22 Dec Why Merchant Account Applications are So Strict?
Many new business owners obviously rush out and sign up for merchant accounts. This allows an entrepreneur to accept credit card payments without going through a large and time-consuming hassle. However, when applying, many realize that it is a lot of work and they end up applying at looking at multiple places. Some companies are strict and do not allow everyone who applies to join. Here are four reasons why this is the case.
With credit card transactions, there is plenty of fraud. This is just a part of doing business, and it costs businesses and consumers a lot of money. For this reason, when looking at applications, some companies will run away from ones that are in high-risk areas with a lot of fraud. Otherwise, the company may take on the hit from the fraud cost. Sadly, even though merchant accounts provide some protection, it is not enough to justify accepting every application. In reality, this is the biggest reason that some companies are overzealous in denying applications as they simply do not want to lose out on revenue when they have to pay fraud claims or deal with companies doing business illegally or poorly.
After 9/11, the United States government used every excuse to harass citizens and business owners trying to make money. Now, plenty of providers fear getting in trouble with the federal government, so they sit back and comply. This is especially true when a person runs a business in an unpopular arena such as gambling. Other times, non-profits have their applications denied as the federal government puts pressure on credit card processing service companies.
Other times, some people apply for a merchant account, but they run an illegal or immoral business. When this happens, many times, a person will not have their application approved as a credit card processing company does not want to deal with the potential backlash. To get around this, some people lie on the application. Other times, a potential customer will continue looking for an alternative. This is likely to continue since most merchant providers want to avoid backlash from city, state and federal government organizations.
A small business owner looking for ways to accept credit cards faces an uphill battle. However, if he or she is in a safe and legal industry, it will be only a matter of time before they find a reliable provider.