The Need for a High-Risk Merchant Account for MLM Business

Smooth and efficient electronic payment acceptance is crucial for driving profits in MLM companies. Having an MLM merchant account empowers you to accept a wide array of electronic payment methods. Using an MLM payment processing service, you can efficiently accept credit cards.

Despite being a rapidly growing and lucrative industry, multi-level marketing (MLM) companies are often labeled as "high risk" by payment processors. While many MLM companies are reputable and well-managed, the industry has faced challenges. Some scams posing as MLM companies have become just another pyramid scheme, deceiving unsuspecting distributors and customers and eroding trust and financial security.

Despite these challenges, Host Merchant remains committed to providing payment processing solutions for the MLM industry.

Why Is MLM Business Considered High-Risk?

Several merchant services companies in the payment processing industry avoid working with MML businesses. Typically, the main factor that prevents them from serving MLM businesses is the sales model employed by MLMs, which involves recruitment. Traditional merchant account providers find the recruiting process misleading, as people involved are not transparent with participants regarding true business opportunities.

Another reason MLM businesses are considered high-risk is the challenges related to compliance with regulations surrounding financial products and income representations. Lastly, the risk of customer dissatisfaction or chargebacks may be higher compared to traditionally structured companies. Here are some more reasons why banks might avoid MLM businesses:

• Moderately High Chargeback Rate: Many MLM setups experience a moderately high rate of chargebacks. This is often connected to the essence of the business model, where new product sellers in the value chain may initiate chargebacks when facing difficulties clearing their inventory. Additionally, dissatisfied buyers expecting different results from the products contribute to an elevated chargeback risk.
• Verification of Product Claims: MLM businesses often revolve around products with claims that require thorough verification. Properly scrutinizing these products demands a more extensive underwriting evaluation than some banks are willing to undertake.
• Reputation Risk: Certain MLMs have been criticized and labeled as pyramid schemes, creating a "reputation risk" for banks and processors associated with these businesses. The negative publicity may influence service providers' decisions to work with MLMs.

Many merchant service providers avoid multi-level marketing businesses because they come with the above-mentioned built-in risks.

How to Get an MLM Merchant Account

Getting your MLM merchant account is simple. You need to apply along with some supporting documents. Given the high-risk nature of the industry, approval usually takes 2-7 business days for US MLM merchants once we receive a complete application package.

The documents we typically need include the following:

• A driver’s license or passport for the person signing up for the account.
• A voided check from the bank where processing funds will be settled.
• Three months' worth of business bank statements.
• Three to six months' worth of payment processing statements.
• Business formation documents like Articles of Incorporation.

Think of a merchant account as a short-term line of credit. That's why the account signer needs to have good personal credit. If not, you might consider adding a co-signer to the application who does.

Types of MLM Businesses

Let's take a closer look at some typical MLM business categories that greatly benefit from having merchant accounts from Host Merchant Services:

• Apparel
• Jewelry
• Home Products
• Health Products
• Toys
• Entertainment
• Beauty Products
• Fitness Products

The beauty of the MLM business model is its versatility—it can be applied to nearly any type of physical product or service. This means your options are practically limitless when choosing the right MLM venture.

Why Choose Host Merchant Services?

At Host Merchant Services, we take pride in our expertise in payments. Our deep knowledge and vast experience with high-risk industries enable us to provide you with the payment processing solutions necessary to manage and expand your business effectively. While we specialize in handling high-risk and high-volume payment processing, we also cater to standard-risk merchants, ensuring everyone can benefit from our top-notch services.

Our extensive banking network ensures account approval both domestically and internationally. Plus, our dedicated account managers are committed to guiding you to success every step of the way. Our recurring billing options boost sales and enhance customer lifetime value, solidifying your business's growth potential.

Our Level PCI-DSS-compliant platform keeps your transactions safe, and our free technical support is available 24x7x365. We offer API integration, virtual terminals, and batch processing capabilities to seamlessly accommodate your unique processing needs. With Host Merchant Services, you can effortlessly take control of your business.