Merchant Account is an absolute for businesses in this online-crazed world. But obtaining a Merchant Account, especially for a new merchant, can be an intimidating process.
Getting a merchant account is like being involved in a partnership with your merchant account provider. The merchant account provider assumes some level of financial risk and liability for providing payment services. Hence, the provider has to thoroughly evaluate and determine whether or not your business is fit for this partnership.
Make no mistake; providers never like to turn down an applicant, but the tedious application process is necessary to evaluate your business and hopefully minimize risk.
Below mentioned are a few reasons on why you might have failed to obtain a merchant account. And if you are merchant planning on applying for one soon, the following points could help in making the process simpler:
– Bad Credit History
The merchant’s personal credit history comes under scrutiny during the application process. A history of bad or unresolved debts, unpaid loans or failed business ventures can get you turned away.
If your credit history is what getting you into trouble, make sure to settle your previous dues or let your business partner with a positive credit rating sign on the application instead.
– Business Type
Traditional banks and some payment processors, by default, turn away businesses placed under the high-risk category. Due to their risky nature, merchant account providers refuse to accept these types of businesses.
Such merchants can then turn to merchant account providers specializing in high risk businesses. A quick internet search will land you a few hundred High Risk Merchant Account providers; International Bank Services (IBS), GS Pay, InstaBill, WorldPay to name some are top-rated in the industry.
– Mentioned in TMF/MATCH List
When your previous merchant account provider or bank terminates your account, they place you in the TMF/MATCH list. Basically, it means your business is black-listed. Your presence on the register indicates the other providers that you are a credit risk. High chargebacks, fraudulent activities, violation of company rules can get you quickly on this list.
Avoid committing the above mistakes and clear any outstanding dues with your previous merchant account provider before applying for an account elsewhere.
If you are already on the list, you can either wait for 5 years for your name to be taken off of the list or look for merchant account providers that are willing to process for TMF merchants.
– Lack of documents/Misinformation
A simple reason for being denied is not providing all the necessary documents required and/or giving misleading information about your business to the providers.
In order to properly evaluate the nature and legality of a business, providers ask for a host of documents that need to be submitted and failure to do so can only result in your application being cancelled.
Also, keep in mind that the business information provided by you is thoroughly evaluated by the processor to ensure that your business is right and legal. Your business location, business partners, your bank as well as any previous providers you might have had are contacted during this process.
Hence, understand the company’s procedures & policies and be completely honest about your business.
– Illegal/Fraudulent Business
The most obvious reason for your business to be denied a merchant account would be if the provider finds out your business is linked to a fraud activity or you are selling banned products & services. Avoid any illegal or fraudulent activity in order to get approved.
As tiresome as this process might be, be patient and do your homework before applying. The above points can serve as guidelines to make the process a bit easier and land you a merchant account provider that is a right match for your business.