Posted by NationalACH on Dec 13, 2012

Electronic Checks for Collection

Debt collection agencies, credit counseling and repair services, bankruptcy attorneys as well as other industries in working with financially challenged clients find echecks are one of the best payment processing options.

These types of companies establish echeck accounts, using either ACH or Check 21 processing.  The choice of which technology to use is based on the anticipated number chargebacks and returned transactions.

Debt Collection Industry

The US Bureau of Labor Statistics projects that debt collection will experience a 23% growth rate by 2016. Debt collection companies are growing because more consumers are falling behind on their bills.

In addition, new technology makes it profitable for smaller companies to get into the business. And it is a profitiable business, indeed.  According to Smart Money Magazine,  profits generated by debt collection agencies keep as profits on average 25% of the collected debt.

Reasons Debt Collection Classified as High Risk Accounts

Debt collection is considered a high risk merchant account because, obviously, many debtors do not have funds to pay money owed.  When the amount is due, debtors often do not have the money in bank account to cover the payments, creating high return rates.

Further, some debtors know how to “game the system”.  They deny that the payment was authorized and initiate a chargeback of the payment with their bank.

The Fair Debt Collection Practices Act is a federal law which regulates third-party collection agencies and protects consumers from unfair and abusive collection practices. Consumer advocates want to amend the Act in order to provide consumers with even more protections when they are contacted by debt collectors.

Increasingly, law suits are being filed against collection agencies alleging unfair collection processes.  And the Federal Trade Commission reports more complaints are received about debt collectors than any other industry.


Accept checks online. Accept check by phone, mail & fax payments. The more ways debtors can pay you, the more money you can collect.

Most debt collection agencies use Check 21 electronic check processing because there is greater flexibility in terms of chargebacks and returned transactions.

ACH processing requires chargebacks stay under 0.5%.  Check 21 electronic check processors do not have this limitation.  And Check 21 processing allows for higher return rates than ACH accounts.

Debit card processing is also available for debt collectors who processing high volumes of transactions.

Are you interested in payment processing for your debt collection agency?

Contact today