Tens of thousands of bail bond payments will be processed before the end of the year. And if you’re in the business of getting people out of jail, knowing how to set up a proper merchant account to take payment for your services is necessary. Keep reading along to learn everything you need to know about bail bond merchant accounts.
Why Are Bail Bonds Merchants Needed?
In theory, bail payments help ensure that someone who has been accused of a crime will have enough material stake in their case that they will not flee the country or choose to skip their court date. However, anyone who has navigated the court system will tell you that the process involved in paying bail is not always so straightforward.
Why? Well because most people can’t afford a few thousand dollars (depending on the crime and set bail) to get out of jail..until proven guilty. So, this is where the business of bail bondsmen comes into play.
Through the use of a bail bond merchant account, bondsmen can accept payments from their clients via debit cards or credit cards. Bail bond merchant processing helps ensure that the payment can be made easily, and securely. And that their client (the defendant) can leave jail until their trial date arrives.
As you’d probably expect, the nature of the criminal justice system causes the process of making bail payments to be notably different than, say, making a payment at the grocery store.
With that said, a bail bond merchant account is a specific payment processing account that high-risk bail bond businesses use to accept different types of digital payments for their services.
Currently, for-profit bail bond companies are used in the vast majority of all states. Being able to accept a wide variety of different payment types can help make it easier for bail companies to then securely pay their client’s bail. And, in turn, give its client the freedom to live their life until their court date actually arrives.
What is a Bail Bond Merchant Account?
The bail bonds industry is considered a “high-risk” industry. As a result, is often treated differently than other consumer-oriented businesses that offer lending services. Many payment processors do not have the ability and bank relationships to accept bail bond-related payments. Therefore, a bail bonds merchant must use a high-risk bail bond merchant account. This will allow these payments to be processed.
There are quite a few reasons the bail bonds industry is considered risky. While we like to think that our system rests on the principle of “innocent until proven guilty”, that principle doesn’t always apply. To some, the very fact that the client has been accused of a crime creates a situation where posting bail on their behalf is quite dicey. Even if it’s a secured loan.
In many cases, the only real “collateral” provided by the borrower (defendant) is the promise that they will return for their assigned court date. But if they choose not to return, then the capital used to secure the bail bond could be at risk. As a result, risk-averse lenders will avoid issuing these sorts of loans altogether.
But companies that are involved in the bail bond industry know what they are getting into. They know that while many of their clients are riskier, most bail bonds are still eventually returned (often with interest). Bondsmen know they play a critical role in the criminal justice system. They can help prevent people from being detained for months—or longer—before they are even convicted of a crime.
They also know that in order to establish themselves within this industry—one that has thousands of other competing bail bond companies—they will need to establish a secure and efficient merchant account that can be utilized to take card payments for these situations.
Why Do Bail Bond Merchants Require a High-Risk Account?
Banks determine bail bonds businesses as high-risk due to the nature of the
Industry. Which could include inconsistent cash flow, an excessive amount of chargebacks, and shady clients. Bail bond clients often attempt to avoid payments, skip court, or dodge communication with their bondsman.
Even if a client did complete their contract to satisfaction, they could attempt “friendly fraud.” Which would be disputing their bail bond charges on their bank statement once their trial is over. An increased risk of chargebacks means a high-risk label for the merchant.
Because of this obstacle, these merchants need to look for a bail bond merchant service company that offers high-risk merchant account bail bond payment solutions. Traditional payment gateways fail at offering these services. But with the proper research and documentation, this industry can still offer digital transaction options for its clients.
A high-risk merchant account will enable bail bond merchants to:
- accept credit card payments and ACH transactions for selling secured and unsecured bonds
- finance a defendant’s bail bond premium
- pay bounty hunters to recover defendants who flee, along with their assets
Things to Do Before Establishing a Bail Bond Merchant Account
Establishing a bail bond merchant account isn’t exceptionally difficult. But, you will need to make sure you go about the process in the right way. Failing to get the right documents and certifications in place could delay the opening of your account. Or create other issues. Fortunately, most of today’s leading bail bond merchant account providers like ECS, make it easy for you to get set up.
Establish Your Business Credentials
Before opening a new account, the first thing you will need to do is make sure you are legally allowed to issue bail bonds. As suggested, the laws governing the bail system can vary tremendously by state. Right now, two states don’t have any cash bail system in place. While other states have general modifications to their system.
Some states will require you to pass an exam and even a pre-licensing course before you can actually open your business. If you are unsure whether you are allowed to establish a bail bonds merchant account, consider speaking with an attorney who is currently licensed in your state.
Gather Your Documentation
Once you have been given the “green light” to officially operate as a bail bond issuer, the next thing you will need to do is organize and submit your paperwork. Again, this process can vary by state.
In general, you will likely need to have:
- a state-specific business license
- a bail bondsman state license
- additional municipal or county license
This will be dependent on where you plan on operating, as well as the jurisdictions most of your clients will come from.
Additionally, you will also need a business-specific bank account and an employer identification number (EIN). These numbers are issued by the federal government. Think of it like a social security number for your business. They are essential for anyone who will hire additional employees.
