MLM Network Marketing Companies Die Without Merchant Accounts

MLM Network Marketing companies all need merchant accounts or their days are numbered. However, they are considered very high risk by banks. Why? Because some MLM Network Marketing companies in the past were really scams.

Those shady companies, whose sole purpose was to go big only to close down later in a declaration of Bankruptcy leaving unpaid distributors in their wake, have given the industry a bad name. Luckily, there are some great companies out there. But how can you tell?

What Makes A Network Marketing Company Look Like A Good Risk?

First of all, any MLM Network Marketing Company, which banks a great deal of money through recruitment or training, has made them a target for the FTC (Federal Trade Commission). They are begging to be closed down since the payouts are based upon how many people you can recruit rather than product sales. If they are allowing people to purchase “positions” in the commission plan rather than have them earn it then that’s bad. It starts looking like a true Pyramid scheme.

However, if you want to determine what makes the MLM Network Marketing a low risk business then, look at the opposite of what makes them a target for the authorities.

Do they make most of their money from product sales? If yes then Great! This makes them a direct sales and marketing company and that’s a good thing.

Do they have set packages or are people allowed to “Front Load” (over buy) in order to advance in the commission structure? Set packages are good and should contain an amount of training in them.

Companies that deliver as promised are Great! This means that all distributors receive products and commission checks on time and so there are very few customer complaints and charge backs. Click here for an MLM Merchant Account

Strategies for Network Marketing Companies

Some Network Marketing companies prefer to accept all the credit card processing from the end users. Others prefer to allow the distributors to obtain their own merchant account. Which way is wisest?

A Network Marketing Company may take all the risk if the end user (who bought from a distributor) wants to charge back. If a renegade distributor skirts the marketing rules for example and causes lots of charge backs, Headquarters has to cover the losses and jeopardize their merchant account.

Remember, too many charge backs and your company can be shut off from taking another transaction.

The best strategy is to work a deal with the processor. Open the main account for headquarters but then allow all the distributors to accept credit cards themselves. Usually, the processor would rather have the risk spread around. They also make money on the small merchant through flat fees. It all adds up for them.

The last strategy described keeps your headquarters’ main account safe from distributor fraud or a bad marketing scheme. I highly recommend it.

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