Merchant accounts act as a lifeline for businesses running on higher risks. Particularly businesses dealing in travel & cruise, e-commerce, forex, casino, and business process outsourcing telemarketing require them to allow their customers to make hassle free online payments. There always lies a chance of fraud payment with them.
But not all high risk businesses are fortunate to have access to merchant accounts. Here are 5 reasons why businesses are denied merchant accounts.
1. Impaired Credit History
High risk merchant account provider always checks the personal credit history of a signatory. Having a bad credit history could ruin your chances of getting a merchant account.
2. Businesses Mentioned On the Prohibited List
There are certain businesses with relatively higher risk involvement. The risk is associated with chances of fraud. In order to keep their money safe, merchant account processors abstain from providing services to such business units. Even if service providers agree to offer their services, they charge comparatively higher processing fee to cover up the chances of loss arising from business defaults.
3. Ongoing tax liens/claims
High risk merchants deny services to businesses or owners for getting involved with business or personal tax liens. It’s important for you to resolve any such tax related issues before seeking for a high risk merchant account.
4. Blacklist business
Finding listing on the TMF Match List can be dangerous for your business if aspiring to get high risk merchant account. The list only mentions the name of business entities with higher credit risk or whose existing merchant accounts have been terminated by the other banking institutions. This clearly proves you are a threat to the banking system.
In case you have any processing fee or charges left unpaid with your previous service provider, make sure you clear the backlogs at the earliest before putting up application with new service provider. It’s always advisable to avoid high risk situations in the business.
5. Business Unable To Match Processing Volumes
While filling merchant account application you will come across a section which requires you to announce expected volumes based on past trades or future expectation. It is generally a rough figure and only required by the service provider to get a faint idea about the scope of your business. You are advised to only state realistic figures as processing amounts outside the guidelines laid down for your industry can mar your chances of getting approval for a merchant account. You may not find your application to be approved as you are flouting the already laid down rules.
Other than having a clean credit history you are also required to properly do your homework before beginning with the process. Knowing what is required at each step can be more than useful especially for the first timers entering the market.
Know the tricks before you apply for a merchant account can save you a lot of time and prevent disappointment you might have to face for not getting approval for a merchant account. In fact don’t seek to apply for a regular merchant account, try for a high risk merchant account or an offshore merchant account.
Getting possession of merchant account is not an easy job and involves proper approval to get one sanctioned for your company. A merchant account provider must be convinced that you are eligible for an account. Most businesses are judged on the degree of risk they carry. The lower the risk, the easier it is to get approval for an account and vice versa. To know more on why businesses are denied merchant accounts read on.
Author Bio: Jason Simms is the owner on AMSLV and an expert e-preneur on e-payment processing systems & high risk merchant accounts. Based in California, he has worked as a consultant with dozens of small and medium scale businesses in the US since 2003. He is a Guest Author at Paydaysonline.com