Multi-level marketing (MLM) businesses have been around for decades selling products or services to other businesses and private consumers, as well as allowing investors to purchase products or services at a discount.
There are several successful MLM companies that have grown over the years due to their unique selling strategies. Two of the more popular MLM operations people are the most familiar with are Tupperware® and Amway®. This paved the way for other MLM businesses to develop using comparable sales strategies of these successful companies.
Typically, in an MLM operation, there is a “down-line” where one person will sell products and services directly to customers, while at the same time recruiting others to work under them. In exchange for their recruitment efforts, the parent company will pay the recruiter a percentage of their “down-line’s” sales as a commission.
One of the main benefits of an MLM model is it allows just about anyone to start their own business—often with a low initial investment. Plus, many of the models offer the flexibility to work part-time or full-time, as well as provide in-person, telephone, and online sales opportunities.
However, Multi-Level Marketing Merchant Services are often considered high risk by merchant account providers. The reason they are classified as such stems from the risks associated with this type of business model.
The Potential for Chargebacks is Greater
Buyers may have remorse after investing to start their business and change their minds. Rather than contact the salesperson directly, they may dispute the transaction through their credit card provider instead.
In addition, some sales plans are set up as a monthly subscription service, so products or services are charged and delivered to customers who may forget they signed up for or agreed to a subscription. This often leads to disputes about the charge and increases the potential of chargebacks.
High Number of Non-Swiped/Chipped Transactions
Thanks to modern technologies, many MLM models allow their independent sales consultants to set up their own online e-commerce websites. They may also take telephone orders. Unfortunately, this could result in fraudulent transactions, which can be more difficult to challenge if someone denies making the purchase.
There are Dishonest MLM Operations
Not all MLM businesses are legitimate businesses. Some say they are an MLM company, but, in all actuality, they are essentially running a “pyramid scheme,” which is considered an illegal operation.
Despite these obstacles, many people have found investing in and running their own business as part of an MLM firm rewarding. The biggest challenge, though, is finding multi-level marketing merchant services to accept debit and credit transactions.
Fortunately, there are options available if you are starting or are already running your MLM business and want to further grow your business by accepting debit and credit card payments. Here at Leap Payments, we offer flexible solutions based on your business needs, even in the high-risk MLM industry. To learn more about our solutions, low industry rates and amazing customer support, please feel free to contact us at (800) 993-6300 today!
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