So you’re in the market for a new credit card processing company, and you’ve found a good candidate to handle your business’ finances. You’re going through the steps to sign up, only to have your application declined.
What happened?
In all likelihood, there’s several reasons an application for credit card processing can comeback negatively. Sometimes a line isn’t filled out on the form, or there may be another minor mistake in the paperwork.
However, there are times, when there’s a more serious issue (or issues) preventing your company from receiving processing services. Until these issues are resolved or addressed, a card processor will not move forward with the application.
The largest question though, is what are the reasons for why an application to process credit cards would be denied? Well, we’re going to discuss the main problems that block your application from being accepted, and how you can resolve them.
Since credit card processing services are essentially applying for a loan from a bank, they have a list of qualifications they check. They will examine if an applying business falls into the high risk category.
For a lot of credit card processing companies, they are hesitant in signing a business that’s a high risk possibility, and will likely reject a risky business in order to protect their interests.
It may be a barrier, but not an end-game. There are several credit card processing companies that will work with businesses that fall into this category. You may have slightly higher processing fees associated with your monthly statement, but you could still potentially take credit cards.
Whoever signs as the personal guarantee of the account will have their personal credit history, and account examined. A credit card processor is checking to assure that you don’t have any past or present negative balances or overdrafts.
They want to know the account has sufficient funds. This will ensure the company can cover the fees that will be deducted each month to pay off the monthly statement.
Whoever is signing the personal guarantee for your business needs to have good credit, and consistent cash flow coming into the account. They will also need to have some place of ownership in the company.
The TMF (Terminated Merchant File) or Match List is a“blacklist” used by credit card processors, and it records merchant accounts that have been terminated by a processing company. This can happen when a merchant is flagged as a credit risk.
There’s a few ways a merchant account can become blacklisted. To avoid the MATCH list, check and make sure any previous merchant accounts that you have are paid off. If you have any fees owed or outstanding bills to the credit card company, you will want to make sure those are paid. This will ensure that nothing will prevent you from signing on with another processor.
There are other reasons your name might appear that would require more time and involvement to resolve. To avoid high risk situations with any processor, you will want to keep your accounts in good standing.
You may not be expecting taxes to affect your ability to sign up with a credit card processor. However, if you have outstanding tax liens that you have not paid, a processor will not be willing to sign your merchant account on.
Those tax liens are considered “bad” debt against you, and are similar to having a negative account.
Tax liens can count as unpaid taxes to the government, via State or Federal level. This could either be your business taxes such as employee tax, payroll taxes, or even taxes unpaid on your personal account.
If you have tax liens, the IRS will alert you, and you’ll receive the proper documentation from them to settle the tax liens. If the documentation is completed, you can show the processor the corresponding papers from the IRS.
Chargebacks are something merchants will come across every once and a while. Sometimes they are cases of fraud, or just a dispute with the card holder over a product or service. A chargeback can also be do to insufficient funds in the customer’s bank account.
It’s not an issue to receive a chargeback occasionally, but if your business is constantly being slammed by chargebacks, a credit card processor will not want to do business with your company.
To the processor, you are considered high risk. A lot of chargebacks on an account can make the company appear like they are struggling to provide good services and keep money. The company may lose money due to fraud and not handling transactions wisely.
Applying for credit card applications can be easier, if you take the above advice into consideration. Be wise with your finances, and you’ll have a better experience finding a credit card processor.
Click here to see how other businesses have been successful with accepting credit cards.
