High Risk Processing for Multi-Level Marketing
The 1980s and 1990s saw dramatic growth in the Multi-Level Marketing (MLM) industry. Multi-Level Marketing allows individuals to become product distributors for everything from cosmetics to kitchen tools to lingerie and get paid a commission on sales and/or the number of distributors He or She recruits. High Risk Multi-Level Marketing Merchant Accounts are not easy to obtain. Let the professionals at SecureGlobalPay show you how to get approved and stay approved.
When the industry began, Multi-Level Marketing marketers would recruit interest by hosting parties. Now marketers are able to grow their business via social media and various alternative platforms. Multi-Level Marketing Merchant Accounts are not easy to get approved due to the various risks involved. MLM Companies turn to SecureglobalPay for their High Risk Credit Card Processing needs.
Multi-Level Marketing Merchant Accounts
Despite the growth of the industry, traditional financial institutions are reluctant to work with High Risk Multi-level Marketing companies. The industry’s unpredictable growth patterns and history of chargebacks cause it to be viewed as high-risk by banks. The result of this is that MLM marketers seeking to process credit card payments online are often charged with high percentages and transaction fees in addition to the more than likely and often uncomfortable processing volume caps. To avoid this, MLM marketers can turn to High Risk Merchant Service providers like SecureGlobalPay. They specialize in providing MLM distributors custom credit card processing solutions and Multi-Level Marketing Merchant Accounts.
SecureGlobalPay can usually approve merchant accounts for High Risk Multi-level Marketing within 48-72 hours. SGP offers the MLM industry fraud filters, chargeback management tools and PCI-compliant payment gateways. Fill out SecureGloalPay’s online merchant application form to begin processing payments immediately.
Credit Card Processing for Multi-Level Marketing Products
According to the Direct Sales Association, 5.3 million people work as direct sellers in the Multi-Level Marketing industry, with 800,000 working full-time and 4.5 million part-time. All are eligible to purchase products at a discount and resell them for a profit. The ability to securely and efficiently process online credit card payment transactions can mean the difference between success and failure. Applying for a SecureGlobalPay merchant account is the first step. High Risk Merchant Services are what we specialize in.
SecureGlobalPay provide merchant accounts for Multi-Level Marketing businesses offering following products and services:
- Beauty
- Books
- Clothing
- Fitness
- Health
- Home Products
- Jewelry
- Toys
- Wine
Almost anything can be sold via MLM. Contact SecureGlobalPay to discuss obtaining payment solutions for businesses offering these or any other products and services.
SecureGlobalPay specializes in working with high-risk merchants. We work hard to help MLM businesses of all sizes to succeed. Apply now for an MLM merchant account.
Obtaining an MLM merchant account
Fill out SecureGlobalPay’s secure online application form to begin the process. To speed the process, have the following ready to provide to our underwriters.
- A valid, government-issued photo ID (e.g., driver’s license, state/provincial ID, etc.)
- A bank attestation or void check
- Bank statements (3 months worth)
- Processing statements (3 months worth)
- SSN (Social Security Number) or EIN (Employer Identification Number)
Please note that your history of chargeback ratios must be under 3%.
E-commerce businesses must have a secure and fully operational website.
Approval is not guaranteed. But with your application and the documentation above, SecureGlobalPay underwriters can work towards approving your application within 48 hours. Apply now.
Preparing for the underwriter’s review
Underwriters face special challenges when reviewing applications from MLM businesses. According to the US Federal Trade Commission, many multilevel marketing businesses are not legitimate. Therefore, in order to approve applications from MLMs, underwriters must ensure the marketers in question are running reputable, law-abiding businesses that pose no financial risk to credit card processors.
Due to the high risk of fraud in the industry, underwriters seek to ensure MLM marketers are selling products that are not dangerous to consumers, overpriced or of questionable merit. Because such practices pose risks to credit card processors, underwriters work hard to ensure the MLM marketer in question operates according to a sound business model that will not result in a high volume of credit card chargebacks.
In evaluating applications, underwriters examine an applicant’s bank statements, credit scores and credit card processing history. Businesses that have had online merchant accounts closed in the past pose a risk to processors. Merchants with negative balances, unpaid bills, missing payments or excessive chargeback ratios are more likely to be viewed negatively by underwriters.
