6 Merchant Account Underwriting Requirements To Know

Jan 08, 2021

Many merchants are still in the dark when it comes to the process and what is actually required to obtain a merchant account. 

And when it comes to finding the right merchant account, business owners will find themselves immersed in new, sometimes confusing jargon used within the payments industry.

Another issue that business owners will encounter is that merchant accounts actually have a very thorough underwriting process. It is through this process that informs whether the merchant account is accepted or denied. 

What Is Merchant Account Underwriting?

Since the acquiring banks are the ones who are shouldering the burden “on behalf” of merchants, they take great lengths to lessen this risk by excluding any businesses that fall under high-risk categories. 

Merchant account underwriting requires a thorough analysis and meticulous evaluation of applications submitted by merchants. Acquirers are the ones that carry out this analysis mostly to confirm that businesses are viable, trustworthy, and meet basic criteria. 

The 6 Merchant Account Underwriting Criteria

So before a merchant sets out on the path of finding the perfect merchant account for their business, they must gain an understanding of what, exactly, the merchant account underwriting process entails. That way, a merchant is armed with the right information and prepared to meet these requirements successfully. Here are the six criteria that merchant account underwriters use to confirm that the business is viable, trustworthy, and has a chance of getting approved:

  • Must-Have A Business Bank Account

When you have a designated bank account for your business, it speaks volumes about the seriousness of your business. Your financial report should be separate from your personal expenses. Keep your balance at a healthy level and your “overdrawn balances” to a minimum. 

  • Financial Documentation

Financial statements and processing statements are used to create an overall picture of your company’s viability. Records that also track a regular “transaction flow” for example, can give underwriters an accurate picture as to how you handled chargebacks and the steps you took to lessen fraud. 

  • Define Your Business Structure

When you take the time to register your company as a limited liability company (LLC), a sole proprietorship, a partnership, a cooperative, or a corporation, this demonstrates to acquirers your “legitimacy” as well as your “legal standing”. You also need to be sure you feature your Employee Identification Number (EIN) to file your business taxes. 

  • Maintaining PCI Compliance

One of the most important requirements for accepting credit card payments as well as mitigating potential fraud is to be PCI Compliant. By following these guidelines, you can ascertain your business’ security. Using the latest and up-to-date software can further shield you from any data breaches. 

  • More Supporting Documents

Underwriters may take things a step further and require you to furnish your business policies documentation that outlines your shipping, billing, returns, and refunds. Best practices require companies to communicate reasonable timelines for customers to receive their goods and offer high-quality goods to avoid any type of reimbursement. 

  • A Complete Application

Although the application will feature all the aforementioned requirements and criteria for approval, it is still critical that the application itself is completed thoroughly. Underwriters also pay careful attention to the way you fill out your application. They are especially keen on it being complete, accurate, and professional. 

Don’t Remain In The Dark

Merchants have a lot on their plate as they navigate the complex and sometimes the topsy-turvy world of entrepreneurship. Getting a merchant account approved is most definitely the golden ticket to accepting payments and growing their business

However, none of this is within reach if merchants do not prepare for what is required of them to get a merchant account approval. It is best to get familiarized with the underwriter’s requirements to ensure a higher chance for approval.

Let us help you get a high risk merchant account today!

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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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