Nearly everyone with their own business wants the ability to process their customer’s credit cards. While getting a merchant account so that a business could accept credit cards has been a major hassle and a huge cost in years past, today it’s possible to get a merchant account online.
A small number of businesses, however, are discovering that they are considered to be to high risk to get a merchant account. When this occurs, one of the first questions these businesses ask is what makes me so high risk?
The answer can be complicated, since risk isn’t tied to just one factor. When assessing whether or not a business qualifies for a merchant account, factors such as credit history and type of business are the biggest considerations. Credit history encompasses a lot more factors than just the business’ history of paying its bills on time. Because money is transferred to and from the business’ bank account on a daily basis, it is important that the business have a good history with its bank. An account that suddenly closes or is at risk for being overdrawn can wreck havoc with the automatic deposits that are made by the processor into the merchant’s bank account. Often, this can result in the funds being incorrectly transferred, causing problems for everyone involved. If a business looks like it will have problems with it’s bank, they will often be denied for a merchant account.
Next, the type of business, including its relative size, customer base, and even the product it sells is compared to similar businesses. If too many similar businesses have had issues or problems with keeping a merchant account, the new business is often denied as well. For example, businesses that have a lot of overseas clients tend to have higher amounts of fraud than businesses that operate primarily domestically. This means that a business with a lot of foreign clients will have a better chance of being denied for a merchant account. There are also some products that are banned from sale in various locations that can prevent the business that sells them from obtaining a merchant account.
If your business has been denied for a merchant account, you can call the company that denied you and ask why. Sometimes, there are things that can be changed or fixed to make a business qualify.