How to Get Approved for an Internet Merchant Account

Difficulty: Moderate

Instructions

Things You'll Need:

computer

Step 1

The way that you present your business on your application form for a merchant account can have a dramatic effect on your ability to have the application approved. A prerequisite question on all merchant account application forms is gross volume, how much will you process in one month, to which many applicants will provide an artificially inflated number. It is natural to have a positive attitude towards how your business will develop online, and this is especially true for new start up companies, however when answering this question you should choose a low number instead.
Step 2

If you have an established processing history then you will obviously have a pretty good idea as to what your monthly processing volumes will be. If you can honestly say that you do not know how much you will process, which most people should fall into this category, then you should base your monthly processing volume prediction on what you estimate you would process in your worst month of business.

EXAMPLE – If you have a start up business and you estimate that by the end of one year you could and should be processing $10,000 per month, you would most certainly not want to put $10,000 per month on your merchant account application form. In all likelihood you may never reach that volume, and even if you did it would be extremely unlikely to do so in your first three months of business. By estimating a monthly processing volume in the $1000 to $3000 range you will dramatically increase your chances for easy approval since you are basically asking for a smaller credit limit.

In your first month of business it would not be uncommon to have a bad month in terms of processing volumes overall. It takes time to roll out a new business even with a strong marketing campaign so the first month is unlikely to set any long term sales targets.

By the time you reach month two of processing, you will have developed a new edge to negotiate processing volumes with your merchant account provider. So long as you keep your account in good standing, specifically keeping chargebacks to an absolute minimum, you are now in a very advantageous position.
Step 3

When you initially apply to a merchant account provider, your application will be one of hundreds or even thousands that are currently in the review stage where information is validated and a risk association is established with your account. It is very easy at this stage to have your application declined – the merchant account company has not invested any resources other than the initial read through of your application as of now. Basically they could take you or leave you at this point.
Step 4

Once you are approved and your account is live and processing, you will have far more negotiating power than when your account is in the review stages. If you have requested a relatively small processing volume on your application, and are now starting to experience sales in excess of this volume, you will most likely be able to secure the processing limits that you require. This is the worst time for the merchant account bank to lose you as a customer since they underwent the expense of the customer acquisition, initial review, application process, approval and integration with your company. If you need a higher processing limit because your business is exceeding its expectations for sales targets, you can make a strong argument why it would be better to work with you than lose you at this stage.
Step 5

In many cases you will not lose your ability to process transactions if you exceed your processing monthly limit. This will just flag your account for review sooner to determine if your processing limits need to be increased. When your account gets evaluated it will be done on a basis of:

Total transaction volume
Average per transaction value
Percentage of chargebacks
Percentage of refunds\
Length of time account has been open
Any red flags or derogatory remarks on your account

Many companies place too much emphasis on the monthly processing volume predictions on their merchant account applications. No business likes the idea of having their ability to generate money shut off because they made too much money – obviously. Be realistic, and even on the low end, with your processing volume predictions and you will find your merchant account application approved quickly and easily.
Step 6

American – Merchant accounts in America are much easier to be approved for in general than any other geographic area. Merchant accounts are readily available and have the lowest processing rates in the world in terms of set up fees, per transaction costs, monthly billing and discount rate.

To be classified as needing a high risk merchant account in the America your business needs to operate in an industry that is flagged as high risk. In Canada many legitimate companies with legitimate products or services are classified high risk due to some aspect of their business model not meeting the strict Canadian banking regulations. In the USA the banking and ultimately merchant account regulations are much less conservative making it easier for more businesses to qualify for low risk merchant accounts. The most common high risk American industries are adult, gambling, pharmacy, replicas and companies that require high per transaction and monthly volume totals.
Step 7

Canadian – if you can not get approval from a regular bank do you qualify as high risk? Maybe not if a merchant account broker is able to negotiate on your behalf for approval – often for even lower rates than you would receive if you went to the source directly. A merchant account broker is like having a commission sales agent working for you in that they make money if you make money. A good merchant account broker can be a huge resource for your business since they have infinite market knowledge and a vested interest in the success of your company.
Step 8

International – Many areas of the world now have online payment solutions and merchant accounts readily available however the are still many areas of the world that have great difficulty being approved for a merchant account. Further still there are many areas of the world which are black listed for payment processing for which there is no merchant account solutions.

In order for some international companies to be approved for a merchant account payment solution they will be subject to substantial processing fees, security reserves and other business strains. More so than this is just finding an online payment solution that is willing to work with you since so many have shut their doors to international merchants in the past few years.