Most banks automatically view Multi-level marketing (MLM) merchants as being “high risk.” Due to this, MLM merchants may have a difficult time finding a merchant bank card with zero fees willing to process credit cards for their business. If you are an MLM merchant, your best solution may be a high risk merchant account.

MLM strategy

Multi-level marketing is a sound and legitimate strategy. It is a form of direct selling that encourages existing distributors to recruit new distributors for a direct sales company by offering a percentage of each recruits’ sales. This is a logical way to encourage profits for all: Salespeople sell products directly to consumers via networking and word-of mouth, and, in this way, all of the distributors make a profit through direct sales of products to customers. However, sound strategy that it is, most banks simply don’t want to be associated with MLM businesses.

Why are banks so unwilling to take the risk?

MLM merchants are unfortunately associated with high chargeback rates and the possibility of fraudulent activity due to the activity of some MLM businesses in the past. Some MLM merchants, for instance, have used pyramid schemes as a way to sell products – a strategy where money from new recruits is used to pay older recruiters, who are at the “top” of the pyramid. In order to earn the money back, the new recruit has to then recruit new members. Often, however, this doesn’t pan out: Recruits stop coming in and the recruiters at the top of the pyramid then end up with all of the profit while those at the bottom lose out altogether.

The use of pyramid schemes by some MLM businesses as well as other questionable tactics, such as price fixing of products, encouraging members to purchase the company’s products, and the company profiting from training events for recruiters, were once rampant. The saying “one bad apple spoils the whole bunch” applies in this case, and these companies managed to give the entire MLM business a bad name: Banks are very reluctant to provide merchant accounts to MLM merchants. As they see it, MLM businesses have proven themselves to be high risk in the past due to the actions of a few MLM businesses. Banks lost money on these particular companies and they aren’t willing to take the chance again. This attitude may not be accurate, but it’s how it looks from the point-of-view of the bankers. So, even if you have done business with a bank in other regards, they may deny you a merchant account when it comes to your MLM business. They simply won’t be willing to take the risk.

The solution

In order for your business to be successful, you need a merchant account that is reliable, affordable and flexible. Your MLM business must be able to process Internet/MOTO transactions consistently to maximize your profits. Your merchant account needs to have the ability to accept payments from around the world and process transactions made in a multitude of currencies, including euros and British pounds, and it must be up and running and available to accept transactions at all times, around the clock and every day. Furthermore, your merchant account should ideally operate on terms that are equitable to your business.

Contact us

Fortunately, we can help. We have been in the Merchant Account Industry since 1995. Our specialty is getting high risk merchant accounts approved and setup so they are continuously active and your business can consistently accept credit card payments through your website and avoid loss of sales. We have lots of experience and can get your MLM business a merchant account that will meet the needs of your business via the most favorable terms possible. 

Click HERE to Start Your Application

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