How to Obtain a Merchant Account with Bad Credit

Apr 04, 2014

If you want to accept credit and debit cards from your customers, you will need a merchant account. Merchant processors charge a fee for you to process debit and credit cards, and connect transactions with your business checking account. Each merchant account processor has different standards for approving your merchant account. Your credit is usually checked when a merchant applies for an account. Merchant account processors are typically lenient with customers with bad credit, though it is wise to read the fine print, as some charge higher fees than others will. You have options to take under consideration when applying for a merchant processor.

First off, having bad credit should not limit anyone from having a business. While bad credit possibly shows bad decisions, be sure to explain your situation. Overdue hospital bills can be viewed differently than overdue credit card bills. It should not reflect on your business, and in some cases, it will not. If you are structured as a Limited Liability Company or a C-corporation with an employer identification number, merchant account processors may pull the business credit and not your personal credit. This is fantastic, however, if you are a new business without any credit, you can be placed into the “bad credit” category. There are many people who have bad credit, and it should not stop them from obtaining a merchant account. Bankruptcies are a little tougher, as they can stay on your record for much longer than an overdue credit card bill. However, there are merchant account providers who cater to those who have previously filed for bankruptcy.  Some merchant account processors accept businesses with a FICO score as low as 500, current bankruptcies, judgments, and liens.

Your personal decisions should not affect your business, or your desire to start a business. These businesses need someone dedicated to them, and to their owner. These businesses need a company that specializes in “high-risk” situations. With careful consideration, you are sure to find the company that is the right fit to host your 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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