The Conundrum for Collection Agencies
Collection agencies and accounts receivable management companies have long been the black sheep in the eyes of credit card companies and processors.  Anyone attempting to set up a merchant account as a third party debt collector can certainly attest to this fact as they are routinely asked to pay incredible processing fees and even hold a reserve of thousands of dollars to protect the credit card processing vendor.  While this may have been a valid practice in the 1980s and 1990s, it has been offset by the flood of debit cards and ACH transfers that are now the preferred method of payment for most debtors because the previous risks are simply not there for any of the parties involved.  However, collection agencies are still penalized as if there has been no shift for the rest of the business world.  The agencies that specialize in small business and medical accounts are the hardest hit with these penalties because the majority of their payments are $500.00 or less.  They are simply losing too much in per-transaction fees, increased fee percentages, and the dreaded reserve of funds to sustain profits while accepting credit or debit cards as third party debt collectors.Help Is Coming
There have been others to recognize the shortcomings of the current system for all businesses in today's market.  Some of these people have started a revolution the market with their own version of payment processing and money transfer solutions.  They have taken the banking aspect out of processing payments for all merchants, including debt collectors, and facilitated a direct transfer of funds between parties.  The trend is not only for collection agencies, either.  The state of Iowa announced in January, 2013 that they will be accepting payments from one such company for the payment of state taxes.  These companies are actively and quickly moving the trend from processing credit cards to a "cash-based" money transfer system that alleviates the demands that large banks place on small businesses, including collection agencies.Why the Trend?
First, the processing fees charged by the processors that facilitate direct fund transfers are incredibly low.  While processing a credit card, collection agencies are typically charged $0.30 - $0.50 per transaction on top of a 5% fee.  That means that taking a payment of $50 costs the collection agency around $3.  Small business collection agencies simply cannot afford this loss of profit on accounts and will often resort to other methods of payment that are less effective.  The newer fund transfer companies on the market charge debt collectors, and all businesses, around $0.25 to process a transaction of $10 or more via ACH transfer.  On the same $50 payment, that's an additional $2.75 that the collection agency brings in profit that would have been going into someone else's pocket before it even hit the door.  While traditional processors consider demand a reserve because they consider the transfers "high risk", these companies eliminate the risk for all small businesses by facilitating direct fund transfers.  Interestingly, the transfers are safer for both the person paying their debt and the collection agency because they are not tied to a credit or debit card number that contains personal information.  Finally, almost all of these companies have apps for smart phones that allow complete control and access to your information and payments.It's About Time
These new payment processors are certainly the face of the future for all businesses, collection agencies, and person-to-person fund transfers.  Gone are the days of discrimination against collection agencies because of the practices that were utilized 30 years ago, and the new age of debt collection and payment processing for all small business can begin.Robert CrawfordManaging MemberRTC Financial, LLCRTC Financial, LLC utilizes one of the new fund transfer processors mentioned in this article to keep the costs of paying debt as low as possible.  Contact us today to see the difference in the new age of debt collection.http://www.rtcfinancial.com