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Why Network Marketing is the Future of Entrepreneurship

Network Marketing Businesses are growing fast, but are still considered high-risk. Learn why and how to build an MLM with the right payment processing partner.

Network marketing is one of the fastest growing industries around, and it is especially important because it intersects with so many other industries at the moment. Entrepreneurs from all walks of life are likely to find a comfortable entry point to the business world with the help of a network marketing company these days. And as more of these young business owners succeed, the demand for opportunities continues to increase. 

Where is Network Marketing at Today? 

According to some experts like Erik Johnson, the network marketing industry already encompasses nearly $180 billion. This number may seem shockingly high if you've never heard of network marketing before, but it has spread its wings rapidly, and it is quickly becoming the second easiest way to get a business up and running--nipping at the heels of the franchise movement.

You can find network marketing opportunities that cover a wide spectrum of products and services from cosmetics and nutrition supplements to custom bath products and food storage.

When it works, network marketing gives entrepreneurs a strong sense of stability with residual payments appearing in their account every month. Instead of working for one-time sales or a single commission payout, most of these new business owners are able to build portfolios of clients that pay over time, and easily ramp up their business via online networking tools and strategies. 

Risks of Network Marketing

The one thing that many entrepreneurs love about network marketing is that it requires very little cash to get started. Unlike purchasing a franchise, most of these opportunities do not require a minimum net worth or a significant payout of cash up front. There is no time or money spent on building a location or any of that other stuff.

Therefore, the risk involved is really minimal for the agent. Instead, most of the risk falls on the side of the banks and payment processors who are handling the financials behind the scenes.

There have been some major cases of fraud within the network marketing industry in the last several years, and it is not uncommon for customers to report their purchases as fraudulent or to ask for refunds after they have bought in.

This has led to excessive chargebacks and fees for some network marketers and has left payment processors to evaluate what level of risk they are willing to take with those in the industry. Nevertheless, with so much money on the line, somebody has to be responsible for processing those payments and proper vetting is usually enough to minimize risk to the financial institutions involved. 

The payment processing sector has initiated a number of safety precautions to protect against fraud in this industry as well. For instance, ensuring that the company, the agent and the bank account are all within the US helps reduce fraud. In addition, keeping a rolling reserve protects against unexpected spikes in chargebacks and other issues. 

For entrepreneurs, getting started with network marketing is easy and fun. It can open up a whole world of possibilities while exposing them to minimize personal risk. In the meantime, they are still counting on payment processors to help them manage their finances as they build their customer list and start earning regular payments. 

Contributor:

John Hughes

John is currently the Senior Vice President & Head of GlobalOnePay leading business development and partner teams. John has over over 20 years experience in the electronic payments industry, with roles including co-founding a successful businesses in the financial services and merchant acquiring space. John has held senior management positions with multiple top tier acquirers and was CEO/Co-founder of Base Commerce.