Merchant Account Declined? Find out the reason!

The merchant account application is a process that involves evaluation of potential risk of the business. But many merchants don’t have a clear idea what are the possible risk factors for their business?

If your business goes bankrupt or has a huge amount of chargeback then it the merchant account processor is liable to pay the amount. Now this is a huge financial risk for the merchant account processor. Moreover, there are many fraudsters who find it an opportunity to take advantage of the liability of the bank. Therefore, banks and merchant account processors have to prepare themselves for the risk ahead.

Here are the reasons why businesses fail to obtain approval for merchant accounts and the ways to avoid the complications in the whole process.

Reasons for merchant account rejections:

Personal credit history affects approval

The decision for approval is largely affected by the personal credit history for the signer on the account. In case there are multiple people to sign for your business, make sure they have a good credit. Merchant processors prefer that the account signer should have at least some percentage of ownership for example: a person with a major title in case of a company registered with LLC or Corporation.

Active tax liens are considered high risk

If you have personal or business related tax liens then you are under the high risk category for which it is difficult to get an approval for merchant accounts. Thus, make sure you resolve liens before you start a merchant account application.

High-risk category can face rejections

There are certain industries which have been entitled as high-risk and are often rejected by banks for merchant accounts. So, if your business is under the same category you will have to face rejections. So, it’s better to find high-risk credit card processor which can help you to find the right merchant account processing solutions for your high-risk business.

Out of the norm processing amounts

While applying for a merchant account application, you need to apply for an expected volume and growth in reference to past processing. Although every processor is excited for your business growth but processing amounts outside of the “norm” can reduce your chances of getting approved.

Thus, don’t forget to evaluate your business processing amounts and expected growth in accordance with the recent volumes and develop a realistic and optimistic figure.

MATCH list is the blacklist

If your business is on the TMF Match List it means another bank has terminated a merchant account with you which means you are a credit risk.

So, make sure you leave a good standing of all your previous merchant accounts. So, pay off all the outstanding bills or fees owed to a previous provider before you apply for another merchant account.

So, if your business is stuck up in any of the above mentioned reasons, make sure you fix everything before your merchant account application.