MLM Merchant Accounts – Reliable Payment Processing

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Last Updated on July 7, 2023 by Corepay

Multi-level marketing (MLM) can be a highly profitable industry when executed properly. However, when it comes to growing your business, you will need an MLM merchant account to ensure you can accept payments effectively. 

With the explosion of social media apps such as Instagram and Tik Tok, MLM companies can effortlessly grow their businesses and teams. 

Years ago, MLM employees could not instantly reach out to millions of people through an app where you can seek people out via common hobbies. 

MLM credit card processing is generally considered high-risk by acquiring banks and processors for several reasons.

Keeping chargebacks at a minimum should be first and foremost for your MLM business, as chargebacks can drastically affect payment processing fees as well as potentially get your merchant account terminated.

So, what does being deemed high-risk mean for your business? It means that you might have to pay higher fees for your services so that banks and processors can cover the risk associated with your business.

When choosing a merchant account for MLM, the most important thing you can do is that you choose a high-risk processor familiar with your industry. 

At Corepay, we know the ins and outs of MLM, and we are also confident that we can reduce your chargeback ratio, ultimately save you money in fees.

Let’s take a look at why MLM is considered risky below.

What Are MLM Merchant Accounts And Why Are They High-Risk?

Multi-Level Marketing merchant accounts allow merchants to accept electronic payments, resulting in more cash flow efficiency. Our MLM merchant accounts give you the ability to accept many payment methods electronically.

With an MLM payment processing solution, you will be able to accept credit cards globally, including the US, France, UK, China, Australia, Japan, Sweden, etc., which are all places in which cards are used more than cash.

Outside of technological advancements that make it easier to accept credit cards and the pandemic of COVID-19, another driving force for more card payments is the relentless advertising from major card brands such as Master and Visa.

Another alternative method that MLM companies commonly can come across is ACH. The ability to accept as many currencies/forms of payment as possible results in higher conversions; thus, every MLM merchant should be working with a processor capable of processing multiple currencies.

At Corepay, we are proud to offer the following for our MLM merchant accounts:

  • Highly competitive rates blended 2.95%
  • Fast approvals
  • Waived application fees
  • Waived set up fees
  • Waived annual fees
  •  PCI-Level 1 secure payment gateway that is monitored around the clock and regularly tested for security issues
  • Mobile payments: You can easily accept payments from customers paying with their mobile device

So, why are MLM merchant accounts risky?

They are typically classified as risky by payment processors due to the following:

  • Legal liabilities
  • Chargebacks
  • Reputational risks associated with scam
  • Unpredictable growth

Legal Liabilities

MLM can present certain legal liabilities that many acquiring banks and processors don’t want to engage in. An excellent example of this is a skincare MLM business. 

Typically, MLM employees have not been licensed cosmetologists, resulting in angry customers seeking legal action due to a product/service they were sold.

Reputational Damage

MLM companies have had a bad rep over the years as buyers and distributors have claimed that they are nothing more than pyramid schemes. Distributors are often tricked into buying thousands of dollars worth of supplies, only never to sell the product.

Complaints are then filed, ultimately making the company/brand look bad as a whole. Because of this, processors often don’t want to associate with companies that could risk damaging their reputation.

Many MLM brands also make claims that have yet to be proven true, such as, “this product will clear your acne.” 

Many MLM companies may force sellers into purchasing products in bulk. This is typically a giant red flag as the seller can then be stuck with thousands of dollars of products they might never be able to sell.

MLM Chargebacks

MLM companies typically face a medium to high chargeback ratio, which is usually linked to the nature of their business models.

When a new employee comes on board and has troubling clearing out their inventory, they may file for a chargeback. 

Chargebacks are one of the easiest ways to increase fees that your business pays for credit card processing. If you are experiencing a high number of chargebacks, you will need to seek out a payment processor that can help you lower your chargebacks.

