Crowdfunding Merchant Account

Crowdfunding Merchant Account

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Crowdfunding merchant accounts are considered High Risk because they may attract high returns and chargebacks. It is the core reason why most of the payment gateway companies avoid working with merchants from this industry.


To expand the business entrepreneurs need funding. To convert an idea into reality funding is required. Traditionally people used to collect financing from Venture Capitalist and Angel investors. For many entrepreneurs, it was not the perfect way of acquiring funds. The most challenging thing for many entrepreneurs was to handle the pressure of the investors. Founders and Entrepreneurs prefer to run the business in their way, and if the investor starts questioning the activities of the company, then it becomes a challenge for the harmony within the organization.

Crowdfunding is a better way of collecting the required finances for startups as well as established organizations. Rather than going to venture capitalist or Angel investors organizations prefer to go to the public for funding. We are not talking about getting listed on stock exchanges but we are talking about taking the project to the public’s so that they can contribute toward.

Crowdfunding is basically implemented in three different ways. Donation Based, Reward-based and Equity based.


Donation-based crowdfunding can be a project in which people donate a small fraction and don’t expect anything in return. These kind of project are generally short-term projects and are related to humanitarian causes.


As the name suggests this kind of crowdfunding activity requires the platform to offer some sort of reward to the people who are supporting the project. The reward can be as simple as offering a premium membership of the project, distributing t-shirts, credit display on the website and many other forms. Most of the times the rewards are not very expensive.


In the world of startup organizations, people prefer to launch equity-based crowdfunding. In most of these kinds of projects, the funding is utilized to establish and develop the company. When the company starts generating profit then the people who contributed to the crowdfunding project get an equity or share in the organization.


Many payment service providers and credit card processing companies are comfortable in onboarding experienced as well as startup merchants from the crowdfunding space. Having said that every processor scrutinizes each application to ensure that the crowdfunding project is genuine and is not being utilized for other activities like money laundering, Transaction Laundering, bribery and other illegal activities. To reduce the risk of money laundering payment service providers usually put a cap on the maximum ticket size. Different countries have got different regulations for crowdfunding projects and payment service providers who offer solutions to merchants from different countries have to follow all these regulations. for instance, in Canada, the crowdfunding regulations are different for few provinces. For the United Kingdom, the government has implemented rules of regulation related to crowdfunding platforms and initiatives. Same goes for United States of America merchants from the US have to follow the crowdfunding guidelines prescribed and recommended by the United States Government.

The Merchant Classification code(MCC) for crowdfunding is generally 6012 Financial Services. Most payment service providers consider offering credit card processing solutions to start-up companies within the crowdfunding industry. If the merchant has got an existing credit card payment processing statement or processing history then this can help the merchant in securing better rates, faster payouts and higher monthly caping.


If you have developed a crowdfunding platform and want to accept payments then you need an international merchant account. To get an international merchant account and crowdfunding payment gateway for your crowdfunding platform you must follow these guidelines

1. The website should be complete and should clearly resemble the business model.
2. SSL certificate is mandatory for all crowdfunding websites applying for Credit Card processing.
3. Terms and condition, Privacy policy, Cookie Policy and Refund Policy pages must be there on the website.
4. Proper Customer Service email and contact form should be available on the crowdfunding website.
5. The descriptor should be visible on the prominent pages of the website. This helps in reducing friendly fraud.
6. Logos of major card brands that the merchant wishes to accept must be visible on the website.


As mentioned earlier most payment service providers offer Credit Card processing solutions to startups as well as experienced merchants in the crowdfunding industry. Still providing maximum documents to the payment processor will help you to improve the possibility of getting a crowdfunding merchant account. Here is a list of basic documents that are needed for a crowdfunding online credit card processing account.

