"High risk" in this case isn't a reflection on your specific business. It's just a reality of your industry. It also doesn’t mean that you can’t get a good solution for your business, it just means you’ll need to be aware of restrictions on high risk, as well as what to look for when evaluating processors. In this article, we’ll cover how to find the right solution if you need credit card processing for bail bonds.
Bail Bonds and Credit Cards
The first decision is whether to accept credit cards. In the past, some bail bonds agents have not accepted cards, opting to take only cash, checks, or money orders. However, as plastic increased its popularity and many Americans don’t have large savings accounts to tap, taking credit cards can be a good thing for business. However, keep in mind that as a high risk business, bail bond agents will pay higher fees to accept credit cards than other types of businesses.Secured vs. Unsecured Bail Bonds
Some bail bond agents issue bonds secured by tangible items, such as jewelry, cars with titles, or other valuables. While this type of collateral can help you as the bail bond agent, it’s unlikely to affect your ability to get a merchant account or to negotiate better rates. Your credit history, bank balances, and low chargeback ratio (if already processing) will be bigger factors than whether you offer secured or unsecured bonds.Why are bail bonds high risk?
Bail bonds are considered high risk due to the higher-than-average rate of chargebacks and the larger transaction sizes. Additionally, since bail bondsmen are supposed to be licensed and follow regulatory requirements, it’s a more complex transaction than simply buying a book or pair of shoes. Bail bondsmen may be at increased risk for “friendly fraud,” where a customer initiates a chargeback as fraudulent even though they actually authorized or made the purchase. For bail bonds, once the person is out of jail, they’ll initiate the chargeback. There are steps you can take to help limit your risk of chargebacks, including posting clear refund policies, utilizing AVS or 3D Secure for online transactions, or using EMV chip terminals for in-person transactions.Transaction Caps and Restrictions
As with many high risk merchant accounts, your account as a bail bondsman will likely be subject to restrictions. Some processors will cap the total amount you can accept by card in a month, while others will impose ACH delays or rolling reserves. Some restrictions are temporary, and will be contingent on low chargebacks and other signs of stable processing. You may be able to have a monthly processing cap raised after a few months of steady processing history. Your processor may also remove rolling reserves once the initial timeframe passes. (However, the processor can re-implement rolling reserves at the end of the original time period if your processing history is still a concern.) The bottom line is that restrictions are not the end of the world, and you may be able to negotiate better terms after establishing a positive processing history.Bail Bond Rates
Rates to accept credit cards as a bail bond agent will vary depending on your credit history, processing history, and other factors. You should expect to pay upwards of 5% depending on your processor and the type of cards accepted. That said, if you’re in a state that permits credit card surcharging, you may be able to defray the costs of card acceptance by passing a portion of the fee to your customers. Most states allow you to charge a credit card fee of up to 4% or the actual cost of processing (whichever is lower) provided you notify the customer in advance and comply with disclosure rules. If your merchant account fees are higher than 4%, your customer would pay the first 4% and you would pay the remainder. If you’re interested in surcharging, you’ll need to work with your processor to set it up through your terminal or POS system.Finding a High Risk Credit Card Processor
The days of frustration when looking for a high-risk credit card processor are over thanks to services like CardFellow’s high risk merchant account comparison tools. You’ll be able to request and view complete quotes from multiple companies, in the same format. You’ll also benefit from CardFellow’s high risk quote protections, such as a rate lock and no cancellation fees. When seeking a high-risk merchant account, be prepared to turn over documents with your application. You’ll typically need to provide ID, recent bank statements, past processing statements (if applicable), and your social security number.Square and Other Aggregators
It may be tempting to sign up with services like Square, which boast same-day account setups. As a result, there is minimal initial due diligence and almost any business can start processing. However, high risk industries are not permitted in the terms of service for companies like Square. Eventually, when the aggregator reviews your account or looks into the application in greater detail (which they will) your account can be shut down without warning. Save yourself the hassle, and find a processing company that explicitly supports high-risk industries instead of trying to game the system. Remember, if you’re new to processing, you’ll likely be subject to restrictions or volume caps. However, once you’ve built up a good processing history, you may be able to have restrictions loosened or caps raised. If you’ve been processing for several months, it’s worth revisiting your options.
Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing. As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.
