Merchant Account Application Declined

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Merchant Account Application Declined

Merchant Account Application Declined

Merchant Account Application DeclinedUnfortunately, this happens with some merchants when they apply for a merchant account. It is vital for any business owner to have a Merchant account and payment gateway to accept credit card payments. If the merchant account application is declined then the possibility of getting approval from a different provider also lowers down.

In this article, we will first discuss why merchant account applications are declined. In the later section of the article, we will talk about how you can get a second chance with your application. This article is beneficial to merchants who apply to card processors, ach and electronic check payment processing companies. let us understand the top reasons why credit card processing companies reject applications.

Core Reasons Behind Merchant Account Application Declined issue.

Incorrect information filled on the Merchant Account Application.

On the application form, the merchant is supposed to fill in vital details related to his or her business. These details include.

  • Personal and Business details of the directors and stakeholders.
  • Information about the business model.

In case if the merchant is not filling the particulars accurately, the chances are that your application will be rejected. It is a good idea to fill in the details correctly after careful examination. Simple information like Minimum Ticket Size, Maximum Ticket Size, Monthly Sales Volume, Number of transactions each month. Can also create challenges. The merchant should be as realistic as possible while filling in these details. Sometimes requesting a higher ticket size or a higher monthly sales volume can also be the core reason behind the application getting declined.

Manipulated KYC documents

Along with the Merchant Account Application, the Credit Card processing company also asks for copies of the KYC documents. KYC stands for know your customer. The merchant should provide the exact copies of these business document. The merchant should be aware that manipulating the KYC documents most of the times results in the application getting rejected. In case if any of the KYC documents is not available merchant must contact the payment processing company and request the list of substitute documents.

Prohibited industry, Business owner or Jurisdiction

In the payment processing industry, several Industries, business owners, companies, and nation are considered prohibited. If your application was not approved because of the above three factors then, unfortunately, no other processor will be able to help you.

Previously Terminated Merchant Account

If you’re previous merchant account that was terminated then it may create challenges for your new merchant account application. Credit card brands maintain a Global database of terminated merchants. It is a good idea to clear all the dues with your previous payment processor and collect no dues certificate.

High Ticket Size may result in merchant account application declined

We recommend you to be as realistic as possible when mentioning highest ticket size. Sometimes it is good to start with a small of volume and small ticket size. Financial Institutions and credit card acquiring companies prefer to work with merchants that offer products and services at reasonable prices.

Incomplete Website

Most of the times before looking at the motion account application the underwriting team looks at the merchant’s website. If your site is not complete or is not resolving correctly, this can delay or reject your application approval. As a professional business owner, you must ensure that your site is complete and resolves appropriately. You should also ensure that your website has all the policies listed. The most common policies are

  • Terms and condition
  • Privacy policy
  • Refund policy
  • Cookie policy
  • If you are selling your products and services in the European Union, then your website must follow latest GDPR guidelines.

Copied content on the site

Your website should not have copied contents from other websites. Payment processing companies take this very seriously and can decline your application because of duplicated content. Along with the refusal of the merchant account, your site will also face challenges related to search engine rankings. We recommend you to use the genuine material on your website. A professional organization with ethics will not copy contents from other people’s site. If you’re using images from the internet, then ensure that these images are royalty free and you should also credit the source of the image where ever needed.

Product and Service details not clear enough.

We sometimes get applications from merchants who do not list the details of the product or service correctly. Only mentioning the name of the product is not enough. You should think like a buyer when you look at your shopping page. Will you make a decision when you visit a website which only shows the product name and does not declare the description and specification? Underwriting teams like to approve the sites that offer elaborative details of all the products and services listed.

Non Serviceable Jurisdiction

There are hundreds of payment processing organizations across the world. Not every processor offers Credit Card processing in each jurisdiction. Sometimes the application may be rejected if the processor does not underwrite merchants from your country. In that case, you should approach another processor that supports merchants from your Nation.

High Chargeback Ratio

If your previous processing history shows a considerable high chargeback ratio, then your merchant account application may not get approved. To reduce the chargeback ratio, you should look at chargeback alerts and notifications services.

