When a Merchant applies for Credit Card processing account, then the application is thoroughly analyzed by the acquiring Institution or the payment service provider. Throughout the analysis, the underwriters and risk analysts check multiple elements involved in the merchants business model. One key component that the Credit Card processing company would indeed analyze is the marketing activities and initiatives of the merchant. The methodology of marketing can undoubtedly help underwriters to identify the approach of the business. In this detailed article, you will understand about few factors that the Credit Card processing companies may evaluate before deciding about the fate of your merchant account application.
Type of product/service sold. Acquiring Institutions and payment service providers usually maintain a list of prohibited businesses. If the merchant sales or participates in any of the prohibited industry then there is a considerable possibility that the application will be declined.
Merchants Online Reputation.
Card processing companies utilize various risk analysis tools to identify the reputation of the business. Starting from checking reviews on the Internet to evaluating detailed reports that cover multiple endpoints. This analysis can help the underwriters understand the vision of the company.
The relation between the sales projection and the business plan.
We always recommend merchants to send the business plan along with kyc documents to the payment processing institutions. Detailed and realistic business plan that syncs well with the projection and the present financial standing of the business can help create a positive image of the merchant in the minds of the underwriters.
Level of customer service.
A company that offers a high level of customer satisfaction stands a better chance of keeping the chargeback to sales ratio low. If a customer is satisfied, then the chances are meager that he or she would raise a dispute. Processing companies prefer to work with merchant there are serious about delivering an everlasting great experience to buyers. Merchants must understand that its the financial institution that is covering most of the risk. Merchants must offer quality customer service so that the financial institution feels comfortable all the time.
Web front of the company.
Merchants with detailed and realistic website have better chances to get approved than those who have a site with least information and copied content. Business owners must understand that financial institution evaluates the website of every applicant. When you look at the website try to know if the site is capable of attracting traffic and converting it. It includes the quality of content, responsiveness of the website, engagement level and reasonable pricing of products. Underwriters evaluate hundreds of applications. They are pretty much aware that which industry has what average pricing for the specific product. It is vital for entrepreneurs to price the products correctly. Highly inflated pricing of a product that is available at a cheaper cost can certainly attract disputes and chargebacks.
Realistic Sales Forecasting.
To clearly understand the focus as well as the genuineness of the sales projection your acquiring company may ask for a sales projection timeline. They may ask for your sales forecasting for each month for the next 6 to 12 months. This helps the processing institution to understand if the figures are realistic or not. Credit Card processing companies regularly monitor the activities of the merchant. In most of the cases for businesses grow as per the industry average or CAGR. It is hard to understand how a startup merchant can immediately generate extremely high sales volume. One must know that delivering a large number of orders creates a more significant challenge for the merchant as well as the acquiring company. To reduce the credit risk your payment gateway provider or merchant account provider may fix a monthly sales volume, number of times a specific card can be charged within a particular time frame. PSP may also implement additional filters these may include Address verification system and 3D secure authentication. Merchants should welcome these filters.
In a nutshell, we can say that when you apply for a merchant account, you must ensure that you send your business plan that is realistic to the processing company. If you have the intention to implement extensive marketing, then you must represent the availability of the required funds to the processing institution. It is better to project a smaller monthly sales volume that can be achieved rationally. After establishing The Merchant account and processing for a few months, you may request the financial institution to review your limitations.