accounts over the last six weeks. “Visa and MasterCard are not allowing us to process credit card transactions for buying and collecting debt. For the moment, it sounds like (the industry) is falling by the wayside, at least until they figure out some regulations.”
How the CFPB is Changing Debt Collection
The Consumer Finance Protection Bureau is changing the game when it comes to collections, payday loans and other industries it deems consumer unfriendly. The CFPB is expected to release new regulations for debt collection in December according to a recent edition of Collections & Credit Risk daily e-newsletter.
What is good news for the consumer is not so good news for collection agencies. Recent headlines in Collection & Credit Risk – Court Allows for Class Action Against Collections Agency and Courts Halt Three Debt Collection Operations (May 26) – favor the consumer more than the merchant. It is a sign of the times.
“We’ve gotten quite a few calls because banks are giving debt collection merchants 60 or 90 days to find another bank or processor,” said Ms. Jacques. “We just don’t have a solution for companies who buy debt right now,” said Ms. Jacques.
Keeping a Keen Eye
Instabill merchant account managers and copywriters will be watching the plight of debt collection merchants – as well as other industries like payday lenders, ammunition merchants and others targeted by the CFPB – very closely. To discuss our merchant account options, simply click the live chat option below or speak one-on-one with a merchant account representative at 1-800-318-2713.