5 Ways to Make Sure You Get Approved for a Merchant Account

Merchant Account Approval

Even though your application for a merchant account with the acquiring bank is done on your behalf by your payment service provider, the process can still be a challenge. But not to worry - there are ways to increase your chances of being approved for a merchant account quickly and without any hiccups.

Applying for merchant account services through a payment service provider makes the process much simpler, but there are still strict policies that must be adhered to.  This is quite understandable, as the acquiring bank is taking on a risk. It’s their responsibility to minimize that risk, and it’s as much for your benefit as it is for theirs. You and your business information will be carefully scrutinized and evaluated to ensure they are taking on a minimal risk, particularly for online payments.

Here are some tips for how you can avoid complications in your merchant account application process, so your payment service provider can get your merchant account up and running as streamlined as possible. Also check out this blog post for more tips on how you can prepare.

Personal Credit History

Your personal credit history plays a large part in your application. If you have a good history, and if you have a number of other people who can sign for your business who also have good credit, this will work very much in your favor. Signatories are often also required to have at least some ownership equity, to be a company officer, or to be a senior executive in the company.

Tax Issues

Ensure that you have resolved all your tax issues, submitted your annual declarations, and that there are no tax liens on your account or property.

High-Risk Business Types

Most acquiring banks maintain a list of industries that they generally will not service due to their traditionally high-risk nature in order to protect their interests. Your payment service provider is aware of this, and has partnered only with the top tier banks that accept applications from merchants in your industry, so you don’t need to concern yourself with that.  Be aware that high-risk businesses typically have higher processing fees charged to the merchant to help cover the risk that is being assumed by the acquirer. High-risk usually refers to a higher incidence of chargebacks.

Some acquirers will simply refuse to do business with companies who are chargeback-prone. Speak with your payment service provider about solutions, if this is an issue for your business.

Processing Volumes Should Remain Within the ‘Norm’

Your expected volumes are based on past processing and expected growth in the near future. To improve the odds for getting approved, show processing amounts within the “norm” for your industry. Evaluate your processing amounts at a realistic number based on your recent volumes and expected growth in the next 4-6 months. Study processing volumes and growth trends for other businesses in your industry to come up with a more realistic number for your payment service provider to present to the acquiring bank.

Keep in mind that seeing a high ticket price or monthly volume prediction that’s far greater than the average for your industry may put a potential bank on guard.

Avoid being on the TMF List

To avoid being on the TMF (Terminated Merchant File) list, clear any outstanding debts related to merchant accounts, past or present, and make sure that any previous merchant accounts under your name were left in good standing. Clear any outstanding bills or fees owed to a previous provider. Also, be highly visible to your customers by keeping a working phone number and having a web presence. Provide obvious ways for your customers to contact you, and reply promptly to customer requests.

All merchants need to go through a rigorous compliance check in order to be approved for a merchant account. By working with a reputable payment service provider and keeping these 5 points in mind during your application process, you will be well on your way to getting that approval and accepting online payments.

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