MLM merchants with one or more such red flags risk a decreased chance of having heir applications approved.
The following will increase the chance of approval for MLM businesses:
- Bank savings
- No outstanding bills and debts
- A principal in the business with a good credit history to act as applicant
Identifying and removing red flags will increase an MLM business’ chances of approval by underwriters. These merchants are also more likely to avoid merchant account limits, volume processing caps and possibly receive lower rolling reserves, all of which can be applied to high risk merchants as a way to reduce the risk to processors.
Excessive MLM chargebacks due to fraud
The multilevel marketing industry has acquired a reputation for being unlawful.
According to the U.S. Federal Trade Commission, because MLM businesses generate large amounts of money by recruiting and selling merchandise to others for resale, they effectively amount to a pyramid scheme. This perception is reinforced by the fraud and illegal activity of some players in the MLM industry.
Multi Level marketing businesses sometimes reinforce this perception. Sudden closure of MLM outlets, a high level of chargebacks or requests for refunds by customers can be the result of poor communication. Vague company descriptions, constant self-promotion or questionable products and services only reinforces the public impression of MLM companies as pyramid schemes in which distributors make more money by recruiting new sellers rather than selling products to the public.
Hallmarks of Legit MLMs
Legitimate MLM businesses are characterized by long-standing reputations for efficiency and customer service, such as Avon or the Pampered Chef. Companies like this provide a roadmap for success in the industry.
Vagueness about company policies and operations or fake claims about profits are red flags. Legitimate MLM distributors should be transparent and willing to answer questions about all aspects of their company’s business. An unwillingness to disclose details about their operations or excessive focus on recruiting new members are red flags for this industry.
Excessive Chargebacks for MLM’s: The Problem
Credit card processors can be penalized for sponsoring MLM merchants with excessive chargeback ratios. When a business exceeds a 2% chargeback ratio, companies like MasterCard and Visa can penalize online credit card payment processors with thousands of dollars in financial penalties.
A ratio of 3% or more for chargebacks means that merchants are no longer profitable for credit card processors. This inevitably leads to closure of accounts. If 4 out of 100 transactions per month are chargebacks, then the business has a 4% chargeback ratio and poses a risk to its online credit card processor. Merchants must take every possible measure to avoid excessive chargebacks.
How to avoid Multi-Level Marketing Chargebacks
Providing great customer service can go a long way toward preventing excessive chargebacks. When merchants are communicative, transparent and responsible, customers are far less likely to experience dissatisfaction and initiate chargebacks on products or services. When merchants offer quality products, good customer service, a sound refund policy and demonstrate a willingness to improve their services, this generates confidence in the business.
Effective communication is key to this process. Because many chargebacks are initiated by customers who do not remember purchasing a product or service or who fail to recognize transactions listed on credit card statements, merchants can take steps to head this off at the pass. Providing sales receipts listing the merchant’s contact information, e-mail address and customer support phone number will help ensure there are no surprises.
Customer satisfaction surveys sent immediately after a purchase can also remind customers of the transaction and prevent chargebacks.
Providing 24-hour customer service support can also serve to limit credit card transaction disputes. If a customer can reach out and speak to a company representative about a problem or concern, it lessens the likelihood of a transaction dispute becoming a chargeback by providing an easy path for obtaining a refund.
Managing chargeback ratios effectively can make the difference between running or closing a business.
Multi-level Marketing Merchant Account Categories
Four-digit numeric codes known as Standard Industrial Classification (SIC) codes are common in the United States and many other countries for identifying businesses and their primary purposes.
Direct selling businesses fall into the category 5963: Direct Selling Establishments.
A complete SIC list is available via the US Department of Labor website.
A similar classification system known as NAICS (the Northern American Classification System) is a list of six-digit codes used by federal statistical agencies to classify business establishments. The classification system aims to gather, analyze, and publish statistical information about similar types of businesses and their impacts on the U.S. economy.
HIgh Risk Multi-level Marketing and direct sales businesses are categorized under 454390: Other Direct Selling Establishments NAICS code.
Visit the United States Census Bureau to view the complete NAICS code list.
Apply with SecureGlobalPay today!
- No Application Fees
- Fast Approvals
- Multiple Secure Payment Gateway Options
- LOW Rates and Fees
