Getting Approved for a Merchant Account

There is a high level of risk that merchant providers and their partner banks take on when approving a new merchant.  Getting approved for a merchant account depends on several factors and how much risk you pose to the merchant service provider regarding chargebacks.  Chargebacks occur when customers dispute activity on their credit or debit cards and request their credit card provider issue a refund to them.  These refunds are debited against the merchant services provider and their partner banks, creating a lot of potential liability.  As such, getting approved for an internet merchant account can be a lengthy process. However, in most cases, getting a merchant account isn’t hard at all.

Due to the risk online merchant service providers and their partnering banks assume when providing merchant accounts for companies, certain factors can make it hard for you to open a merchant account. Some of these factors are listed below:

Bad Credit – This is by far the most common reason for a denial; however, there are merchant account providers out there like Charge.com that work with high risk applicants.

New Companies – A brand new company that was just formed is a much higher risk than an established company who is just looking to change providers.

Type of Industry – The type of industry you are in can also bring up a red flag.  For instance, industries where there has been a history of abuse by other people can make it hard to obtain a merchant account. Types of industries that typically have a hard time getting approval are listed below:

•  Pornographic websites
• Guns and ammunition
• Online gambling
• Free + shipping type offers
• Multi-level marketing companies
• Affiliate marketing companies
• Group buying websites
• Penny auction websites
• Discount memberships
• Gym memberships
• Membership clubs
• Recurring billing products
• Nutritional supplements

Expected Transaction Volume – If you apply for a merchant account and indicate you need a high level of processing volume, your chances for obtaining a merchant account will greatly diminish.  The more volume you do, the more likely you will face many chargebacks and the more risk you pose to the merchant services provider.  Only apply for processing volume based on your expected volume, be conservative, and only ask for the minimum you need.  If your volume picks up, you can always apply for more volume later.  Build trust with your merchant services provider and you can eventually get to the point where you can have virtually unlimited processing volume.

Average Ticket Size – On the typical application, the merchant services provider will want to know what your average ticket size will be.  If you indicate an extremely high average ticket price, the chances of approval will be greatly diminished.  The larger transaction size means a higher cost if there is a chargeback and more risk the bank and merchant service provider must take.

Expected Transaction Volume – If you apply for a merchant account and indicate you need a high level of processing volume, your chances for obtaining a merchant account will greatly diminish.  The more volume you do, the more likely you will face many chargebacks, and the more risk you will pose to the merchant services provider.  Only apply for processing volume based on your expected volume, be conservative, and only ask for the minimum you need.  If your volume picks up, you can always apply for more volume later.  Build trust with your merchant services provider and you can eventually get to the point where you can have unlimited processing power.

Getting a merchant account is not hard if you follow the advice we have offered and already have finished the things included in the “Getting Started” paragraph.  Once you get a merchant account, make sure you are staying on top of your customer service to minimize the number of chargebacks acquired.  Keeping your merchant account in good standing is vital to the long term success of your business.  Failing to maintain good standing with any merchant service provider will make it much harder to obtaining a merchant account in the future.  Increase the odds of getting approved for a merchant account today by contacting Charge.com and speaking to one of our merchant service account specialists!