At Corepay, we are confident we can lower your chargebacks associated with MLM through our partner product, CB-ALERT.

Another tip when it comes to lowering MLM chargebacks is a clear policy page. 

This page should detail exact return policies and refund policies in an effort to lower your chargebacks.

Unpredictable Growth

MLM businesses typically depend on employees to go out and sell the product. Because of this, there is often a high turnaround rate, which makes it hard for banks to see the big picture of their business.

Providing proof of bank funds as well as a business plan can help processors get the big picture of your business, which may result in lower fees.


Applying For An MLM Merchant Account

Applying for your MLM merchant account is an exciting time for your company. Below is a list of the information you will need when applying for your account:

  • Proof of operating address
  • Company EIN document
  • Personal financial statements
  • Business financial statements
  • Principal’s driver’s license
  • Voided check to prove bank account
  • Articles of incorporation

When applying, it is in your best interest to provide the processor with as much information about your business as possible, including chargeback ratio, return policies, and proof of a compliant website.

Getting Your MLM Merchant Account Approved

After applying for your account, our team will perform our underwriting to determine the risk that is associated with your account.

We perform our underwriting at the time of the application to avoid surprises that could lead to account termination.

The typical time that gets approved is generally between 24-72 hours upon completing the application.

Did Paypal, Stripe, Or Square terminate your MLM Merchant Account? 

Given the unfortunate news that your account was put on hold, frozen, or even terminated, it’s important to note that there is still hope. 

The first thing you need to do is get a reliable high-risk processor on board ASAP. This will prevent your business from losing out on sales that could prove to be detrimental in the long run.

Once you have signed up for a new merchant account, are you can process payments, you can then follow the protocol with Paypal, Stripe, or Square.

Your funds will be help for up to 180 days, as they perform their audit and inform on the reasoning to why your account was shut down.

Many hours can be spent and wasted dealing with customer service when in most cases, there’s not much you can do other than find a new provider and start processing payments as quickly as possible.

Paypal, Stripe, and Square are all against certain forms of MLM, making them a hazardous choice for your merchant account/payment gateway.

How To Choose The Best Payment Processing For MLM

When choosing your payment processing solution, choosing a high-risk processor is a must. While time is of the essence when it comes to finding processing, you always want to spend time comparing different rates and services.

MLM Fees

Fees associated with MLM payment processing will depend on a few factors. First, the type of service that your business requires will directly play a role in your total fees.

MLM Overview

The MLM industry grossed over 35 billion in 2018 and has shown slow but steady growth in recent years with apps like Tik Tok.

The most popular products sold in MLM are cosmetics and personal care, and there are currently 6.2 million Americans actively selling products.

Those involved in MLM can end up spending over $25,000 in expenses per year if trying to grow their business.

Another stat is that over 50% of all MLM drop out within the first year of sales.

Below are the top 10 MLM companies in the world today:

  1. Amway – $8.8 billion (Nutrition/cooking)
  2. Avon – $5.7 billion (eyeliners, anti-aging creams)
  3. Herbalife – $4.5 billion (supplements)
  4. Vorwerk $4.2 billion (Cooking appliances)
  5. Mary Kay: $3.5 billion (Makeup)
  6. Infinitus: $3.41 billion (Herbal health)
  7. Perfect: $3.06 billion (Health solutions)
  8. Quanjian: $2.89 billion (Supplements)
  9. Natura: $2.26 billion (soaps/skincare)
  10. Tupperware: $2.21 billion (food prep solutions)

Wrapping Up

Now that you understand what you need out of your MLM merchant account, we encourage you to apply with other processors and us and compare rates and services.

It is also not uncommon for merchants to have more than one MLM merchant account to lower the risks of having only one account.

At Corepay, we understand MLM deeply and the troubles you will face as a business during the growing stages.

Fill out an application below to find out what we can do for your business. We are confident we can get you pre-approved today and processing in no time.

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