What makes MLM unique compared to other sales methods is that the distributors are compensated not only by the sale of products and services to customers, but also for the sales made by other salespeople whom they recruit. This business model generates true revenue for a distributor by creating a sustainable ecosystem for both themselves and those that they recruit (their downlines).
While the traditional MLM structure has remained the same, the recruitment and sales process has shifted online, with social media being a key driving force, due to its ability to accelerate word-of-mouth on a global scale. However, the downside is the restrictions enforced by some merchant providers make growing an MLM business online hard.
For an MLM merchant looking to maximize their volume, operating online is essential. As a specialist in multi level marketing credit card processing for high-risk merchants, T1 Payments understands this, and we successfully support many MLM businesses through our High-Volume Multi-Level Marketing Merchant Accounts.
MLM has proven to be both a growing and lucrative industry. In 2018, the MLM industry made global sales of around $193 billion with the US covering 18% of this, making it the second biggest contributor worldwide.
Wellness products have continued to lead the market forward, making up 35.6% of all sales in the US in 2018. Texas, California, and New York have seen the biggest success in terms of MLM growth..
Despite continuous growth in the industry, unpredictable growth patterns, and a history of chargebacks have led to a perception of being high-risk by many merchant providers. Businesses looking for an MLM payment gateway and seeking to process credit card payments online are often charged with high percentages and transaction fees, in addition to processing volume caps.
T1 Payments understands the challenges associated with running an MLM business, which is why we offer unlimited processing volumes, built-in chargeback mitigation tools, and multi-currency global processing as a commitment to empowering those in MLM.
A High-Volume Multi Level Marketing Merchant Account with T1 Payments means conducting business without the risk of losing sales opportunities or the ability to obtain new customers.
While the federal government has played an active role in regulating MLM activity, most of the regulation has come at a state level.
The intended purpose of these regulations is to enforce a focus on the sale of the product, as opposed to distributors trying to maximize their downlines.
Federal regulators have used a 70% rule to determine the legality of an MLM business. The rule is that at least 70% of the total inventory bought by an MLM distributor must be sold or personally used before reordering. However, the 70% rule is not a statute, but instead a concept that can be evaluated by the courts on a case-by-case basis.