Applying for a high-risk merchant account is often a frustrating and drawn-out process. It seems like there is always another i to dot or t to cross. And when you think you’re almost at the finish line, the processor will ask you for yet another document or affirmation. Then, when all has been handed over, you may still be rejected. This process does send some companies into a totally discouraged state, forcing them to give up. Merchant account approval is a process, but being aware of what you need in the application process, as well as knowing what factors may contribute to you being denied may go a long way in ensuring acceptance.
1. Negative personal credit history or active collection accounts
The personal credit history for the signer on the account, or owner of the business, is usually checked and has a large effect on the decision for approval. If there is more than one person who is able to sign for your company, use the one with the best credit rating. Merchant processors typically require that the signer for the account be a person with at least some percentage of ownership, an officer, or someone with a title of importance if the company is registered as an LLC or Corporation.
2. Active tax liens
If a merchant has personal or business-related tax liens, they will be considered high risk by all processors. Having active tax liens will usually halt the application process before it even starts. Liens need to be resolved before starting a merchant account application.
3. Merchant industry
Many merchant account providers have specific industry lists that they use, and they will automatically reject an application form from one of these businesses. These industries usually fall into the high-risk category and there are factors that label them as such. If you fall into one of these sectors, be sure to make use of a specialist high-risk processor so as not to waste your time.
4. Processing volumes are suspect
When applying for a merchant account, the application requires you to forecast your expected sales volumes based on past processing, as well as discuss expected future growth. If these totals are anything outside of the standard for your industry, it automatically triggers a red flag. Although this isn’t a death sentence for your application, it can hurt your chances of approval.
Having optimism for the future growth of your company is absolutely encouraged. However, unrealistic numbers in financial situations do cause raised eyebrows. Ensure the business evaluation is representative of your current workings and that your optimism remains cautious.
Being on the TMF Match List is indicative of a termination of your merchant account by another bank. This puts a very loud black mark next to your company name, and it hurts your chances of finding a merchant account provider as your history shows irrefutable risk. It goes without saying that avoiding this complication is important. Try to ensure that all previous merchant accounts in your name have been reputable.
After educating yourself on these obstacles, why not also chat with an expert? Octapay specialise in high-risk payment processing and will be sure to help you successfully open a merchant account. As the leaders in the Cryptocurrency, Forex and Gaming industries, the Octapay team have many years of experience and welcome new clients from these industries. Call them today and see how easy it can be to apply for a merchant account and get quick merchant account approval.