1. Website whois certificate: It is required to identify the ownership of the website. The domain must be in the name of the company or the major stakeholder and the ultimate beneficiary of the company.
2. Business license: This includes the certificate from the government where the crowdfunding organization is located.
3. National ID and Address proof of all the directors: Payment processing companies require this information to understand the ultimate beneficiary of the company. Payment processing companies may also run a credit check on the directors to check the creditworthiness.
4. Utility bill in the name of the company: This can be a telephone bill internet bill or any other utility bill that clearly shows the name of the business and the address that appears on the merchant account application.
5. Utility bill of the business owners: Many payment service providers ask for this document. With the help of this document payment service providers can confirm the business owners actual residence. All these documents help the payment processing company to evaluate the motion account application for crowdfunding in a better way.
6.Business plan: You will not see the request for this document on many merchant account applications but we recommend you to share your business plan with the payment service provider. Crowdfunding platform must have a business plan. Without a business plan, there is a high possibility that the crowdfunding platform will fail and eventually result in chargebacks and dispute from people who have contributed.
7. Organisational Chart: Sharing the organizational chart and hierarchy of your company helps the processing company to understand the key responsibility areas of each director.
8. Resume of the directors: You are not applying for a job but if the profile of the directors of your crowdfunding platform is fantastic why not share it with the credit card processing company. Eventually, the application is always screened by a live person. The more convincing your profile is the better chances of approval you will get.
9. Last year profit and loss statement: If you already running a business and have completed one financial year then you should share the profit and loss statement of your company that is prepared by a third party auditor. When all these documents go together with the merchant account application to the crowdfunding payment service provider the chances of you getting a High-Risk merchant account improves exponentially.
10. Business Bank Statement: Although most of the payment processing companies run credit check it is great to share the copy of last year business bank statement. This statement helps the processor to understand the financial strength based on the credit and debit on the business bank account.
11. Personal Bank Statements of the directors: Most of the times this document is not asked by payment service providers but we all understand that payment service providers want to work with directors and ultimate beneficiaries who are financially sound. If your personal bank statement reflects high financial strength then there is no harm in sharing the copy of the same to your credit card acquiring Institution.
12. Industry recognition: If your organization has received quality certifications or any other certification from recognized associations then you should share the copy of the same to the processing Institution.
13. Nonexpiring access to the crowdfunding website: Some processes may ask for the username and password of your website. They ask for this information because they want to ensure that your website is only being used for crowdfunding. Sometimes the processing companies may ask for the logins at the time of preapproval. For your information processors also ask for the logins if the merchant is from industries like Online Dating, Travel portal, web hosting and advertising Platforms


Apart from getting a credit card merchant account for your crowdfunding portal, you can also use ACH payment processing for your project. After credit and debit cards processing ACH/Echecks are one of the most popular modes of transactions used by high-risk merchants in the USA. Quadrapay works with multiple payment service providers including service providers in the space of credit, debit, ACH and echeck payment processing. If you want our team can take your application to these processors for preapproval. Once your website is preapproved you will be required to send some of the above-stated documents to the ACH payment processor. ACH payment processor may also offer recurring billing to merchants from many high risk industries. ACH Crowdfunding payment gateway comes with Virtual Terminal and API.


As mentioned earlier crowdfunding is also considered a high-risk industry by many payment service providers and one of the core reason for the same is high chargeback ratio. As a responsible merchant, you should ensure that your merchant account does not attract high chargeback ratio. You should look at measures that can help you in reducing the fraud and chargeback percentage. A perfect way to reduce chargebacks to a huge extent would be to use chargeback alerts and notifications services. These services are highly effective and help crowdfunding merchants in reducing chargebacks and fraud. If you are using multiple merchant accounts then you can request the chargeback alert company to monitor all the descriptors. With chargeback alerts, you will get near real-time notification and this may help you to resolve the issues with the card-holders.


India has a massive number of startups. These companies prefer to generate funding from an enormous pool of individuals. Startups in India prefer to use crowdfunding to create the necessary money required for the company’s growth. India also has got many payment service providers that are comfortable in onboarding good merchants for crowdfunding.


The application process to get a payment gateway for crowdfunding in India in starts by sending a merchant account application to the payment gateway company. Along with the payment gateway application form the business also needs to submit some additional documents. These documents are listed below.

Business license. This may include the GST Certificate, Shop, and Establishment Act registration certificate, MSM Certificate, Certificate of incorporation(CIN) with the article of association and memorandum of association, LLP registration certificate, One person company or OPC company registration certificate.
PAN card and Aadhar card of the directors. These two documents are used as the identification proof and the address proof of the business owners in India.
Cancel cheque of the business bank account or Letter of good standing from the business banker.
Utility bill. It may include electricity bill issued by power suppliers, Water bill, Municipal corporation bill or Landline bill.
Once the merchant submits the application form and the KYC documents to the payment gateway company then the underwriting team at the Indian payment service providers office analyses the crowdfunding website as well as the supporting documents. Based on the internal risk analysis the payment gateway solution may be provided to the merchant. If you are interested in getting a payment gateway for crowdfunding in India, then we request you to send us an email on [email protected]. Our team will assist you in finding a reliable payment gateway company for your crowdfunding project in India. Apart from India, we can also suggest reliable payment processing solutions for crowdfunding platforms in Austria, Hungary, Malta, The UK, Norway, Croatia, and Canada.

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