Bad Industry Reputation

Apart from prohibited Industries, they are some Industries that have a lousy reputation because of high chargeback and regulatory challenges. Few payment service providers may accept some of these industries. Payment service providers prefer to work with Top Notch players from these industries. Even if you are a Startup then also you should project the values of a future successful business in that industry. Some sectors that may have high risk associated are Travel, Forex, Nutraceutical, Trial and continuity, PC tech support and online dating. These merchants should ideally apply for a High Risk Merchant Account.

Now that we have discussed few of the common reasons why the motion account applications get rejected let’s quickly go ahead and find out ways that can help you to get a second chance for your application analysis.

Request Reanalysis

The moment you get an email about your application getting declined you can request the payment service provider to re-analyze the application. You should also ensure that you allow the payment service provider to take various measures of risk mitigation. When you respond to the payment gateway company or the merchant account acquirer, please keep these things in mind and also ensure that you share your willingness to the processor about these factors.

Send additional documents.

Since your application is declined, you should provide additional documentation that will help the processors to re-evaluate your application. This may include the last year profit and loss statement preferably developed by a third party auditor.
You can also send a documented lawyers viewpoint about the legality of your business. Sending notarized copies of your KYC documents also help the underwriters to have more faith in your business.

Your commitment to a Rolling or Fixed Reserve.

The application may be declined because of the possibility of high chargeback. You may offer your acceptance for a fixed or rolling reserve on your account if approved. With the Rolling reserve, merchant account acquirers can mitigate some risk.

Share the copy of industry recognition.

If you have received any industry recognition that can help you to elevate the brand reputation of your company, then you should share the same with the acquiring Institution.

Share a copy of quality certifications.

If your company or product complies to latest quality standards and you have a certification to prove it, then you should share the copy of the quality certifications. These certifications should be verifiable online

Share your business plan

Along with your application, you should always share your business plan. Most of the times processors do not ask for a business plan. If you provide a business plan, then it helps the underwriters to understand various aspects of your business. It also helps the underwriting team to understand the financial stability and hierarchy of your company.

Offer acceptance of a delayed settlement.

You can also let the payment processing company know that you are comfortable with a slightly delayed payout. With a delayed payout payment processing companies can reduce the credit risk.

Offer acceptance of a higher transaction fee.

Payment processing companies make money on transaction charges. You can accept a slightly higher transaction fee. You are not doing this to bribe the payment processor, but you are doing this to make the processor comfortable in reducing the credit risk.

Offer acceptance of a lower monthly volume cap

Rather than requesting a higher monthly sales volume and not getting any payment processing solution it will be an excellent idea to reduce your monthly sales volume and ask the processor to relook at your application. Sometimes a lower monthly volume means lower risk.

Non-expiring access your business website

Many payment service providers ask for non-expiring access to the business website of the merchant. This does not include access to email and any other system but only provides access to the website frontend and backend. Proactively offering these details to the payment processing company shows your willingness and honesty for a long-lasting relationship.

Merchant Account Application Declined – What Established Sites Can Teach

It is an excellent way to learn from the best players in your industry. Look at the website of the top-notch businesses in your industry and try to incorporate the best practices. This will help you in creating a better platform for your customers and will also assist underwriters and risk team members in developing better confidence in your business.

Share details of your customer care policy.

Payment processing companies like to work with merchants that take customer care seriously. If you have a policy in place that can help processors have more faith in your business then you may share the same with the processors.

If you have any questions related to Merchant account or payment processing solutions feel free to send an email to us on [email protected]

Disclaimer:- The Information stated on this website and this page may have errors and should never be considered accurate.

Recommended readings

Detailed guide about how to choose a payment processing option.

Bankim Chandra

Bankim Chandra

Bankim Chandra is a Merchant Account consultant. He works with merchants globally and helps businesses in getting reliable payment processing solution. He writes extensively on the internet about Payment Gateways, Credit Card Processing, Echeck Processing, Chargeback Alerts, ACH and Business Funding.

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