Just about every business will need a merchant account to operate effectively. A merchant account allows businesses to conduct credit card processing. It provides a business with a special bank account that enables such transactions. A business can increase profits a great deal by signing up for merchant accounts. Unfortunately, some business owners do not have good credit and their status has their business connected to their social security numbers. A business owner can still obtain a merchant account even if he or she has poor credit. The following are some tips on achieving that task:
Many merchant account providers will offer accounts to business owners who have bad credit. The catch is that the business owner may have to give the company a deposit. Another catch that the business owner may have to face is paying higher fees for the various services. Otherwise, an interested business owner can get signed up for a bad credit merchant account as quickly as today. The process is quite simple, and it can help the business to increase its sales as much as 400 percent. More than 80 percent of consumers makes its purchases with credit cards and debit cards. Therefore, having a merchant account is not an option; it is a necessity.
The interested business owner will not want to jump into the first arrangement that he or she sees. Poor credit does not mean that the business owner needs to accept any inflated agreement that comes his or her way. A comparison tool can help the person to select an arrangement that is positive for all parties involved. A comparison tool is a web page that offers a prospective customer an objective look at several providers. The person can make a sound decision after reviewing the terms, benefits and features of several credit card processing providers.
Another thing that the business owner will want to review is consumer ratings. Consumer ratings will give the business owner an idea of the merchant accounts provider’s integrity and business operations tactics. The business owner can then make an informed decision on whether to go with a merchant provider or not. The business owner can try the provider’s services for a certain amount of time. He or she will have the option to cancel the services if they do not live up to the standards that they promise.
In today’s consumer environment, people buy with plastic far more often than with paper money. Technology is making it easier than ever to accept credit cards for services and goods. Even cell phones are being equipped to swipe cards on the go, but somewhere behind the swipe is a company taking the payments and sending the funds to the business owner.
In exchange for the service of processing the credit there are fees that need to be paid. If a business owner has bad credit it can be difficult to find a processing company that will offer them an account. However, there are ways for business owners to open a merchant account with these credit card processors even when they have bad credit.
Look At Local Banks
The local bank you do business with on a regular basis may be more willing to help with credit card processing for your company. The bonus here is that startup costs and additional fees are often lower than national credit card processing fees.
Get Someone Else to Back the Merchant Account
The easiest way to back up your merchant accounts is to find a qualified co-signor. This person or company will guarantee your account. When using a co-signor, business owners can apply to any of the top-rated processors.
If it isn’t possible to use a co-signor, check out companies that specialize in helping merchants obtain high risk accounts. There are plenty of companies that focus solely on credit card processing for companies with bad credit. One way these companies help business owners get merchant accounts is by looking for overseas processors, so be sure to check out the legitimacy of the companies before signing up.
Provide Assurances for Merchant Accounts
Like any lender, it will help lessen the risks when you provide some backup in case of default. Find a provider that will accept a reserve deposit to cover a missed payment. If you cannot afford to make an initial deposit into a reserve, offer a rolling reserve. When credit is processed, the processor keeps a percentage of the funds in the account. Another form of assurance for merchant accounts is the third-party provider. An account through companies such as PayPal who take the credit processing through their system and pay you the proceeds takes the liability off of you.
Merchant accounts are a must for business owners who wish to compete in this fast-paced business atmosphere. It’s difficult to ignore the fact that a large majority of consumers are making the transition from cash to credit cards. Online retail sales are growing rapidly due to the charge-friendly environment in cyberspace. This widespread use of charge cards is rapidly turning the option of credit card processing into a necessity.
Since credit card acceptance is becoming a basic requirement for all businesses, does this also mean every business owner will automatically qualify for a merchant account? If so, does this also include business owners with low credit scores? How difficult is it for an individual with a low FICO score to get a merchant account? Are the eligibility requirements usually stringent or will most merchants work with entrepreneurs dealing with credit issues?
The prerequisites for obtaining credit card processing systems will vary from merchant to merchant. However, most payment system providers will not reject potential customers who have low credit scores. Charge card processors are payment options that provide customers with additional ways to pay for their goods and services. The past credit history of the individual or business has no bearing on the performance of the actual payment system.
This doesn’t necessarily mean that other factors cannot impede individuals who have low credit scores. For example, most payment system providers will require potential customers to have checking accounts before receiving services. If an individual’s past credit history is less than desirable, they may not qualify for a checking account right away. They will need to settle their credit issues and raise their credit scores before they can receive a checking account.
Having a debt looming with any payment provider can also keep a person from obtaining a merchant account. Not only will it affect their credit score, it will also cause other merchants to question the person’s credibility. This debt is not worth keeping since it can actually prevent the individual from gaining more clients and growing their business. A smart business owner would settle this type of debt on a moment’s notice for the sake of their company.
As long as an individual with a low credit score has a checking account, they should be able to obtain a charge card account without a problem. Payment providers will work with anyone, regardless of their past credit history. Once this individual has their account, they will be responsible for keeping up with the costs associated with this arrangement. As they keep up with payments, they will have a chance to improve their reputation while building their business at the same time.