Common Reasons You May be Denied a Merchant Account

Before issuing a merchant account, banks evaluate your business for the amount of risk involved. The risk can be accredited to the nature of the business; volumes of business conducted every month, potential chargebacks, etc.

You may be denied a merchant account on several accounts, some of which are as the following:

Doubtful Credit History

The first and foremost factor that a merchant account processor will check is your personal credit history.

If your account’s credit history shows fraud activity, chances of denying a merchant account are higher.

However, some merchant account processers assign account under multiple users. In this case, make sure that all your associates have a good credit history.    

False Information about Your Business

When you fill an application form for merchant account, it asks you for details about the average ticket size and monthly processing volumes.

Merchant account processers will scrutinize and verify every single piece of information you provide. In case any discrepancy is found in with the information provided, your application will be disapproved.

Already on the backlist

Banks or merchant account processers have a TMF list, which they use to detect client’s history. In case your application was earlier rejected by a processing company, your name will be on that list.  

Get ready for disapproval in this case.

It is important to remember that you’ve got to be honest about your business, and credit history with the merchant account providers, or your business might have to deprive customers the convenience to pay online.

Two Types of Payment Processors Merchants Should Know about

There are basically two types of processors, under which most of the payment processing entities will fall. These are: 

Front End Payment Processor

    For payment, the customer can prefer transaction through online submission or cab make a card swipe with POS.

   Now the merchant will send the credit card information with the obtained amount to the acquirer.

·         The information is further processed by the acquirer to the bank.

·  Now the bank will verify the status of customer’s account and will accept or decline the transaction. 

   After the verification, the acquirer sends a code to the merchant and asks the customer to sign the receipt.  

Back End Payment Processors

·         Initially, the merchant will send the settlement to a merchant bank processer or acquirer.

·         Now the acquirer will get the details from the credit card network and process it to the issuing bank.

·         Here the bank approves or rejects the transaction and returns it to the network and allows to debit the amount to customer’s account. 

Now the bank will send the debit statement to the customer at a predetermined date.