Bad Credit Merchant Accounts: Getting a second chance with Instabill
Some merchants need and deserve a second chance. They often fall victim to excessive chargebacks or refunds; negative balances and bankruptcy; or even fraudulent business partners. We get it. We take inquiries for bad credit merchant accounts on a weekly basis. Instabill merchant account managers have helped many merchants with bad credit reestablish themselves and their businesses. We will outline exactly what the merchant needs to do to secure a merchant account and return to good standing. We offer no guarantees, but we promise to hear out your case.
What is the TMF List?
The Terminated Merchant File, better known as the TMF list or MATCHlist (Member Alert To Control High risk), is akin to a ‘detention’ of sorts for merchants. It is the ultimate penalty for excessive chargebacks, nonpayment or fraud. It is not easy to remove oneself from the TMF list, and can take as long as five years.
In the current climate, Instabill is unable to provide merchant accounts to merchants who have landed on the TMF or MATCHlist, simply because the risk is too much to assume for our acquiring banking partners.
How Merchants Get Matchlisted
Merchants are placed on the matchlist for a number of different reasons:
- Too many chargebacks or refunds: When a merchant consistently exceeds the monthly threshold of chargebacks, banks and/or payment processors will close the merchant down.
- Fraudulent or criminal activity: Some merchants obtain a merchant account for a certain product, but sell a different product, whether they are unscrupulous or just assume such a practice is acceptable. Either way, this is considered a breach of contract with the credit card processor and the acquiring bank, and the penalty could be the closing of your business.
- Consistent negative bank account balance: When a merchant is consistently under balanced, banks and payment processors lose faith and must protect themselves by closing the merchant account. This is why acquiring banks impose rolling reserves and monthly minimum processing figures.
The 2 Things Merchants Must Do After the TMF
Recovering from the MATCHlist isn’t easy. There is no shortcut. Below are two things merchants must do to begin to get back into good standing:
- Pay off any and all outstanding debt: Paying back any and all outstanding debt to a payment processor is the first step and absolutely paramount to finding your way back into the good graces of a bank.
- Get a letter from the payment processor: Once your debts have been settled in full, you must obtain a letter from the payment processor for proof that you’ve made settlement and no longer owe. The letter displays that you, the merchant, made good, maintained good faith and are worthy of a second chance.
Along with submitting the proper KYC documents to your TMF merchant account provider, only then can a payment processor consider offering a merchant account to a merchant with bad credit.
What Do Bad Credit Merchant Accounts Entail?
Applying for a bad credit merchant account is asking for a second chance, for an acquiring bank and payment processor to take a risk on you. Obtaining such an account could cause merchants to adjust their business models to return to good standing. For example:
- Volume Restrictions: A merchant that deals in high volume may have to operate with lower volume caps.
- Long Term Reserve: Merchants often open a merchant account with a varying, limited rolling reserve, depending on whether it is a domestic or offshore merchant account. Bad credit merchant account providers may impose a reserve for the duration of the contract with the payment service provider. A long term reserve guarantees the bank that it has the funds in case a business fails.
- Higher Rates: Merchants can expect to pay higher rates for at least the first 90 days, six months or until they can prove that they are consistently viable to the acquiring bank.
“We’ve seen merchants get approved with low credit scores,” said Instabill Sales Manager Wendy Jacques. “With strong financials, merchants can still earn approval with lower limits, volume caps and a reserve held for the life of the account.”
If you’re a merchant who deserves a second chance, Instabill is a bad credit merchant accounts provider that believes in making good. Select the live chat option below to be connected to a merchant account manager.