5 Reasons for Merchant Account Declines

Jul 22, 2014

As a business, in the current economic climate, being able to take payments by credit card or debit card is essential. It will expand your business potential, giving you a greater business presence with a wider customer base.

However, there are instances where your application to apply for a merchant account fails because of being a high-risk business. There are companies that will take on high-risk merchant accounts and knowing beforehand if you fit into this category, can mean applying for the right merchant account for your circumstances the first time, saving you time and embarrassment.

It is important that if you are looking to apply for a merchant account, you consider any possible points, which could risk the merchant company denying the application.

The main areas that can cause problems with the application, even a high-risk merchant account are:

  • Being included on a ‘match’ list; this list is compiled by the merchant accounts who have withdrawn their services or indicated that you are a high-risk business.
  • If you are running a business that is not permitted, for instance, medical marijuana is legal in some states, but these businesses have difficulty in getting merchant accounts because they are not legal in all states, causing difficulties with banks accepting their business.
  • If you owe any tax money, it will highlight in the report. The merchant account will find this information when looking into your application and is a highly rated reason why the application fails.
  • Your personal credit history will have an effect on the ability to open a merchant account; if you have problems managing your own money, you are not a good risk in business either.
  • Becoming bankrupt will mean that financial options that are normally open to you will quickly shut. This is the high risk involved in dealing with a bankrupt person.

Make sure you have sorted all of the potential problems that can result in a rejection in the application process of a merchant account.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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