Qualifying for a Merchant Account
December 28, 2008
Just as with anything to do with your business, you need to do more than just sign up for a merchant account. Because the merchant account bank will want to make sure that you aren’t a fraudulent business, they will be asking you a lot of questions about your business as well as what you are doing. It isn’t as simple as just signing up for them to handle your credit card transactions – but for most businesses, it can be.
The first thing that a merchant account will want to do is check your background. This means that they will need information from you in order to do this – social security numbers, addresses, etc. Provide them this information so that they can make sure that you don’t have a previous record of fraud or anything else that might cause suspicion of your intentions.
They will also want to do a credit check on you to see what your credit history is. If you have a lot of outstanding debt, they may be concerned that you won’t be able to pay their fees in a timely manner or handle your finances well enough to help them make a profit too. In truth, having a lower credit score will affect your chances of getting merchant account service, so you may want to try to clean up your credit report first before trying to apply. To get a copy of your credit report, you can talk to one of the large credit reporting agencies – Experian, TransUnion or Equifax – and request your free copy. You are allowed to get one of these each year without any charge, though you can order one for a nominal fee as well.
The next thing that the merchant account bank will check is what you are selling as a part of your services. They are doing this because they want to know that you will not be having a lot of chargebacks (returns) that will bounce back to their accounts and require them to dispense refunds in addition to managing the purchases. Most merchant account banks feel that businesses that send tangible goods are more likely to have lower chargeback costs, while those that sell services might have a higher likelihood as the services can not necessarily be replaced before a refund would need to be issued.
The merchant account back will also want to know how you are accepting payments from your customers. If you’re accepting payments in person, getting the signature and matching the credit card with the driver’s license, that’s considered the best way to manage a transaction – and it’s safer for the merchant account to handle. However, this doesn’t mean that your internet business is disqualified. You just might have to pay higher fees in order to set up a merchant account.
You will also need to show the merchant account bank the statements and records of any previous dealings with merchant accounts. This will give them an idea of what kind of business you are and how you will handle their services.
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Great info. This is a unique service since you are the first that I’ve come across. I read a lot of merchant account related articles and the only other two that I read that was close to this topic referenced you guys. You should set up shop in Canada. Merchants would be knocking down your doors!
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