Reasons For Why Your Merchant Account Application Being Denied

Reasons For Why Your Merchant Account Application Being Denied

Businesses may have a variety of reasons for not being able to get merchant accounts. Bad credit scores, certain business types not covered by the merchant account, or tax liens may all be reasons for denied applications. The inability to accept credit card payments can severely impact a company’s chances of success. There are merchant accounts for people with bad credit that can help.

Are Merchant Accounts Hard to Get?

It is relatively simple for many businesses to open a merchant account. The application process used to be time-consuming and often declined by credit card processors and brick-and-mortar banks.

There are still requirements that must be met to receive a grant. Let’s look at the top four requirements and how we can overcome them.

Bad Personal Credit History

One of the main reasons traditional merchant account providers decline to approve a merchant account application is bad credit history. Your credit report may contain items that can initiate questions or decline applications. These include active bankruptcy, low credit scores, and active collection accounts.

Possible Solutions

You can increase your chances of approval by taking the account out of your name and transferring it to a business partner who may have better personal credit.

It is easier to get a merchant account for bad credit if you are a C-corporation, a limited liability business, or have large cash reserves.

Sometimes, the processor will accept a personal guarantee. You should carefully choose merchant accounts for bad credit as each credit check could lead to a decrease in your credit score.

Unacceptable Business

Certain types of businesses are considered “blacklisted” in order to be approved for merchant accounts. These businesses are known as risky and include those that deal with adult material, drugs, or the travel industry.

If you have been involved in telemarketing, or subscription services, a processor might also decline your application.

Traditional merchant account providers should also be aware of an industry that has high product returns and processes volumes that are higher than industry standards.

Possible Solutions

You will need to find a payment processor who specializes in high-risk businesses.

Clear customer service guidelines should be provided by your company. A full refund is a good practice and will result in fewer chargebacks.

Most often, chargebacks are when customers are not satisfied with the service or product and request a refund. Instead of asking for a refund directly, customers can dispute a transaction and contact their bank to request a chargeback.

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These bank transaction reversals are not good. All merchant account processors have limitations on the number of chargebacks that a business can obtain before an account is closed.

When applying, don’t overestimate your processing volume. Provide realistic projections of your business type to establish your credibility and build a relationship.

Your processor makes a profit only if you sell.


Active Tax Liens

Your business is at greater risk from tax liens, whether personal or business-related.

Possible Solution

Before applying for a merchant bank account, you should resolve any tax liens. If this is not possible, you can work with merchant account providers with poor credit to find alternative solutions.

You’re on the MATCH List

The Member Alert to Control High Risk Merchants (MATCH list) is a registry that records all merchants who have had their accounts closed in the past. Accounts can be closed for any reason, including a merchant account that is in poor standing.

You may not be approved to open a merchant account for more than 7 years if you are on the MATCH List.

Possible Solutions

You should resolve any outstanding accounts you have with your previous provider. If you are unsure why you have been “blacklisted”, call the bank that placed you on the list to ask. Another option is to locate a merchant service provider that will work with businesses, regardless of their MATCH status.

Don’t Give Up

No matter what the reason, merchant accounts can still be opened as long as you are operating legally. It’s important to be patient while you search for alternatives. This is especially true if you are in an industry that falls outside of the legal guidelines, such as online dating or marijuana. However, there will be at least one credit processor who is willing to make money with your company. It’s your responsibility to ensure that your business is prepared for any opportunity in the credit card processing industry.

The application process for a merchant account is simple and we will be happy to assist you.

Merchant Stronghold is a company that helps businesses to get their applications approved, regardless of past mistakes. We have a 95% approval rate for merchant accounts with bad credit and approvals within 24 to 48 hours.


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