Simpler Smarter Savings

People’s credit history and criminal history, if any, are weighed when they apply for merchant accounts. These accounts permit a business to engage in credit card processing, debit card processing and to accept electronic checks. After the bank or merchant-account provider deducts transaction fees from the sale, it deposits the money in the merchant’s bank account.

Since the bank, Independent Service Organization (ISO) or Merchant Service Provider (MSP) that does the credit card processing is taking a chance that the merchant will handle credit and debit cards and electronic checks in a secure and responsible manner, the bank or service provider checks the credit and criminal history of the merchant. These service providers are also concerned about the number of chargebacks or reversals of credit card sales that businesses have. Businesses that process their financial transactions carelessly will have a high percentage of chargebacks.

Obviously, merchant accounts are important when doing business over the Internet and in brick-and-mortar stores. To get this account, people have to apply. A poor credit history may get a person turned down. Why? Credit history is important to the banks and companies that process credit card transactions because they doubt whether people who cannot handle their personal finances well enough to maintain good credit can effectively handle credit cards in business.

If the business has partners or more than one owner, banks and service providers will look into the credit history of everyone named on the application. Likewise, banks do criminal background searches. If the applicant has a criminal history, that may cause the application to be turned down. After all, it does not look good for a person who has been convicted of writing bad checks, identify theft, money laundering or some other crime, especially as related to money, to be engaged in credit card processing and taking people’s personal information.

However, if the applicant’s poor credit history and criminal history is in the past, the person may still qualify for a merchant account. If the lives of these applicants are now going in a positive direction and they are currently engaged in a legitimate business and their credit is decent, they may qualify for an account that lets them process credit cards. Applicants have to put their best foot forward. If there were strikes against them in the past on their credit report, they should clean them up before applying.