03 May Why A Clean Record is Better When Applying for a Merchant Account
Applying for a merchant account can be quite nerve racking. A merchant account is not guaranteed to any business. Banks and merchant processors take on considerable risks when approving a merchant account. The merchant application approval process takes into account the risks that may be involved with providing you with the capabilities for credit card processing.
As a business owner, you may ask, what risk do banks and merchant processors take on. Bankruptcy happens in the lives of individuals and companies, so this is one factor that influences whether you will be approved. Also, a business that has a tremendous amount of chargebacks is a serious risk to those that issue merchant accounts. Banks and merchant processors must do their due diligence before approving an account. They must take into account fraud and all types of things that could create considerable risks. Providing a business with merchant accounts is no small matter.
The personal credit history of the person who applies for the account is reviewed. The credit score will most certainly influence whether your company will be approved for merchant accounts. Merchant processors will normally require the person who signs for the account to have some type of ownership in the company.
Another factor that will stop a bank or merchant processor from providing a business with the ability to do credit card processing is an active lien. Regardless of the type, a business or personal lien can totally derail the approval process.
Merchant accounts are only granted to certain business types. Some businesses tend to have the reputation of being high-risk, so a bank or merchant processor does not want to take on that type of risk. If a high risk business does gain approval, there will most likely be higher processing fees involved.
Giving a honest assessment of volume expected will help your merchant account application. Every business has dreams of growing, but when applying for merchant accounts, past performance is indicative of the volume expected in the future. Evaluate your past volume, and also evaluate the next 4-6 months of expected growth in your business. Using these figures should give you a realistic picture of volume expected.
Before approving a credit card processing account, banks and merchant processors will check the blacklist. If another merchant has terminated your account, it will show up on this list. You can get approved for a merchant account but, it is important that your record is clean.