Debt Relief Merchant Account

A debt relief merchant account is a high-risk merchant account that lets debt settlement, debt management, credit counseling and student loan document preparation companies accept card and ACH payments for their fees. It is underwritten by a processor and acquiring bank that knowingly accept the category and review your fee timing, licenses and marketing before you process.

Paymotile is free to apply and matches debt relief companies with processors and banks that accept them. Start your free application or call (888) 542-4147.

Below: why acquirers decline debt relief, the FTC advance fee ban, state licensing, documents, costs and chargeback limits. For other industries, see our high risk merchant account guide.

What is a debt relief merchant account?

It is a merchant account approved specifically for companies that are paid to change the terms of a consumer’s unsecured debt. Pricing, reserves and volume limits are set for that risk. The bank reviews your contracts, fee schedule and sales scripts before approval, so it already knows how and when you charge your clients.

Under the Telemarketing Sales Rule, a debt relief service is any program represented to renegotiate, settle or in any way alter the terms of a debt between a person and unsecured creditors or debt collectors, including a reduction in the balance, interest rate or fees. Underwriters sort applicants into four groups:

Business type	What it does	What underwriters look at first
Debt settlement (debt negotiation)	Negotiates lump-sum payoffs for less than the balance owed	Fees charged only after a settlement and a client payment
Debt management and credit counseling	Sets up a repayment plan with reduced interest or fees, often run by a nonprofit agency	Nonprofit status, state registration, monthly fee amounts
Debt consolidation programs	Markets a program or a loan that combines several debts into one payment	Whether you are a lender, a broker or a settlement company
Student loan document preparation	Prepares consolidation, repayment plan or forgiveness paperwork for a fee	Fee timing, any implied government affiliation, state registration

Is debt relief high risk, and why do acquirers decline it?

Yes. Most processors list debt relief as restricted or prohibited. Clients are in financial distress, programs run for years, sales usually happen by phone, and clients who drop out dispute their fees. Banks also face their own legal exposure, because federal rules can hold a processor responsible for helping a seller that takes illegal advance fees.

• Processor liability: the Telemarketing Sales Rule makes it a violation to give substantial assistance to a seller when you know, or consciously avoid knowing, that the seller is breaking the rule. The FTC’s business guide lists processing customers’ payments as an example of that assistance (FTC).
• Processors have paid for it: in January 2025 the FTC sent more than $5 million in refunds from its case against the ACRO Services debt relief operation and a related case against its payment processor (FTC).
• Active enforcement: in October 2026 a federal court permanently shut down the Accelerated Debt Settlement operation, with a $106.8 million default judgment against the corporate defendants. The FTC alleged the operators posed as banks and government agencies and collected illegal advance fees (FTC).

If Stripe, PayPal or Square closed your account, this is usually why.

What does the FTC Telemarketing Sales Rule require from debt relief companies?

The rule bans advance fees. Under 16 CFR 310.4(a)(5), a debt relief company that sells by phone cannot request or receive any fee until it has settled or changed the terms of at least one debt under an agreement the customer accepted, and the customer has made at least one payment under that agreement.

The conditions in 16 CFR 310.4(a)(5) are:

1. A result: you have renegotiated, settled, reduced or otherwise altered the terms of at least one debt under a settlement agreement, debt management plan or other valid contract executed by the customer.
2. A payment: the customer has made at least one payment to the creditor or debt collector under that agreement.
3. A proportional fee: if debts are settled one at a time, the fee for each debt must either be proportional to the total fee, or be a percentage of the amount saved that stays the same for every debt.

Dedicated accounts. You may ask clients to set money aside for settlements and fees, but only if every condition in the rule is met:

• The funds are held at an insured financial institution.
• The customer owns the funds and is paid any interest.
• The account administrator is not owned by, controlled by or affiliated with you, and does not give or receive referral compensation.
• The customer can withdraw at any time without penalty and must receive the funds, minus fees you have properly earned, within seven business days of asking.

Disclosures. Before a consumer enrolls, 16 CFR 310.3 requires you to disclose how long results will take, how much the customer must save before you make a settlement offer and the likely harm to their credit.

Who is covered. The rule reaches outbound calls and, under 16 CFR 310.6, inbound calls that consumers make in response to debt relief advertising or direct mail. Sales completed after a face-to-face presentation are exempt from most provisions. The FTC’s guide for business says bona fide nonprofits are not covered, but companies that falsely claim nonprofit status are.

Enforcement. The FTC, the Consumer Financial Protection Bureau under 15 U.S.C. 6105(d), and state attorneys general under 15 U.S.C. 6103.

Which debt relief fee models can a processor approve?

Processors approve fee models that match the rule: a performance fee charged after each settlement and first client payment, set either as a fixed percentage of the amount saved or as a proportional share of one total fee. Enrollment fees, setup fees and monthly fees collected before any settlement are what get telemarketed programs declined.