Usually, all of the licenses mentioned above will have a simple application process and can be purchased for a corresponding fee. Once you have completed each of these steps, congratulations! You are now a licensed bail bond issuer.
Establishing Your Bail Bonds Merchant Account
Now that you are an officially licensed bail bondsman, the next thing you will need to do is create the infrastructure needed for your business to thrive. Take some time to compare different bail bond merchant platforms you might want to use.
There are many available merchant account platforms available to choose from. However, you will most likely need a well-established high-risk payment processing company. ECS, for example, is a popular option that has gained praise for its secure platform and user-friendly interface.
When creating your account, there is a checklist of items you will need. You will likely need to present the information mentioned above. As well as your business bank account number, business license number, your employer identification number, address, government-issued identification, and other important bits of information.
Payment processors consider the following factors when making a decision on a merchant’s application for processing:
- Adherence to laws
- Bank account statements
- Business transparency
- Credit history
- Payment processing history
- Privacy policies
- Refund Policies
- Website security
- etc…
Payment processors need to have trust that they are working with a legitimate merchant. Especially in such a risky industry. A healthy reputation, bank account, and credit score are some of the factors that will increase a bail bond merchant’s chances of approval. However, negative bank accounts and poor reputations and credit scores coupled with high chargeback ratios may scare a payment provider off.
Once the information has been submitted and you’ve been approved by your prospective lending partner, you will then be able to create your account and manage it accordingly. This means you will be able to start operating your bond bail business and begin to accept high-profit clients who will pay for services with credit cards or debit cards.
Tips to Avoid Excessive Chargebacks
Because the outcome of a chargeback is determined by the cardholder’s issuing bank, the merchant more often than not loses the battle–even if the charge is legitimate. But there are some ideas on ways you can avoid losing out of these funds.
For card-present transactions can be secured by making sure to obtain a signature on the credit card receipt. To secure card-not-present or online transactions, the Address Verification Service (AVS) provides merchants tools to match the billing addresses of the customer and the one registered with the card. Additionally, the three or four-digit Card Verification Value (CVV or CVC) also helps to reduce fraudulent purchases.
Additionally, using your online payment portal to keep accurate records of client information and payment history can help a bail bond merchant to avoid unnecessary chargebacks. Moreover, maintaining copies of customer identification, contact information, signed contracts, and signed receipts will help build a successful case for the banks that issued the chargeback.
Lastly, customer training and available support are important. To avoid a chargeback for fraud in the first place, proper employee training is a must. Your employees should know how to spot suspicious activity or fraudulent signs.
Furthermore, offering extended hours or even better, 24-hour customer support can minimize chargebacks after transactions. If a customer doesn’t recognize a charge or doesn’t believe their payment looks accurate they can always contact you, rather than filing a dispute with their bank.
Benefits of a Bail Bond Merchant Account
If you are a bondsman or run some other type of bail bond business, then having a bail bonds merchant account is an absolute must. There are numerous benefits to be had with credit card processing on a high-risk merchant account. Establishing this particular type of account is the surest way that you will be able to accept all forms of payments. Including payments made via debit card or credit card which, for many people, is the easiest and most direct way to make bail payments.
In the end, that means that creating a bail bond merchant account will be the most effective way you can grow your business—after all if you aren’t able to accept payments from a prospective client who is hoping to make bail, there will almost certainly be another bail bondsman in your area who they will choose to use instead.
Furthermore, most bail bond payment processing platforms are very easy to use. Once you’ve learned to navigate through your virtual terminal and online reports portal, it will be easy to track and manage all your transactions and chargebacks, generate business-specific reports, and more. Additionally, using an established high-risk payment processing gateway can increase payment security and prevent various types of fraud.
Not to mention, accounting for cash bail bonds could be a nightmare. Processing your services all through digital payment and online record keeping will keep business management seamless.
Ultimately, there are very few reasons not to establish a bail bond merchant account, other than the fact that some of these platforms will charge a fee. However, even keeping that in mind, many platforms do not have any sort of setup fee. Additionally, the relatively minor fees will be much less than the revenues your business generates.
Things to Consider When Comparing Bail Bond Merchant Accounts
Be sure when deciding to work with any merchant payment processor to do your research. Comparing the options you have available. When comparing your options, it will also be important to consider any state laws and other regulations that might affect how you do business.
When considering different options, be sure to keep these factors in mind:
- Fee structure: Look for platforms that have no setup fees, as well as a transparent fee structure. Once that works best for your business, whether that be a flat rate, interchange plus, or tiered.
- Integration: The right high-risk payment processor should offer seamless integration with their payment platforms to your merchant website or POS system.
- Functionality: Be sure to select a platform that is easy to use, provides fast funding, and is otherwise highly functional for all your business needs.
- Ongoing support: Naturally, you will want to be sure to work with a team that can answer your questions and will help you solve any future tech issues. ECS offers in-house support teams for all your merchant service, technical support, and risk-based questions. These departments operate on extended hours so they are available to assist whenever you need them.
By taking the time to explore your options, you should be able to find a bail bond merchant account that works well for you. As long as your business is involved in the bond industry, establishing this sort of account is an absolute must.
To contact sales, click HERE. And to learn more about ECS Bail Bonds Merchant Account High-Risk.
