Credit isn’t the only thing that merchant account servicers look at. They need to know if your business falls into their high-risk pool and possibly what you will be selling. Be prepared for a lot of questions.
To obtain a high-risk bad credit merchant account, all you need to do is, fill out their paperwork for an application for an account. It will take twenty-four to forty-eight hours before they return with their answer. More than likely it will be in the positive and you will be underway to accepting credit and debit card payments.
Be ready
With a new account, you will need to be prepared for a small reduction in each transaction. The reason for that; is an insurance type policy for the merchant account servicer. Don’t be dismayed. A small amount will be taken from each transaction and put into a reserve account, or Escrow if you may. It will sit there to cover any chargebacks you may have.
For those chargebacks
A chargeback is just another word for a refund. They want to cover their backs with any chargebacks that you may have. If you don’t get a chargeback taken care of, the merchant account servicer is held responsible for your lack of responsiveness.
Always take care of chargebacks
Your chargebacks will be the downfall of your merchant account. Be on top of things and take care of your customers before they ever go to the credit/debit card issuing bank. Once it has gone that far, you had better respond to the letter that notifies you of the issue. None responsive account holders will end up in merchant account jail. Also known as the TMF file (Terminated Merchant File). Being put in a TMF file is the death of your merchant account and it will prevent you from ever getting another one.
Take the time
Take the time to shop around for the merchant account servicer that will work best for your business. Don’t be dismayed if you are put into a high-risk pool of accounts. A lot of our day-to-day businesses are in that pool. It’s only because of the risk of high refunds, or rather, chargebacks.
It’s up to you to maintain your merchant account and take good care of it. Once your trial period is over, that reserve account will be released to you, and all the funds that you had taken will be put into your designated account in full. A trial period can last from three to six months. With bad credit, they may make the decision to do it a little longer. Don’t be shy about being active with the results of your account. It is completely up to you whether you are successful, or have a tragic end with your merchant account. Don’t take it lightly, because processing your credit and debit cards becomes impossible without the merchant account. Good luck with your decisions.