Fee model	Status under the Telemarketing Sales Rule
Percentage of savings, charged after each settlement and first payment	Permitted, if the percentage is the same for every debt
Proportional share of a total fee, charged as each debt is settled	Permitted, if each fee matches that debt’s share of the enrolled balance
Fees paid out of a dedicated account after settlement	Permitted, if the dedicated account conditions are met
Enrollment, setup or retainer fee before any debt is settled	Prohibited for covered telemarketing sales; expect a decline
Monthly service fee collected while the client is still saving	Prohibited for covered telemarketing sales

State fee caps apply on top and do not cancel the federal ban, so your model has to satisfy both. This page is general information, not legal advice.

What state licenses do debt relief companies need?

It depends on each state where your clients live. Many states require a license, registration or bond for debt adjusters, debt negotiators or debt management providers, and some cap fees. There is no single national license, so underwriters ask for a state-by-state list of where you enroll clients and proof of authority in each.

Three current examples:

• Connecticut: the Department of Banking issues a debt negotiator license under Connecticut General Statutes sections 36a-671 to 36a-671f, with applications filed through the Nationwide Multistate Licensing System (NMLS).
• Texas: the Office of Consumer Credit Commissioner registers debt management and settlement providers under Chapter 394 of the Texas Finance Code and publishes maximum fees each year. For July 1, 2026 to June 30, 2027, the debt settlement setup fee cap is $574 and the monthly service fee cap is the lesser of $14 per account or $72.
• California: the Department of Financial Protection and Innovation requires registration for debt settlement and student debt relief providers under the California Consumer Financial Protection Law, effective February 15, 2025.

Why does student loan debt relief get extra scrutiny?

Because regulators treat it as one of the most abused corners of the industry. Recent FTC cases allege that student loan relief sellers posed as the Department of Education or loan servicers and charged upfront fees for forgiveness that never came. Underwriters assume the worst until your file proves otherwise.

• In July 2026 an operator of the Superior Servicing scheme was permanently banned from debt relief and telemarketing. The FTC, which sued in November 2024, alleged the operation posed as a Department of Education affiliate and took more than $45.9 million from consumers (FTC).
• In April 2026 a federal court temporarily halted an operation that, the FTC alleges, claimed ties to the Department of Education and charged illegal upfront monthly fees as high as $1,400. The case is pending (FTC).

Expect the bank to check that your site and scripts never imply a government affiliation or promise forgiveness, and that no fee is taken before the result is delivered.

How is debt relief different from a collection agency or credit repair account?

The three are often confused, but they are underwritten separately. Debt relief companies work for the consumer to change what is owed. Collection agencies work for the creditor to collect it. Credit repair companies dispute items on credit reports. Each has its own federal law, fee rules and merchant category.

	Debt relief	Collection agency	Credit repair
Who pays the fee	The consumer in debt	The creditor or debt owner	The consumer
Main federal rule	Telemarketing Sales Rule, 16 CFR 310.4(a)(5)	Fair Debt Collection Practices Act and Regulation F	Credit Repair Organizations Act, 15 U.S.C. 1679b
When a fee can be charged	After a debt is settled and the client makes a payment	Set by contract with the creditor	Only after the promised service is fully performed
Visa merchant category (October 2026 manual)	Debt and credit counseling: MCC 7277	MCC 7322, Collection Agencies	Assigned by the acquirer
Paymotile guide	This page	Collection agency merchant account	Credit repair merchant account

Your acquirer assigns the code. Disclose every service you sell: miscoding or an undisclosed product line can end in termination and a listing on the MATCH list.

What do underwriters check, and which documents do you need?

Underwriters check that your fee timing matches the federal rule, that you are licensed where you enroll clients, that your marketing makes no guarantees, and that your processing history is clean. Have your contracts, licenses, scripts and dedicated account agreement ready. A complete file is the fastest route to approval.

Documents to gather before you apply:

• Business registration documents, EIN, business bank account and government ID for each owner
• Three to six months of bank statements, plus recent processing statements if you have them
• State licenses, registrations and surety bonds, with a list of states where you enroll clients
• Client agreement, fee schedule and the disclosures you give before enrollment
• Contract with your dedicated account administrator
• Sales scripts and a list of lead sources and affiliates
• A live website with fees, disclosures and cancellation terms
• Nonprofit determination letter, if you are a nonprofit credit counseling agency

See our high-risk merchant account setup guide for the general process.

How much does a debt relief merchant account cost?

As of 2026, typical high-risk rates run 3.25% to 3.99% per transaction, depending on volume, risk and chargeback history. Most accounts also carry a rolling reserve of about 5% to 10% of sales, held for about 90 to 180 days, plus monthly and gateway fees.

