For high risk businesses, finding a merchant account solution can sometimes be difficult. However, if you know what your high risk merchant service provider looks for in a business, then you will know what it takes to get your application approved. Here are the top four most common reasons why acquiring banks may decline your merchant account application and how to avoid them.
Misleading Monthly Processing Volume and Average Ticket Size
When filling out your merchant account application, we require you to provide us with your monthly processing volume as well as your average ticket size.
However, if these numbers do not coincide with the type of business you operate, then you risk greater chances of having your application flagged or declined. Acquiring banks train their underwriters to detect even the tiniest reason that your business may be fraudulent.
Let’s say you run a small e-commerce business and your monthly processing volume is $5,000. If you list on your merchant account application that your average ticket size is $600, this will raise a red flag. In some cases, the acquiring bank will immediately decline your application, while other banks will offer you a chance to explain why the ticket amount is so high in relation to your monthly volume.
My Advice: Be truthful about the goods or services you are selling and how much you are charging. If you are an honest merchant, then you will have nothing to hide. In most cases, if you are straightforward from the beginning, it will make for a much smoother and easier application and approval process.
Present on the MATCH List
Visa and MasterCard processing banks maintain a MATCH list that identifies businesses that have had merchant accounts terminated in the past. You may also know this is the Terminated Merchant File (TMF). What you may not know is that all acquiring banks and credit card processors have access to this list and will check to see if you are on it. However, it is not just your company name that appears on the MATCH list. Any name associated with your business or terminated merchant account will also appear on the list.
It is easy to avoid getting your name on the MATCH list. Make sure that the directors you appoint or even major shareholders in the business have a clean history. Also, make sure that you do not have any outstanding bills or fees from previous merchant accounts. Lastly, keeping your chargeback ratio low will also lower your risk of getting your name on the MATCH list.
Once blacklisted, you will remain in the system for five years and it can be difficult to get your name off the list. However, some of our banking partners will approve merchants who are making an effort or are in the process of getting off the list.
My Advice: If you operate a legal and legitimate business and find your name or business on the MATCH list, do not panic. There are acquiring banks that work with merchants on the MATCH list. However, if you are on the MATCH list and you are applying for a merchant account, be prepared for taking extra steps and submitting extra documents in order to comply with the bank’s requirements.
Unacceptable E-Commerce Industry
Most high risk credit card processors have a list of industries they cannot accept. This does not mean the business is illegal. It may simply mean the processor does not have a banking partner who accepts this specific e-commerce industry. Acquiring banks decide what e-commerce industries they wish to accept based on the level of risk, and the bank may simply find your industry too risky.
My Advice: Contact me online or give me a call so we can talk! I help merchants like you establish solid, long-term processing solutions every day. I will listen to you and match you with a merchant account that is perfect for all of your high risk credit card processing needs.
Linked to Fraud or Illegal Activity
Perhaps your merchant account application was declined because banks associate the products or services offered to fraud or illegal activity. Our underwriting process is very thorough and we practice due diligence to ensure the integrity of our merchants. However, in some cases we will raise a red flag if we find:
- Products on your website that do not match the description or cost
- You are trying to sell controlled drugs
- Illegal adult content, including child pornography, bestiality, incest, or extreme violence
My Advice: Be honest when I ask you about your business. Tell me exactly what you are selling. If it is something Instabill cannot accept, then I will tell you immediately. Most importantly, stay away from fraud and illegal activity. It can only lead to harm.
