Can't get a merchant account? Here's what to do

By Stephanie Armstrong

It can be extremely frustrating and discouraging to have your merchant account application denied. Accepting credit cards is vital to business and high-risk merchants still need a way to process credit cards. Luckily, there are steps you can take to help you get approved.

What makes a high-risk merchant?
Merchants such as mail-order companies, dating Web sites, travel and check-cashing companies are just a few examples of those considered to be high-risk merchants. These businesses and services are often classified as being at a higher risk due to a high volume of chargebacks, customer disputes and product returns.

Online businesses are identified as a high-risk merchant because a credit card is not present for verification during a purchase. New business merchant accounts are often viewed as a high-risk, as well. They have a tendency to get denied if they even have a potential for credit card fraud, regardless if they are legitimate merchants or not.

How to change your high-risk merchant account status
Working in these industries does not mean you will be denied approval for credit card processing from every company you apply to. The course of opening your merchant account can go smoothly and business will be on its way before you know it.

• Be completely honest when applying for a merchant account. State previous merchant accounts, liens, bankruptcies and discrepancies. This information is used to evaluate your company's risk.
• Slightly modify your business model. Making changes to your procedures and Web site can help you avoid being classified as a high-risk merchant account.
• Find a reliable merchant broker. Sometimes instant credit approval Web sites are scams and it is critical to choose a trustworthy merchant account provider for your high-risk business.
• Create a cash reserve for your business to avoid being denied because of chargebacks. This will also reduce your transaction fees if you reserve a large amount.

High-risk merchant account providers
While your merchant account may be seen as a high risk, there are specific companies and services that can offer solutions. There are high-risk merchant account providers and offshore merchant account programs that use a network of banks internationally. There is fierce competition to oversee your account, so you should spend time shopping around for the right provider.

Article by Stephanie Armstrong

Published: March 25, 2010