The Multi-Level Marketing (MLM) industry is under the microscope right now and 2016 was a rocky year for organizations that operate as MLMs. In July, the Federal Trade Commission (FTC) forced health & wellness MLM Herbalife to pay $200M, restructure and provide greater transparency.
In May, the H.R. 5230 bill was unsuccessful in limiting the FTC and its ongoing prosecutions of direct selling businesses. The list goes on when it comes to challenges MLMs face in today’s highly regulated atmosphere.
The ability to process payments effectively is the lifeblood of any business, and this ability is largely hindered for MLM companies. Considered “high risk” within the credit card industry, these companies often face extreme difficulties in obtaining – and keeping – merchant account. This is largely due to the nature of the MLM business — unpredictable and often volatile growth patterns, legal risks like those mentioned above, and the potential for chargebacks.
That said, not all hope is lost. There are payment processors that cater to this niche industry and understand the complex business model better than traditional merchant account providers. Some high risk processors may charge higher transaction fees or impose processing limits, though some also cater to this group with tailored customer support and products designed for the MLM market.
Navigating through the red tape can get sticky, and it’s recommended that you work with a digital payments advisor who has long-standing relationships with these specialized merchant account providers. No matter how you go about searching for the right merchant account provider for your MLM business, you should take the following into account:
Transparency – The best payment processing partners offer MLMs transparent, low-commitment partnerships. Be wary of partners that require extensive application and set up fees. Partners that are interested in a mutually beneficial, long-term relationship will aim to provide the most affordable service and transparent pricing.
Customized Payment Gateway – Your processing partner should have a robust gateway that is tailored for MLM’s distinct needs. This includes tokenized payments, recurring billing capabilities, domestic and international processing, customer vault and load balancing (routing transactions through multiple merchant accounts to minimize declines).
Virtual Terminal Capabilities – MLMs have unique business needs, including the ability to process payments from anywhere. Look for a merchant account provider that enables integration of virtual terminals and mobile payments as part of the processing platform, which can allow your MLM to process payments from trade shows, sales seminars and other events.
High Risk Products – In addition to baseline processing features, your processing partner should provide products designed for MLM businesses. This may include the ability to connect with multiple banking partners and offshore partners, anti-fraud tools, chargeback monitoring and management solutions and centralized account management that can access multiple business units from one online dashboard.
Exploring every processing avenue and potential partner can be time consuming and expensive. This is a big obstacle for MLMs who are often growing at record paces and where there is low ability to deviate resources away from the core business. Working with a Digital Payments Advisor that has expertise in merchants services for MLMs and who has establishing banking and processing partnerships can be the most efficient route.
Not sure where to start? Contact us today to get a free consultation – we’ll discuss your business model and your unique needs in a processing partner.