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Do you have to have good credit to get a merchant account

Have some type of investment in the business you’re trying to get a merchant account for to prove how valuable it is. In the underwriting process, investments will prove to be of great value to those processing the application for your small business. A co-signer is a great way to improve your odds of approval if you’re suffering from bad credit without too many stipulations on the contract.

A card-not-present transaction can pose more threat for chargeback due to fraud. If there is no physical card, PIN entered, or signature required for a card transaction, there is more potential that an unauthorized user may have access to the card, initiating the transaction. With that in mind, it is not impossible for an eCommerce merchant to obtain payment processing. They would simply need to apply for a high risk eCommerce merchant account with a payment gateway for high risk businesses.

Reason being, timely durations between payment and receival could result in a higher likelihood the merchant will receive a cardholder chargeback. The one thing payment processors want to avoid is excessive chargebacks. So the more steps put in place to reduce chargebacks, the lower risk you pose to payment processors. For the landscaping company, this included how often they were expected to accept credit cards from customers, and amounts of the transactions were taken into consideration. For a merchant service company to be able to approve the company for credit card processing comes with the risk of chargebacks; not being able to be reimbursed.

How Good Does My Credit Have To Be?

You need someone trustworthy to back up your business and provide the send of trust that acquiring banks need. The co-signer is just as responsible as you are for the account, which also puts some pressure on you to become more financially stable. You not only have a business to keep in the black but also another person to factor in. Business credit is directly linked with the business owner’s personal credit score through their social security number. That means if you personally have bad credit, then so does your business. There are ways to improve your odds of approval if you have bad personal credit, like getting a co-signer or providing transaction history.

Fraudsters often target high volume merchants because they can blend in more easily with legitimate transactions and avoid detection. A business in a highly regulated industry is required to have extensive licensing. Additionally, highly regulated businesses have to withstand ongoing government involvement, stipulations, and requirements.

Getting A Merchant Account With Bad Credit

You must be a legit business to get a traditional merchant account. This means small indie sellers without an official license most likely will not be approved. If you’re not sure about opening a merchant account, look to a processing service like Square.

  • Best of all, the company doesn’t charge an application or account setup fee for this service.
  • Many high-risk merchant account providers try to lock their clients into long-term contracts.
  • If the underwriting process is not appropriately executed, there’s a higher likelihood of account termination.
  • While being classified as high-risk can make this process more challenging, it is not insurmountable.
  • You may be wondering why you can’t simply link your business bank account with your payment processor to receive your credit card sales deposits.

Therefore, when you have bad credit, banks may not choose to provide payment processing for your business. It’s too much of a gamble and the risk is too high, which is exactly why you need a bad credit merchant account. As renting these often comes with longer contracts, the merchant account providers that offer them will usually perform a credit check. Mobile card readers are also great for taking payments at the POS, although big providers like Zettle and SumUp run credit checks, too.

Businesses in the above mentioned high risk categories should know where to look for a high risk merchant service provider. Providers like Square and Stripe do not support high risk payment processing.

Why Does My Personal Credit Matter?

The business owner and the business itself have separate credit scores. Your merchant account application will factor in your business credit score, and not your personal credit score. Having no credit history can create just as many difficulties when applying for a merchant account as having bad credit. This remains true even if your business has a good credit score and consistent income. If this is the case, you may want to consider getting a high-risk merchant account.

Whatever you choose, our retail merchant accounts will have you accepting credit and debit cards faster, and for less. Yes, payment processors check your credit as part of due diligence when assessing merchant account applications. Maintaining a strong credit file will help improve your business’s chances of obtaining a merchant account with the most affordable rates. While many payment processors partner with high-risk merchants, you can still lose your merchant account if your chargeback ratio exceeds specified limits. For example, payment processors consider a chargeback ratio of above 1% to be high risk, but still acceptable. However, you may find it impossible to find a provider willing to work with your business if your chargeback ratio exceeds 2%. With our high risk payment processing, you can accept payments from customers around the world.