In order to accept credit cards as a method of payment, you must have an established merchant account set up. In order to get one of these accounts, you must find the right service provider to work with and must complete a formal application. While many businesses will have their application approved without drama or hassle, others will learn that their application is declined. By being aware of some of the more common reasons why applications are declined, you may be able to make a few changes now before you apply for a credit card processing account.
Derogatory Credit History
When you apply for a merchant account, your personal credit rating will be reviewed. If your personal credit rating shows low credit scores, active collection accounts or other signs of potential financial irresponsibility, your application may be declined. If there are multiple people in your company who could apply for the account, such as a business partner, it may be wise to apply under the person who has the best credit score.
If there are active tax liens against your business or against the person who applied for the credit application, there is a strong likelihood that the request for a new account will be declined. Before you apply for a new account with a credit card service provider, it is wise to clear up any issues involving outstanding tax liens.
A Risky Business Type
Some business models and types are viewed as being riskier than others. This may be businesses in a certain industry, but it may also be those that process numerous very small transactions each day. While not all processing firms will work with a high-risk business model or type, there are some processors that specialize in providing accounts to businesses that fall into this category.
Your Business Is on the Match List
The Match List is an internal list amongst credit card processors that essentially lists all of the businesses that have had their account closed or terminated through the merchant provider’s initiative. Those who are on the list are viewed as being very high risk. If you are on the list, you may consider contacting previous merchant account providers to clear up outstanding issues, such as unpaid fees, that may be giving your business a black mark.
If you have already been declined, take time to research the reason for the decline. In most cases, make a few changes or simply looking for a processor that will work with you as a high risk business can help you to get approved.