In your quest to secure a merchant account to grow your business or startup, you are notified you’ve been declined. However, you have no idea why. Where do you go from here?
If this has happened to you, the following list should provide some clarity. There are many reasons why banks refuse to offer their merchant account services to companies. The sooner you discover why you’ve been declined, the sooner you can address the issue and move forward.
- Credit Issues
If your personal or business credit history is less than stellar, you will struggle to secure a merchant account. Many traditional providers will be hesitant to work with you because they feel the risk of fraud and chargebacks is simply too high. Your ability to secure a merchant account will also be affected if you have active collection accounts.
- Tax Liens
If your burdened with personal or business related tax liens, you will also encounter a roadblock. For any processor, tax liens are considered a high-risk situation and typically something they refuse to work around. Most processors will refuse to offer you their merchant account services until you’ve resolved liens.
- “High-risk” Business Type
Traditional providers are not equipped to deal with many business types and industries. In an effort to protect their interests, these “high-risk” merchants are turned away. Gaming, nutraceutical, credit repair, telecom, warranty, travel, restaurants, hotels, eBooks, electronics and airlines are just a few of the business types and industries providers consider high-risk.
- High Processing Volume
A typical merchant account application will require that the merchant share their expected volumes (based on past processing and expected growth). While business growth is desirable, processing amounts that exceed the “norm” for that merchant’s industry are a red flag to providers. While it may sound strange, unusually rapid growth will hurt rather than help your chances of being approved.
- MATCH List
If you’ve been placed on the TMF Match List, your application for a merchant account won’t stand a chance; this “blacklist” is for merchants that have had their merchant accounts closed by their processing bank and are on negative terms. Some of the reasons you might’ve been placed on the list include: a high chargeback ratio, fraud or failure to pay your final bill with a previous provider.
- Fraud or Illegal Activity
Your merchant account application will also be declined if the products and services your offer are associated with fraud or illegal activity. Banks simply won’t go near you. Other red flags include: trying to sell controlled drugs, products listed on your website do not match the description/cost or illegal adult content.
High risk providers, like eMerchantBroker, specialize in working with merchants that struggle to secure an account with a traditional provider. “High-risk” business types, the MATCH list, tax liens, bankruptcy and bad credit are not an issue for these providers. In fact, they offer merchant accounts specifically tailored to meet the needs of each business type and industry they work with. In addition, merchants can have their account up and running in as little as 24 hours. Traditional providers, on the other hand, can take weeks (even months) to approve or decline your application. If you’re still struggling to find a provider willing to work with you, consider what a high-risk provider like EMB can offer.