Bad Credit Merchant Account Explained

Sep 19, 2022

What is a Bad Credit Merchant Account?

If you have applied for a merchant account through a bank but were denied, you may need to explore the possibility of a bad credit merchant account.

A merchant account is your business’ bank account, and can be used to take out loans as well as handle payments. If a business doesn’t have a merchant account, they won’t be able to accept debit or credit cards, online payments, or contactless payments, all of which are necessary in the modern market.

Every business owner needs a merchant account, but not every bank will accept an account application with bad credit. A bad credit merchant account is the alternative to an ordinary merchant account, and is a practical option for many first-time business owners.

If a bank determines a business to be a high risk, it may decline the merchant account application. There are several features of a high risk business that banks look for, including credit history. If your business has bad credit, don’t be discouraged; it is possible to obtain a bad credit merchant account!

A bad credit merchant account almost always comes with higher rates and more restrictions to protect the bank’s investments. While these higher costs may seem prohibitive to some business owners, these accounts open the door for loans, credit cards, and business growth. For those businesses who need them, bad credit merchant accounts are a lifesaver.

Bad credit merchant accounts can be the key for many first-time business owners to break into the market. With time, effort, and collaboration with eMerchantBroker, your credit and viability as a business will gain momentum to achieve your goals.

What you need to know about bad credit merchant accounts:

  • Steps to fix your business’ credit
  • How to get approved for a bad credit merchant
  • You can have a bad credit merchant account and have a successful business!

Fixing a Business’ Credit Score

Whether or not you plan to pursue a bad credit merchant account, it is wise to improve your business’ credit score. Taking small, actionable steps now will build a safety net around your business and give you a huge advantage in future deals.

First, before you do anything else, make sure you are being responsible with your business’ finances. Any level of oversight can have drastic implications! If you don’t know why you have a low credit score, check out this article to determine if you have been doing anything to negatively impact your score and undermine your own chances at success.

If you do know why you have a low score or why you are considered high-risk, it is time to scope out the cause- your credit is merely a symptom of an underlying issue. Is there a reason you needed to take out so many credit cards, or why you can’t make payments on time? Be thorough and honest in this process; your business needs consistency and sustainability and it starts with you.

Keep in mind that not all high-risk businesses have low credit alone; type of industry, location, and other factors are all taken into consideration when determining the risk of a business.

Next, evaluate potential adjustments. Remember that simple solutions are usually the best solutions: creative problem-solving may land you in more financial trouble down the road! If you need some real-world advice on taking charge of your business credit score, look over this article for ideas.

It may be that you need a partner to help turn these mountain-sized issues into more manageable molehills. If that is the case, eMerchantBroker has extensive experience working with businesses in trouble. You can be approved for a bad credit merchant account and start making money even without a perfect credit score.

Whatever your plan is for improving your business’ credit score, remember to have patience and keep a perspective that looks beyond the present. Your score won’t change overnight, but you will never regret investing in your financial future.

Getting approved for a bad credit merchant account can help your business get off the ground.

Get Approved for a Bad Credit Merchant Account

Bad credit merchant accounts are a valid option for many businesses, but there is still a process to be approved for one. It is imperative that business owners educate themselves as much as possible about all facets of their financial options. Some factors that may improve your chances at getting approved for a merchant account or to start earning income as soon as possible include:

  • Experience with successful business ownership
  • Opting for a quick-approval
  • Knowing you may need to negotiate
  • Partnering with eMerchant

1.  Experience with successful business ownership

If you have enough experience in business, you may get better rates with a bad credit merchant account (or even qualify for an ordinary merchant account).

Credit scores are weighted much more heavily for first-time business owners. It makes sense; a bank doesn’t have records of your trustworthiness as a merchant, and your credit score offers insight into your financial habits and history. Credit scores are built over time and experiences, and first time business owners just don’t have that yet.

However, if you have owned and operated successful businesses, your credit score may not factor against you as much. Even Sam Walton had to get his first loan from his father-in-law; not a bank! But once you get up and running, banks will see your success and be more willing to work with you (even if you never grow as big as Wal-Mart!).

2.  Opting for a quick-approval account.

A quick-approval account with an online payment service provider (such as PayPal or Square) can be a way to start accepting payments ASAP. PSPs assign all their users into one huge merchant account, and their approvals usually take about 24 hours (with no personal credit check).

However, this option comes with its own risks: most notably, the provider may shut you down at the first sign of perceived fraud. If your business is in a high-risk industry, or if you experience a high level of chargebacks, you will likely have your account shut down sooner rather than later.

3.  Knowing you may need to negotiate terms.

When applying for a bad credit merchant account with a bank, know that you may need to negotiate some points such as interest rates, account fees, and other contract terms. Keep in mind that some of these negotiations may not be in your favor, so be wary!

Banks will want to give you higher rates, more restrictions, and more fees to make sure they are getting a profitable return on their investment. If these rates and restrictions make it impossible for your business to make a profit, you may need to look elsewhere; or just keep reading to find a wingman in these negotiations.

4.  Partnering with eMerchantBroker

When looking for a merchant account that will accept your high-risk business, there is no better option than eMerchantBroker. EMB specializes in high-risk businesses, including those with bad credit.

EMB has a 95% approval rating, and will walk with you through every step of getting approved for a merchant account and other financial hurdles. If you want less hassle and a more favorable outcome for your business, eMerchantBroker is the best choice for pursuing a merchant account with bad credit.

Can I have a successful business with a bad credit merchant account?

At eMerchantBroker, we have helped thousands of businesses reach their goals when no one else would give them a chance. Needing a bad credit merchant account is not an indication of where a business will end up; only of where it started.

It is absolutely possible to have a bad credit merchant account and succeed in your business! We can help you get approved so you can start earning income, meeting your goals, and building a better future for your business.

Find Business Success with eMerchantBroker

Beyond merchant accounts, eMerchantBroker has solutions for all of your financial stumbling blocks! Services of EMB include: business funding, chargeback protection, check processing, cryptocurrency transactions, and more!

We are dedicated to helping businesses succeed- no matter their circumstance (or credit score).

Your goals are achievable, and we are excited to go on this journey with you.

What’s next?

As a business owner, you absolutely need a merchant account to operate in today’s market- it doesn’t matter if your business is in retail, mail order/telephone order, or online. eMerchantBroker allows business owners to safely collect payments while being protected from fraud and chargebacks.

When you create an account with EMB, you will have access to all of these support services, as well as a helpful customer service staff that works tirelessly to give you up-to-date information and personalized assistance. There is no need to feel confused, overwhelmed, or lost in the financial maze of business any longer.

Even if you have been denied a merchant account previously, EMB is prepared to step in. We have stared down and mastered all the obstacles facing thousands of high-risk businesses, and we can help your business overcome its obstacles as well.

Tell us more about your situation and we can start working together right away!

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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