For years payday lenders have had a difficult time when it comes to the collections part of the business. One of the only options for getting the loans paid back more quickly is by having collections agency credit card processing.

But before we get to that, let’s talk about the nature of payday loans and some background about the kind of business payday lenders run. First of all, there are a lot of reasons behind why collections become an especially challenging task for payday lenders.

These kinds of loan businesses are prevalent in lower-income communities throughout the United States. This is because what payday lenders extend to their customers is quick money. The thing is, this is usually done without much concern for the borrower’s facility in paying the money back. With exceedingly steep interest and burdensome repayment terms, it seems that, more often than not, collecting the money that is owed is problematic.

You see, being approved for a payday loan is extremely easy, which makes it all the more risky for every party involved — the borrower, the lender, and if there is a high risk merchant provider, they’re also put in a position of financial vulnerability as well.

Let’s say a person applies for a payday loan. They give their name, employment information, monthly salary, social security, plus their bank account and routing numbers. The loan amount is promptly deposited into their account and then, supposedly the person should have the money to pay back the loan on their next payday. Unfortunately, what happens frequently is that when a payment is withdrawn there isn’t enough money to repay what’s owed. This results in an overdrawn account or late repayment of the loan.

And so, the borrower goes into debt, the payday lender is left to keep inquiring about the money until it’s paid, and the bank affiliated with the merchant provider is held responsible for any money due by the lender. As a consequence, many payday loan lenders have had to rely on aggressive collection practices in order to get their clients to repay their debts.

In numerous cases, it’s come down to even pestering borrowers when they’re at work — calling them and insisting on the money day after day. What’s more, sometimes lenders exacerbate a customer’s debt when they repetitively try to withdraw payments from an account causing more and more bank fees from overdrawing.

Instead of worsening a client’s debt situation and hassling them to the point of severe aggravation, payday lenders can improve their collections success with the availability of credit card processing. Of course, it can be difficult for payday loan businesses to be approved for merchant account since they are very high risk. It also doesn’t help that the payday loan industry is known for some fraudulent conduct including predatory lending and collection scams.

But if a payday loan business is able to show that they are a more reliable kind of lender, whether based online or at a storefront, Ultimate Merchant Providers can offer collections credit card processing. And with that, payday lenders make it easier and more convenient for their customers to make online payments on their online. Processing credit cards can really make all the difference when it comes to payday loans and collections.