As of 2021, the U.S. pawn shop industry had a market value of over $3 billion. With the current economic instability, combined with stringent rules and regulations that have inspired customer trust, this industry shows every sign of flourishing in years to come. If you are just entering this sector or need to make modifications in your current setup, one of your most important priorities should be finding a payment services provider that will help your shop to flourish.
Understanding your high-risk status.
Although pawn shops are entirely legal and are heavily regulated, they still make conventional merchant account providers wary. There are a few reasons why they believe this sector represents added financial risk to them as lenders.
- Your clientele tends to have a lower income and may be less reliable or financially solvent.
- The pawn shop industry features many high-ticket items that consumers use as collateral for their loans. These can present added opportunities for fraud and chargebacks, both of which are sources of frustration and worry to lenders.
- Due to the numerous regulations that are used to control the industry, lenders perceive that there may be a greater risk of legal trouble.
Additionally, there is the memory of the shady reputation that once dogged pawn shops and their owners. The bottom line is that many payment processors simply prefer to avoid the actual or perceived risks inherent in this industry.
Finding the right credit card processor.
Like it or not, your pawn shop will be firmly placed in the “high-risk" category. Fortunately, this is far from the kiss of death. In fact, there are many reputable high-risk merchant account providers who can furnish you with the quality, reliable service you need.
The key to finding the optimal high-risk provider is to do your research. Yes, you may be required to undergo a longer approval process. You may pay more per month or have limits on your monthly processing volume. The key is to first come up with a list of non-negotiable characteristics in your payment processing company. They should include the following.
- Chargeback and fraud prevention. Keeping customer data safe while shielding your business from security breaches should never be compromised.
- The company partners with various financial and industry institutions to provide a diversified pool of services.
- Software easily integrates into your website.
- Intelligent payment rerouting.
- Reasonable fees.
- High or unlimited transaction volume.
- Topnotch customer service. If problems with your payments system arise, you cannot afford a sustained period of business interruption. Your processor should be well-equipped to address emergencies in a timely fashion so that your shop will be up and running quickly.
When you partner with an experienced, customer-focused high-risk merchant account provider, you are providing your pawn shop with the ideal foundation. Knowing that your payments are fair, your data is secure, and your customers are receiving gold-standard payment services will help to make your pawn shop a valued institution in the community you serve.
