If your business gets closed or bankrupt or having a huge amount of chargebacks then only merchant account processor is liable to pay the dues. So it is the most important factor to be considered for merchant account processor while signing the application. Therefore, banks and merchant account processors have to prepare themselves for the risk ahead.
What are the major reasons for Merchant Account Rejection?
Past Credit History – the decision of approval largely depends upon the past credit history. If your business involves many people, make sure they have a good credit history personal or professionally. Every merchant account processor prefers that a signer should have good credit history or at least have some share of ownership. E.g. – a person holds a major title in case of a company registered with LLC or Corporation.
Active Tax Dues – having personal and business related tax dues are considered high-risk and for that is difficult to get approval for a merchant account. Resolve all your personal and professional tax liens before you go with merchant account application.
High-Risk Business Category – there are some business which are considered as high-risk and are often rejected by banks for merchant accounts. If your business falls under the same category it is advisable to get high-risk credit card processor which can help to find the right merchant account that suits your business with your unique wants. So if you are for example selling CBD products online you will need a CBD payment processor for your transactions.
Out of the Box Processing – while applying for merchant account application you need to apply for a predictable volume and growth in reference to past processing. Before going estimate the future business growth in a graph with the recent volumes and develop a realistic and optimistic figure.
High Decline Rates – when customers process a transaction using credit card some time their bank can decline transaction due to various reasons. If this problem happening many times it could leads a serious problems. If more than 10% of transaction declined the merchant account provider will not be happy to do business with you.
Invalid Documents – when filling application for merchant account it is vital to provide accurate and detailed information about business. Up-to-date balance sheet and monthly statement should contain all information based on sales volumes, chargebacks, decline rates etc. This will help to achieve desired goals.