Sep 03, 2012

Getting a Merchant Account with Bad Credit

Getting a merchant account with bad credit can be a nightmare. Whether you’re a new start-up struggling on a tight budget, or you’re an established business that has hit a rough patch after the recent economic crisis, few of the traditional paths to establishing a merchant account remain open to you if your credit is shot.

How Bad Credit Can Hold You Back

It’s not impossible to get a merchant account if your credit is bad. But, in most cases, it’s going to mean settling for second-rate service in several key areas of your business. If you’re starting your first business, that adds pressure that you really don’t need. Getting your first business up and running is stressful and difficult even when the wind is blowing in your direction – when the wind starts blowing against you, your dreams of entrepreneurial success can quickly start turning into nightmares.

Some more traditional merchant account providers may still offer to deal with you, but it will be at a heavy cost to your business. Some business owners with bad credit even make the mistaken assumption that they have no choice but to deal with a slightly disreputable provider if they want to have a merchant account at all – and when you slip into that mode of thinking, you risk tying yourself up with other businesses who may not be entirely above board in the way they operate, or simply unprofessional.

How to Get a Merchant Account (Without Selling Your Soul)

When you’re a start-up with bad credit, you run the risk of falling victim to predatory tactics from companies that actually are willing to offer you a merchant account. Here are a few of the typical traps to watch out for.

Set Up Fees

When you’re dealing with a provider who doesn’t specialize in dealing with high risk businesses, they will usually try to ‘protect’ themselves by tacking on high set-up fees as well as ongoing monthly costs that may be out of proportion to the amount of sales you’re processing.

Rate Gauging

Merchant account providers often use a trick similar to credit card companies or mortgage brokers when it comes to people with bad credit: the worse your credit is, the higher the rates will be. Of course, this is extremely dangerous from your perspective, because if you have bad credit to begin with, being penalized on rates is only going to increase the level of risk you and your business are exposed to.

eMerchantBroker.com Can Help!

At eMerchantBroker, we specialize in dealing with high risk businesses – so we can help you get set up with a merchant account that suits you, even if your credit is in a bad state, without any of the risks and penalties most other providers will saddle you with. Starting an online business? No problem – we’ll get you up and running without any set-up fees and give you a lower transaction fee rate than Paypal.

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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 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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