Credit card processors may consider some industries or individual businesses riskier than others. Some processors will automatically turn down requests for merchant accounts for these companies.
If you have problems getting a merchant account for your own high-risk small business, you can find high risk credit card processing that will work for you. You may also be able to improve your chance of working with a wider variety of merchant services providers in the future. Learn why your business might need to seek high-risk credit card processing.
If you’ve taken care to fill out your merchant application correctly and run a very good business, you might get declined for credit card processing. These are the primary reasons why credit card processors might turn down a request for a merchant account from a small business:
- The Business Owner Doesn’t Have Good Personal Credit
If your company is very new or very small, your personal credit history will matter a lot. Most processors will check your credit, and they may decline an application if your personal credit scores don’t meet their criteria, no matter how well your business is doing otherwise.
In time, you should work to establish better credit scores both for yourself and your company, but you will probably still need to find a card processor to achieve this goal. In this case, you may have better luck if you turn to a high-risk card processor.
- You Or Your Business Have Current Tax Liens
No matter how good your credit scores are, most merchant processors will be wary of any corporate or personal tax liens that are active. These finance companies know that the government doesn’t fool around when it comes time to collect, and they don’t want you to run out of financing to pay them. Until you can resolve the situation with your tax authority, you will need to find a processor that will work with you.
- You Operate The “Wrong” Type of Small Business
Simply operating the “wrong” kind of business from the point of view of the merchant processor may generate more declines than any other reason. Some processors view different kinds of companies as riskier than others, but if your business falls into any of these categories, you may have trouble getting accepted for a typical merchant account:
* Adult entertainment businesses: Even though adult companies may make profits; some merchant account providers simply don’t want to associate themselves with the adult industry.
* Subscription services: These days, subscription services are very popular. For example, Blue Apron is a subscription service that delivers the ingredients for meals. At the same time, some merchant account providers may associate these companies with a high risk of chargebacks, so they will decline the application.
* Medical Marijuana: Since this industry isn’t legal everywhere, most nationwide merchant providers feel like it is too risk y to associate themselves with the industry.
- Something On Your Application Doesn’t Match The Processor’s Expectations
Sometimes, your answers on your application may not match the expectations of your company because of the kind of business, how long you’ve operated, and so on. For instance, your estimated processing volume might not match averages for your industry. Since you will have have to estimate your processing volume in the future, rejections based upon this may seem quite unfair and subjective.
Card processing professionals will usually tell you to give your best estimate, and it’s fine to be optimistic about your predictions. If your answers reflect your current numbers and any anticipated growth, you should be able to defend your answer. However, some processors may decline you anyway.
- The “Match” List Has Your Business Name
Sadly, if you’ve ever had a merchant account terminated in the past, you may have trouble getting an approval from a typical credit card processing provider. In some cases, your previous processor may have added your name to something called the TMF Match List. You should first seek to find out if you owe any bills to a prior processor, and if you settle up with them, you may have good luck getting your business name taken off of this blacklist.
Besides having outstanding bills due to one of your previous merchant account supplier, there may also be other reasons for your business name to have made this list. Some of these might include customer complaints to the credit card company that they had trouble contacting your business or simply having processing numbers that were far different than what you asked for on your application.
Obviously, you should work to resolve any customer service issues that you have encountered for many reasons. When you submit applications in the future, you also need to work on your volume estimates.
How Will High-Risk Processors Help You?
Even if your business raises alarms with average credit card processors, you can still get another chance to secure an affordable high risk payment solution that you need if you work with a high-risk merchant account provider. Since your business or you have been deemed risky for one reason or another, you may expect to pay higher fees. On the other hand, your good record of working with your new high-risk credit card processor and customers can help you get your business back on track to restore its good name and financial standing.
Of course, some reasons that you may have to work with a high-risk processor may have nothing to do with you or the way that you run your business; you just happen to work an industry that raises a red flag for typical processors. Until average processors change their guidelines, you may have to accept that a high-risk processor will still give you a chance to conduct sales, even if you have to pay somewhat more to do it.
Again, some of the companies that have trouble finding merchant accounts are very profitable. If your small business fits this description, you should not have problems absorbing somewhat higher fees.