Top 5 Reasons for Merchant Account Declines

merchant account declines

Every credit card process comes with risk. That is part of the reason why credit card companies charge so many different interchange fees for different types of purchases. It is also one of the main reasons why some businesses fail to qualify for a merchant account with a bank or payment processor. Without a merchant account, it can be difficult to grow a business into a larger more successful entity, which is why it is important to know some of the top reasons why certain businesses receive merchant account declines.

Merchant Account Declines Reason #1: Prohibited Business Types

It is standard practice for a merchant processor to refuse to do business with certain types of companies. These companies are usually included on some type of list which a merchant processor will make available to prospective clients. These companies that usually run into merchant account denial happen to do so because of their high-risk nature. It does not necessarily mean that a business is destined to fail if it is included on one of these lists, but it can mean you’ll have a harder time securing approval for a merchant account. Even with a merchant account approval, these high risk businesses usually have to pay a higher processing fee to account for their increased risk.

Merchant Account Declines Reason #2: Personal Credit History

Merchant processors may look at your personal credit history, or that of your partner or the signer for your merchant account before granting approval. This can also extend to a part owner or someone with a major title such as CEO or CFO for a corporation or LLC. It is important to ensure whoever may be signing for the merchant account has a strong credit history to avoid complications when seeking approval in the future.

Merchant Account Declines Reason #3: Tax Liens

Whether a liens has been put on you personally or on your business at any point, it can affect your chances of approval. If there happen to be an active liens on your or your business, your application may be denied out of hand. Before you seek any type of merchant account approval from a bank or payment processor, it is vital you resolve any tax liens before you proceed with your application.

Merchant Account Declines Reason #4: Processing Volumes Incompatible with Type of Businesses

Any quality merchant processor will make it their business to see your business grow and become successful. After all, if you make money, they make money. It is important to accurately manage and assess the growth of your company, however, since any abnormalities, even sudden increases in profits, can bring additional risk. It is important to make sure you are able to provide your prospective merchant account provider with a realistic number of expected processing volumes. Any discrepancies with your numbers and your industry’s averages for processing volumes can lead to merchant account denial.

Merchant Account Declines Reason #5: The MATCH List

Think of the TMF MATCH List as the ‘blacklist’ for merchant processors. It basically comprises of companies and/or individuals who have had a merchant account in their name terminated in the past. These accounts were terminated due to their high risk and the fact that they weren’t left in good standing, either with the bank or processor, or even former customers. If you have a merchant account that was previously associated with you or a business you owned, make sure it is in good standing before it is terminated and you end up on the MATCH List.

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