Stripe – debt collection agency: what Stripe’s policy says
In Stripe’s merchant acceptance policy, “debt collection agency” is listed among the prohibited activities.
This is not a matter of vocabulary. Stripe explicitly distinguishes between two lists:
- Restricted Businesses encompass activities that may be accepted after enhanced verification and prior written approval. This is the case for certain crypto operators or sellers of extended warranties.
- Prohibited businesses, however, do not have this option: they are not accepted by Stripe. Debt collection is included in this second list, alongside debt settlement, negotiation, and debt consolidation.
In other words, to open a Stripe account, a debt collection agency does not face stricter control than any other sector: it is structurally outside the scope, regardless of the quality of its case.
An exclusion that goes beyond Stripe: MCC 7322
This exclusion is not unique to Stripe. It is stated earlier, at the level of the card networks themselves.
In October 2022, Visa created a dedicated Merchant Category Code (MCC): 7322, “Collection Agencies,” whose rules came into effect in April 2023. Visa and Mastercard classify this code as a high-risk collection activity, subject to enhanced monitoring.
One point deserves clarification: the network itself does not prohibit the category. It requires the acquiring institution to verify the merchant’s compliance before accepting them, and then to monitor them more closely. Stripe has chosen to go beyond this requirement and exclude the category entirely.
This distinction explains why a differently structured establishment can position itself differently, without breaking free from the network rule.
Debt collection: a regulated, but perfectly legal activity
Debt collection is not a grey area
Debt collection is a legal and regulated activity in France, governed by articles R.124-1 et seq. of the Code des procédures civiles d’exécution.
This framework imposes concrete obligations on any person who carries out amicable debt recovery on behalf of others, whether on a regular or occasional basis:
- Article R. 124-2: provide proof of professional liability insurance and hold an account with an approved credit institution exclusively dedicated to receiving funds collected on behalf of creditors. These conditions must be substantiated by a written declaration submitted to the public prosecutor before commencing any activity, who then exercises oversight over these companies;
- Article R. 124-3: to act only on the basis of a written agreement concluded with the creditor, who gives a mandate to receive the funds on his behalf;
- Article R. 124-4: include specific mandatory information in the letter addressed to the debtor (identity of the firm, identity of the creditor, details of the amount due, payment terms);
- Article L. 111-8: the costs of amicable recovery remain the responsibility of the creditor, never of the debtor, unless otherwise provided by law;
- Article R. 124-7: failure to comply with these obligations (lack of insurance, missing information) is punishable by a 5th class fine.
The legality of the activity and eligibility for a given payment method are two separate issues. And this is precisely what the Stripe exclusion – debt collection agency – illustrates.
Why does Stripe exclude law firms anyway?
Two reasons structurally recur in the way card-backed PSPs handle this type of activity.
First, the volume of disputes: following up with a debtor for a debt statistically generates more disputes than an ordinary purchase, as the debtor may contest the very principle of the amount claimed, not just a billing error.
Next, there is reputational risk: a payment aggregator exposes its own banking partners to the image of the activity it hosts, regardless of its legality.
Do not circumvent the exclusion by declaring another activity
Faced with this obstacle, the temptation to declare another activity when opening the account, in order to pass the initial checks, is not an option to consider, even temporarily.
Reporting a different activity than the actual activity constitutes misrepresentation under Stripe’s terms of service, and those of any other payment platform. Once the true activity is identified, the consequences go far beyond account closure: funds are held in reserve for several months, the account is closed without notice, and, most importantly, the account is added to the database of merchants whose accounts have been terminated for reasons, a database shared among all acquiring banks.
Being listed on this file makes opening any new collection account extremely difficult for several years, not only for the firm, but also for its managers specifically.
The operational conclusion is simple: there is no sustainable workaround. Stripe – a debt collection agency – will remain a no-go. It’s better to turn to a company specifically designed for this type of situation.
Stripe – debt collection agency: discover a French alternative
The question posed at the beginning (stripe debt collection agency) does not need to remain a dead end.
CentralPay is an electronic money institution authorized by the ACPR. As such, it is subject to the due diligence obligations imposed by the Monetary and Financial Code on all payment institutions, concerning the precise knowledge of each customer and their actual activity before entering into a relationship.
This same verification process effectively fulfills what the card network requires for MCC 7322. Where Stripe chooses to exclude the entire category to avoid conducting this verification, CentralPay performs it for each firm.
Are you a debt collection agency looking to collect payments? Our experts are available to discuss our customer invoice payment solution.
