Providing payment processes for Native American tribes

Native American Tribes

Today, there are over five million Native Americans in the United States, with nearly 22 percent living within reservations. Over the years, gaming and economic development programs have increased economic activity for indigenous Americans, yet tribal members and tribe-owned businesses continue to be an underserved market by financial institutions.

One of the major factors for this is the unique legal status that exists among different Native American tribes. Traditional banks often lack the expertise and understanding required to help tribal small-business owners. In turn, these business owners get labeled as high-risk merchants and might struggle to find the help they need to successfully run their business.

The inability (or lack of interest) of these banks to provide service to these areas has led to the development of credit deserts and has caused extremely high interest rates for those individuals or business owners who need access to credit or other banking services.

What are credit deserts?

Credit deserts are lower-income areas where an above-average number of people don’t have credit scores or lack access to low-interest sources of borrowing money, and tribal lands often fall into them. Credit is not just a part of creating economic opportunity, it’s also a means of developing economic stability. Without such, it becomes easier for people and businesses to fall deeply into debt or limits their ability to overcome fluctuating incomes.

According to the Native American Financial Services Association, “the average distance from the center of a tribal reservation to the nearest bank is 12.2 miles and the average distance to the nearest ATM is 6.9 miles. Those who live on tribal reservations may have to travel more than 60 miles to reach the nearest bank or ATM. In contrast, the average distance for those not living on a tribal reservation must travel approximately 0.01 miles to reach an ATM.”

Instead of having access to credit loans at five, 10 or 15 percent APR, borrowers in these areas often only have access to APR loans at over 100 percent and sometime as high as 400 percent. While loans like these can provide relief in the short-term, these types of loans can exacerbate financial problems over the long term.

For many, the problem isn’t just the higher interest rates, but having what’s called “credit invisibility.” This is when a person or business owner is shown to have no credit at all, even if they have a history of making on-time payments or no derogatory marks against their credit. FICO credit scoring models that many conventional lenders use don’t take into account payments on rent, utilities, phone bills, or payday loans. So, these factors aren’t considered on applications for loans or lines of credit.

Even those who aren’t interested in access to credit can suffer the consequences of living in a credit desert. Payment solutions providers without the right banking relationships aren’t able to provide their services at a fair price and this limits a business owner’s ability to receive electronic payments from their customers. And in the 21st century, cash payment is a limiting factor. Growing wealth, starting a new business, or growing a current one, are all made more difficult due to the lack of options found throughout credit deserts.

Banking and processing solutions available to business owners

Unfortunately, these underserved communities are at a higher risk of exploitation by payment solutions providers looking to take advantage of high-risk merchants. Some for-profit financial institutions practice deceptive marketing, predatory lending and illegal collection actions with little to no consequences if caught or reported.

For Native American business owners, especially those who own non-traditional businesses (like CBD shops or medical marijuana dispensaries), falling prey to one of these firms can be detrimental.

If you’re considering partnering with a payment solutions provider or tribal lending company, here are a few questions to ask:

Do they fully understand tribal laws, processes and approvals?

What is their history of working with Native American tribes and business owners?

What is their understanding of the different types of Native American businesses available across different tribal nations?

Not all banking and payment processing solutions are created equal and it’s important to find the right one for your needs.

FLEX Payment Solutions can help

FLEX Payment Solutions was born out of a time of crisis called Operation Choke Point. This was an initiative by the U.S. government to eliminate (or choke out) small-dollar lenders and other lawful businesses that bigger banks didn’t want to work with. Our mission is to help any business type get through any adverse situation with speed and efficiency. We pride ourselves on the time and effort we put into compliance and customer service that keeps the integrity of our programs sound and gives clients peace of mind.

As members of the Native American Financial Services Association, we have a full understanding of the compliance needed to run and maintain Native American businesses, especially those in CBD or hemp-derived services. When paired with our innovative business model and special banking relationships we will indefinitely save you money and help your business grow. To learn more, visit our site at

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