Submitting your merchant account application only for it to get declined is a soul crushing, heartbreaking experience considering the time and effort you have put into both your business and your merchant account application. It is most especially frustrating to those who are new to the marketplace, expecting to set up their business and start earning as flawless and easy as possible.
Merchants have to realize that processors are very comprehensive researchers and investigators, making sure they know every nook and cranny of your business. Processors make their merchants go through a process of thorough review and evaluation so as to determine if your industry is rightfully fit for their services or if you’re an ultra high risk merchant who may need a more tailored merchant account package.
If your business has undergone a review process and has been painfully rejected by your processor, you must be able to figure out and understand the factors that made them decline your application; make the necessary adjustments, and try to apply to as much processors, that cater to your business industry, as you can.
It is helpful to know why businesses fail to obtain approval, so we listed down the basic types of mistakes merchants unconsciously (and sometimes, consciously) commit.
1.) Lack of proper documentation
One of the common reasons why businesses get declined is because of its failure to submit complete and proper documents. Processors require their merchants to submit several documents, along with the latter’s merchant account application, in order to have your account successfully processed. The standard requirements of most processors include driver’s license, passport, proof of incorporation or business license, monthly bank statements, and monthly processing statements. Having a present and fully-functioning website may entail additional requirements that include legal name and URL, BBB (Better Business Bureau), printed yahoo.com search results for your DBA, printed list of your domains from whois.webhosting.info, and print-outs from your website showing product descriptions and merchant policy.
The aforementioned requirements, specifically with regard to your website, may vary from one processor to another.
Failure to submit just one of the said requirements can easily mount up to rejection. It’s best to ask for the specific requirements early on so you can double check if you think you?re missing a document right away. Neatly compile all your requirements and be organized in order to avoid losing anything.
2.) Prohibited business types
Most banks maintain a set of guidelines as to what types of businesses they?ll issue merchant accounts to. Processors conduct comprehensive research on your business industry, making sure that you don?t pose as a risk. Unfortunately, if you do, your application will be automatically declined. This is the processor?s way of protecting its interests so don?t take the rejection personally.
If you?re one of those business types that fall right under the high risk umbrella such as debt related businesses, and adult businesses, you don?t need to worry because you can still apply for your merchant account. Just make sure to apply to a processor that specifically caters to high risk merchants like you.
3.) Misrepresentation
Have I told you that bank processors are thorough researchers that will meticulously pick on every detail they may deem necessary when you apply for a merchant account? If yes, then it?s good that you actually picked something up from this. If no, then please do take note of this as misrepresentation seems to be one of the basic mistakes merchants commit.
Make sure that whatever information you have provided is true and accurate. Your bank processor will most likely contact every reference you have put, from businesses partners, just to ensure that what you said about your business location and nature is true, up to your landlord to check if you?re actually a tenant of his and living on the exact same address you have provided. Merchants can?t afford to mix up basic information as this will greatly cost them a potential merchant account. Make sure you have provided all the right information and exert considerable efforts in ensuring that you are telling the truth in your application.
4.) Present on the MATCH list
The TMF Match list is considered as the black list of all black lists when it comes to merchant accounts. We, at Easy Merchant, are pretty sure you don?t want your business name plastered up there on that list, do you?
If you find your business on the list then your account is most probably closed or cancelled by your recent processor in order to inform and warn other processors that you are a credit risk. Being in the list may decrease your chances of getting approved and may even lead to the rejection of your application automatically.
To avoid this complication, make sure that you have paid all your outstanding bills with your erstwhile provider. Ensure that you don?t have any existing fees before applying for another merchant account because a merchant or principal found on the MATCH list will not be issued another merchant account until they?re removed.
In order to gain approval on your merchant account application, be upfront as possible. Never leave a single detail when it comes to providing your information, as well as never overwrite something because processors can very well detect them right away. Just provide the necessary documents and make sure to do your research when it comes to looking for possible bank processors that have tailored merchant account packages made just for your business industry. There are processors out there that specialize to a certain industry, might as well look them up and start filling out that application form.