Background Check Payment Processing. Boost Your High Risk Business
Background check services are high risk

Background Check Payment Processing. Boost Credibility Even As A High Risk Business

Employment, criminal, credit, professional, universal.... Background checks and screenings come in all forms.

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Background check services have been mostly used by employers. But, there are other industries and companies that use these services. Financial institutions, banks, private investigators just to name a few. Apartment rentals and landlords, even volunteer organizations, too now require background checks.

That means numerous companies are offering these types of services and access to private information online. You might not be a First Advantage of a SterlingBackcheck. But needless to say, the background verification industry is very lucrative. It’s estimated that the industry had a worldwide market value of $5.2bn in 2018. In the US alone, it has a total revenue of $3bn in 2019, and an average growth rate of 4.8% (2014-2019). It’s safe to say that you should be generating at least $50K per month or more from online background check services.

So, you’re operating in this huge industry. It should be easy to get a merchant account, right?

We don’t mean mainstream payment processors (e.g. Stripe, PayPal). We don’t mean platforms with strict rules and unfavorable to background check companies. We’re talking dedicated and independent merchant accounts. Channels that allow you to accept payments online.

No, it’s not easy, and the answer lies in the nature of background check companies.

 

The nature of high-risk processing industries, and background check companies in particular

As the global market becomes more accessible, international hires are commonplace. Organizations want to minimize exposure to employee liability. As such, it’s becoming increasingly important to verify the identities and backgrounds of new hires. Plus, the increased use for on-demand workers has increased continuous (post-hire) background checks.

Background verification and criminal record check companies are classified as high risk businesses by credit card processors. Industries deemed high-risk require payment processing designed for that type of business environment. There are many reasons why background check companies and others have been categorized as high risk. A couple of these reasons are:

  • High chargebacks or fraud in the industry
  • Potential liability if a verification is done without that person’s consent
  • Offering services on a recurring billing model
  • High transaction prices for corporate packages

 

But, with the in-demand nature of your business, customers must have easy access to pay for services. So, you need to give them options without jeopardizing your business. A high-risk merchant account allows you to give your customers the convenience of doing business with you online.

 

The ‘intrusive’ nature of background checks

Background checks aren’t limited to providing credit scores and criminal background checks. It can include criminal history, education, employment verification, credit history check, and more.

Companies also offer services that include social media background checks and international background checks.

Therefore, you work with highly sensitive information daily. Based on the nature of your business, you should already have applied for a high-risk merchant account. If you haven’t done so, contact DirectPayNet. We can walk you through the process of getting approved for a background check merchant account solution.

 

Compliance problems for background check companies

As we’ve noted, when you own a background check company, you hold a lot of confidential and sensitive data. Data safety is, therefore, of paramount importance to your business and to the companies looking to do business with you. These are just a few of the industry-specific compliance requirements necessary for being approved for a merchant account.

  • Your industry regulations
  • Industry regulations differ by region, country/state. For example, there are:
    • state, local, and federal requirements for employee background checks. This includes the Federal Fair Credit Reporting Act (FCRA) in the US.
  • Directives from the EU, including Data Protection Acts, and relevant member state regulations.
    • So, it can be a compliance nightmare for background companies, especially if you operate in the international market. Failure in these areas can impact your approval of a merchant account. After all, like the service you provide for other businesses, merchant processors will conduct a background check on you.
  • Data security
    • Background check companies end up with a significant accumulation of individual sensitive data. This data must securely stored. Train staff to know best data security practices for handling confidential information. Additionally, have top-notch PCI compliance once approved to accept online credit card orders. Hire an outsider vendor to scan your environment. They should inform you about potential security breaches.
  • Reliance on AI for background checks
    • Artificial intelligence (AI) is great for getting objective, data-driven information. Unfortunately, it’s not foolproof. Any inherent bias in your AI background verification tools can lead to compliance issues.

 

Getting approved for a merchant account as a background check company

In your industry, quick turnaround of reports is the expected norm. So, being unable to accept credit card payments can severely affect your growth. You need to maintain all the competitive advantages you have in your corner. Therefore, here are a few ways in which you can improve your chances of approval for a merchant account.

Don’t violate terms that leave you penalized

This is self-explanatory. For example, approval for loans under false pretenses. You deliver receipts on individuals wanting to do business with a variety of institutions. But, background info about you will become known too.

Approved merchant accounts still undergo checks and due diligence. Any false representations used to open your merchant account, is discoverable. It could result in penalties. Yes, even being MATCH list or added to the Terminated Merchant File (TMF). This kind of punishment creates issues for accepting future credit card payments.

 

Have a good credit history

Know those credit checks you do? They are performed on merchant account applicants too. To improve your odds of approval, ensure you have a strong credit history personally as well as with your business. Ensure not to have too many open merchant account applications as this will impact your credit score and make it more difficult to get an approval.

And speaking of personal history, this brings us to the next criterion.

Maintain a strong personal character

Merchant processors look at character traits of applicants. Especially since you’re in the business of background checks, you must show you will maintain people’s private data with the utmost respect. Plus, you may need character references from reputable sources like your bank.

 

Develop a strong processing history

Firstly, keep organized financial records. Next, ensure you do basic things such as clear transaction descriptors to limit chargebacks. For example, use your company name as the descriptor so customers can quickly determine what the charge on their bill is for.

Make sure you notify customers when billing will start. If they had intended to cancel and didn’t, then they will often file a dispute and force a chargeback.

If you offer recurring billing, make sure your checkout page is not pre-filled.

 

Have excellent security measures in place

Again, you handle a lot of sensitive data. Even if you’re pulling the information from other sources, you need to show how your company treats this data securely. So have internal processes, software, and guidelines for the acquisition, handling, and storage of this sensitive information.

 

Ensure you maintain PCI Compliance

In keeping with your security measures, ensure you are PCI compliant. This is a major criterion for doing business with merchant processors. You need to show what procedures you have in place to protect credit card processing information.

 

Read the fine print

Not all merchant account processors are suitable for your business. You should want a reliable merchant account. Plus, you want to limit your chances of being placed on the Match List. So, if you’re going it on your own, review the documentation, allowable businesses, and fees associated with the merchant account you choose.

 

How DirectPayNet helps background check companies

Want to improve your payment processes and make bank? Start off on the right footing. Apply for the right type of background check merchant account solutions from the get-go. You stand a better chance of long-term success when you do.

At DirectPayNet, we understand the needs of high-risk companies. Also, we understand the sneaky ways banks and other payment processors will jack up fees on unsuspecting merchants. The best way to navigate these murky waters of merchant processing is by partnering with an expert at high-risk payment processing.

DirectPayNet has worked with high risk companies across many verticals, including yours.

That said, email the DirectPayNet team and let’s start moving the needle beyond the $50,000 monthly volume cap. Let’s talk better payment options for your customers and lower processing fees for you.

About the author

I serve as the portfolio manager and operations assistant at DirectPayNet. Prior to helping high-risk merchants navigate credit card processing and compliance, I gained extensive experience in affiliate marketing for several online retail verticals (including education, health, insurance, sports and gaming). In 2016, I became a certified fraud examiner (CFE). You can email me with any questions about merchant accounts.