The Quest for Right Merchant Service Provider Can Be Less Threatening!

Summery:
This content provides insights into merchant account approvals and why some applications get rejected by banks and payment processors. It explains the importance of a merchant service provider in helping businesses accept credit card payments and highlights key reasons for rejection, such as poor credit history, high-risk business classification, unrealistic processing volume projections, and being listed on the Terminated Merchant File (TMF) Match List. The guide also offers practical strategies to strengthen an application and improve approval chances. Ultimately, it emphasizes the value of professional assistance from a reliable merchant service provider in securing merchant services efficiently, avoiding frustration, and ensuring smooth payment processing for business growth.

Who Should Read This?

• Merchants who have faced rejection for their merchant account applications one or more times.

• Startup business owners looking to apply for a merchant account.

• Businesses already accepting card payments but dissatisfied with high processing fees eating into their profits.

• Entrepreneurs who want to scale their businesses effectively.

Who Can Skip This?

• Individuals not running a business for financial gain.

Understanding Merchant Accounts and Their Importance —

The widespread use of credit and debit cards in today’s business world is no secret. A vast majority of American businesses, regardless of size or industry, prefer accepting card payments from their clients. However, to process credit card payments, businesses must first open a merchant account — a requirement for both retail and online stores.

If you’re wondering why opening a merchant account is such a big deal, it’s because the process isn’t as simple as just filling out a form. While submitting an application seems straightforward, banks and payment processors carefully evaluate multiple factors before approving or rejecting it. Unfortunately, many businesses face rejection due to various reasons.

Does this mean your dream of running a successful business is over? Absolutely not. There are alternative solutions available, though they may come with a small fee. However, these solutions are worth considering if you seek smooth and secure payment processing.

Before exploring alternative options, let’s first understand why banks reject merchant account applications.

Why Do Banks Reject Merchant Account Applications?

A rejection from a bank or payment processor can be frustrating, especially for small and medium-sized businesses that already operate with limited resources. Rather than repeatedly applying without knowing why you were denied, it’s crucial to understand the bank’s perspective.

From the bank’s viewpoint, every merchant account applicant is a potential risk. Before approving an application, they conduct due diligence to ensure the business will not become a financial liability. This is necessary because many businesses face financial difficulties, experience excessive chargebacks, or even go bankrupt, leaving banks and processors at risk.

To protect themselves, banks have strict approval criteria. Understanding these criteria can help improve your chances of getting approved.

How to Strengthen Your Merchant Account Application —

To increase your chances of approval, consider the following factors:

Maintain a Strong Credit History:

• The personal credit history of the business owner or key stakeholders plays a crucial role in the approval process. A poor credit score can raise red flags.

• If one individual’s credit history is weak, consider including partners or stakeholders with a stronger credit profile in the application.

Understand High-Risk Business Categories:

• Some industries are classified as high-risk due to factors like chargeback frequency, legal restrictions, or financial instability.

• If your business falls into a high-risk category, don’t panic. You may still get approved by working with a specialized payment processor, though you might have to pay higher processing fees.

Ensure Projected Processing Volumes Align with Your Business Type:

• Overestimating or underestimating your projected processing volume can impact approval chances.

• Your estimated sales volume should be realistic and align with industry standards to avoid raising concerns with the bank.

Check if Your Business is on a Blacklist (TMF Match List):

• Payment processors maintain a Terminated Merchant File (TMF) Match List, which includes businesses flagged for past fraudulent activities or excessive chargebacks.

• If your business is on this list, securing a new merchant account will be challenging.

• To improve your chances, clear any outstanding issues with previous processors before applying.

Final Thoughts —

Understanding these factors can significantly improve your chances of securing a merchant account. Instead of facing repeated rejections, take a proactive approach by addressing potential concerns in advance.

If you’re looking to kick-start your startup or expand your business into online payments, professional assistance can save you time, effort, and frustration. A well-prepared approach will ensure a seamless setup for your merchant services, allowing you to accept card payments smoothly and grow your business effectively.