Not all merchant account providers are “friendly” MLM businesses using a direct sales or multi-level marketing approach to grow the business. Companies that are classified as “multi-level marketing” or “MLM” typically represent a higher risk from a legal standpoint -, potential charge-backs and unpredictable growth trends, which to many merchant account providers, are red flags that may prompt an immediate shutdown of the business’s merchant account.
So, what’s the difference between “unfriendly” & “friendly” merchant account providers?
An “unfriendly” account provider, once they learn that you are a direct selling or MLM type of business, will freeze or place a hold on your merchant account funds which basically means you’re out of business. We see many uninformed startup MLM or Party Plan companies sign up for one of these “unfriendly” easy-to-acquire, main-stream merchant accounts so they can start selling their products. However, later, when they do start experiencing tremendous sales volume and business growth they are suddenly shut off because the account has been flagged by the unfriendly provider as a “multi-level marketing” company.
Ouch!!! This type of tragedy is like someone that you thought you trusted suddenly sticking out their leg while you’re running a race, causing you to fall into a heap. Can you feel the pain?
Unfortunately, this is a common occurrence. When this happens, a launched MLM company who may have survived this unfortunate fall will quickly identify and select a friendly merchant account provider and continue running their race. Other may never recover and end up going out of business.
A “friendly” merchant account provider understands the unique business landscape, risks and trends of MLM type businesses. They will not shut your account off if suddenly, you experience tremendous business growth or sales volume. They know and understand the key business drivers that influence the success and profitability of direct sales type business. These are the companies you want to select from the beginning.
If you’re reading this article and you’re not sure if your merchant account provider is “friendly” or “unfriendly”, please contact us. I’m sure we can help.