Bad Credit Merchant Account Solutions
A bad credit merchant account is a type of credit card processing account tailored for companies that have less-than-average business credit scores.
Various credit reporting agencies like Dun & Bradstreet, Experian, Equifax, and Creditsafe maintain the credit reports and scores of businesses. These credit reporting agencies receive regular updates from various financial institutions about the activities of individuals and businesses. They also collect inputs from lenders and public records.
Credit rating agencies consider various factors while determining the credit score of an individual and business. These factors generally include payment history, credit utilization, length of credit history, and public records such as bankruptcy and liens. After thoroughly analyzing these matrices, the credit rating agencies assign a credit score to the company and individuals. A bad credit score can severely impact the overall functioning of any business, as the company may struggle to obtain financing or even secure contracts with suppliers.
When a merchant applies for a credit card processing account, banks check the creditworthiness of the business and its directors. Merchants often face challenges in getting approval for a merchant account if the personal credit score of the director or the credit rating of the company is poor. Traditional banks view such credit as a red flag and, in most cases, decline these applications.
However, high-risk processing companies offer bad credit merchant accounts by implementing various risk reduction measures. Unfortunately, there are very few providers that offer these bad credit merchant accounts. Quadrapay has established a network of relationships with various payment processors that offer bad credit merchant accounts to businesses. Ask us today for more details.
KYC for Bad Credit Merchant Account
For the approval of a bad credit merchant account, the business must provide some important documents. These are the same documents that any merchant needs to provide for the approval of a merchant account, regardless of the credit score. Let us look at some of these important documents.
The business’s legal documents help the merchant account provider identify the legal status of the company. For this, the merchant can provide the certificate of incorporation or any similar document. Additional documents related to business registration that can be shared with the underwriting team include the articles of association, memorandum of association, share distribution information, organizational chart, EIN, or any other tax number.
The payment processing company will also need the national ID and address proof of all the directors who are part of the company. For this, merchants can provide the utility bill of the directors and a copy of their driver’s license or passport.
The funds collected from the credit card transactions can only be settled in the business bank account of the merchant. It is the acquirer’s responsibility to ensure the validity of this bank account. For this, the payment processor will need the merchant’s bank account information. This can be provided through a letter of good standing or a voided check.
If the merchant plans to use an online payment gateway, they need to provide the domain registration receipt. This document confirms the ownership of the domain.
If the merchant is applying for a retail credit card processing terminal, the payment processor will ask for pictures of the store.
Website Compliance for Bad Credit Merchant Applications
It is important for merchants with bad credit to be aware of some important website compliance requirements. The credit card processing company will thoroughly evaluate your website to make a decision about your account approval. These simple suggestions will help you meet the website compliance expectations of the underwriter.
Credit card processing companies that offer merchant accounts to businesses or individuals with bad credit understand that they are taking on a little risk on the credit rating front. However, they will not be interested in working with merchants who are not serious about their business website.
The underwriting team at any bad credit merchant processing company will check the overall appearance of the website. They will also assess the historical organic and inorganic traffic of your site. Therefore, it is important for your website to look professional and already be attracting users and visitors.
The next thing you need to ensure is that your website must display the logos of credit card brands. You can download these logos from the official websites of the credit card companies. Along with that, it is important to ensure that links to terms and conditions, privacy policy, refund policy, and shipping policy are displayed prominently throughout your website.
To reduce the risk of refunds and chargebacks, you must prominently display the company’s contact information on the site. A smart way to do this is by adding the company name, address, phone number, and email to the site-wide footer.
Your website must utilize the HTTPS protocol, and for that, your website should have a valid SSL certificate.
If you keep these factors in mind and modify your website accordingly, you will definitely increase the possibility of getting approved for a bad credit merchant account.
Bad Credit Merchant Account Services FAQ
Can I get a credit card processing account with no credit check?
In the credit card processing industry, the actual process of onboarding a merchant is always handled by the acquiring bank. However, the acquiring bank generally does not sign contracts with the merchant. Instead, the acquiring bank involves a payment processor that signs the contract with the merchant. This payment processor performs the underwriting while ensuring that the guidelines of the acquiring bank are met.
So technically, it may not be possible to get a credit card processing account without a credit check. Merchants should stay away from providers that claim to offer credit card processing accounts with no credit check.
However, if you apply to high-risk payment processors, they may onboard you and implement various measures to ensure that your merchant account stays within the prescribed risk parameters.
The guidelines of acquiring banks in the United States of America may not be exactly the same as banks in the UK, Canada, or the European Union. Banks may have slightly higher or lower risk appetites when it comes to credit checks, which is why when merchants with bad credit scores apply to offshore payment processors, they may get better results. Keeping in mind that these payment processors may also run a credit check, but their expectations of credit scores might be a little more relaxed than those of a domestic American bank.
