We receive merchant account inquiries into the hundreds in any given week. In a perfect world, we’d find solutions for each of them. But when you’re at the mercy of an acquiring bank that makes its decision based on risk profile, it doesn’t always go the merchant’s way.
What is a merchant supposed to do then?
5 Reasons Why Merchant Accounts Get Declined
There are many reasons merchant accounts get declined. We find the most common to be:
- Poor credit history: A low credit score and/or a flawed credit history causes a bank to put its guard up. With due diligence and time, credit history can be fixed.
- The bank found something on a background check: We recently blogged about how merchants must be transparent during the merchant account application process. When a background check reveals something that makes a merchant undesirable, it is considered a major red flag – particularly if the merchant isn’t transparent about it beforehand.
- Not enough capital: Having money in your bank account is crucial. The more of it makes you a viable candidate for a merchant account.
- Low volume: Maybe you’re a startup that has projected volume figures, but no solid evidence to back it up. Startup CBD and online pharmacy merchants often encounter this issue.
- Startup businesses: Credit history is a pivotal factor in gaining a merchant account approval. A lack thereof can scare a bank away (some banks, not every bank).
Solutions for When You Can’t Get a Merchant Account
Having a merchant account to accept payments on your website is a wonderful thing, a privilege even. When merchants are unable to obtain one, there are other solutions.
- Check solutions: When a high risk PSP may not be able to furnish your business with a merchant account, ask for a check solution. Between six months and a year, when your business begins to gain volume, follow up with your provider.
- Partner with someone: We’ve found when merchants have flawed credit or suspect financials, they’ll partner with someone who has better credit history and enough capital. It’s a big ask, but it’s a starting point.
- Build your personal credit: Banks and PSPs look at personal credit and financial history as well as business credit. Having sound personal credit is more important than one might think.
It Starts with a Conversation
Whether Instabill is your first choice or third choice for high risk payment processing solutions, our merchant account managers will listen and search for options for you. We have numerous solutions for merchants who need a second chance. We’re available by calling 800-530-2444.