A rolling reserve is a share of each day’s sales that the processor holds against refunds and chargebacks, then releases on a schedule. Many debt relief companies also add ACH processing.

What chargeback rate puts a debt relief account at risk?

Aim to keep fraud and disputes combined under 1% of transactions. Since April 1, 2026, Visa’s VAMP program labels a US merchant “Excessive” at a ratio of 1.5% or higher, once the merchant has at least 1,500 fraud reports and disputes in a month. Your acquiring bank can act much sooner.

The Visa Acquirer Monitoring Program divides card-not-present fraud reports plus disputes by settled card-not-present transactions. Our VAMP threshold guide explains the math.

Practical steps: charge only fees the client has already seen on a settlement statement, use a billing descriptor with your company name and phone number, and refund quickly when a client withdraws. See our chargeback prevention page for the tools.

How do you apply for a debt relief merchant account through Paymotile?

Paymotile is a high-risk merchant account agent, not a bank. You apply once, free, and we match your debt relief business with processors and acquiring banks that accept your service type, fee model and volume. Typical approval takes about 5 to 10 business days once the application is complete.

1. Apply free. Complete the online application or call (888) 542-4147.
2. Send your file. We check it for gaps, such as a missing state registration or a fee charged too early, before it goes to a bank.
3. Matching. We submit your application to processors and banks that accept debt relief.
4. Review and go live. You see the rate, reserve and volume limit in writing before you sign, then connect your gateway.

Debt relief merchant account FAQ

Can a debt settlement company charge an upfront fee by card?

Not if the sale is covered by the Telemarketing Sales Rule, which bars any fee until at least one debt is settled and the client has made a payment under the settlement. Processors will ask for proof that your billing follows that sequence.

Is a debt consolidation merchant account the same as a debt settlement merchant account?

Not always. A company that markets “consolidation” but negotiates with creditors is underwritten as debt relief. A lender or broker that funds a consolidation loan is underwritten as a lending business, with different licenses.

Do nonprofit credit counseling agencies need a high-risk account?

Often, yes. A bona fide nonprofit is outside the Telemarketing Sales Rule, but many processors still place credit counseling and debt management plans in high-risk programs. A determination letter and state registrations make approval easier.

Can I get approved after a termination or a MATCH listing?

Sometimes. Underwriting is case by case, and a higher reserve is likely at first. Bring the termination letter and proof of what you changed. Our guide to choosing a high-risk provider explains what to ask.

Get matched with a debt relief processor

If your fees follow the rule and your licenses are in order, Paymotile can match you with processors and banks that accept debt relief. Apply free with Paymotile or call (888) 542-4147.

Sources

Statistics and legal references in this guide come from the sources below. We review them regularly and update the page when newer data is published.

1. Electronic Code of Federal Regulations, 16 CFR 310.4, Abusive telemarketing acts or practices (current).
2. Electronic Code of Federal Regulations, 16 CFR 310.3, Deceptive telemarketing acts or practices (current).
3. Electronic Code of Federal Regulations, 16 CFR 310.2, Definitions (current).
4. Electronic Code of Federal Regulations, 16 CFR 310.6, Exemptions (current).
5. Federal Trade Commission, Debt Relief Services and the Telemarketing Sales Rule: A Guide for Business (July 2010, official guidance on the current rule).
6. Legal Information Institute, 15 U.S.C. 6105, Administration and applicability of chapter.
7. Legal Information Institute, 15 U.S.C. 6103, Actions by States.
8. Federal Trade Commission, Court Permanently Shuts Down Illegal Debt Relief Operation Following FTC Allegation That Scheme’s Operators Impersonated Government and Business Entities (October 22, 2026).
9. Federal Trade Commission, Student Loan Forgiveness Scammer Permanently Banned from Debt Relief Industry and Telemarketing (July 21, 2026).
10. Federal Trade Commission, FTC Stops Operation that Allegedly Targeted People Seeking Student Loan Debt Relief (April 16, 2026).
11. Federal Trade Commission, FTC Sends More Than $5 Million in Refunds to Consumers Harmed by Bogus Debt Relief Scheme (January 21, 2025).
12. Connecticut Department of Banking, Debt Negotiation Licensing Information (accessed November 2026).
13. Texas Office of Consumer Credit Commissioner, Debt Management and Settlement Providers (fee table effective July 1, 2026).
14. California Department of Financial Protection and Innovation, California Consumer Financial Protection Law Information for New Registrants (registration rules effective February 15, 2025).
15. Electronic Code of Federal Regulations, 12 CFR Part 1006, Debt Collection Practices (Regulation F) (current).
16. Legal Information Institute, 15 U.S.C. 1679b, Prohibited practices (Credit Repair Organizations Act).
17. Visa, Visa Merchant Data Standards Manual (October 2026).
18. Visa, Visa Acquirer Monitoring Program Overview (fact sheet) (2025).