Are you ready to start a new business for the very first time? If your mindset is like most of society you’re chasing the American Dream with a mental fortitude that screams I will succeed. One of the most overlooked aspects of starting a new business is your ability to accept different types of payments, specifically credit and debit cards. With so many merchant service providers offering different options and incentives to use their services, it can become a cumbersome task to simply figure out the best way to go about accepting payments from consumers. This is especially true if you are a high risk merchant. The following is a quick reference guide to the basics of what you’ll need before starting the application process.
Preparing for the Application Process
- Open a Business Bank Account – You need to have a business bank account. In order to open a business bank account, you need to have a corporation or be a sole proprietor. However, depending on your business a sole proprietor may not be acceptable so if you are planning on operating as a sole proprietor it would be wise to consult with your payment processor in advance of opening the bank account. Once approved for a merchant account, all of your credit and debit card sales transactions will deposit into this account once they clear. Likewise, all costs associated with your high risk merchant account will be automatically debited from this account. You will always want to keep enough of a balance in that bank account to cover those costs. If you don’t have money in the account to cover fees your account could be frozen, pending deposits can be held, and in the worst case scenario your account can be terminated.
- Proof You Are Doing Business – Before you approach any merchant service provider you should already be conducting business or at the point where you are ready to conduct business. Of course you can inquire to get an idea of what you are going to deal with, but all too often merchants inquire about the costs and requirements for a high risk merchant account but they aren’t in a position to give the correct information needed for the payment processor to provide accurate estimates or information. This is most common for merchants opening e-commerce businesses but the website isn’t up yet. Regardless, in most cases merchant service providers need to see what your selling and understand how you are selling it in order to provide accurate information.
- Check Your Credit Score – Payment processors that provide high risk merchant accounts will always tell you that their favorite merchant is one with high risk business but the signer is low risk. A high credit score is a good way to prove you have a strong history of being responsible. There are companies such as Credit Karma that give your score for two of the three major credit reporting agencies as well as helpful tips to improve your score or ways to dispute erroneous credit claims.
- Do Your Research – Conduct some online research for merchant service providers that cater to high risk merchants and then specifically knowledgeable of the industry you are in or the goods or services you sell. Make a list of the payment processors that you think are most capable of meeting the needs of your business and then reach out to them. Although you can ask for them to e-mail you information; it is best that you speak with an agent so that you can engage in a dialogue that will allow you to recognize if that merchant service provider truly understands your business and can meet your needs.
Choosing the Right Processing Partner for You
As a high risk merchant, it is important to understand that working with a reliable payment processor that has experience with your specific business and billing type is incredibly important. Working with a payment processor that doesn’t fully understand your business can lead to several payment processing issues such as funds being unexpectedly held, funds being held for extended periods of time, adding or increasing reserve requirements, or your account being forcibly closed for a variety of loss prevention reasons. In the worst of cases your merchant account can be shut down, funds can be unexpectedly held for an extended period of time, and you could be blacklisted by being placed on TMF or MATCH which is something that all merchant service providers can see.
Being blacklisted will make in incredibly difficult for you or your business to get a merchant account now and in the future. You can always fight a blacklisting but it usually requires costly attorney fees and takes a long time to work its way through the legal process. This is obviously not a great position for a business that is just getting off the ground. So, the best thing you can do is have a conversation at length with the merchant service provider you feel is a good fit for your business so that you can feel comfortable moving forward with the right payment processing partner.
Discussing the Details
Be prepared to discuss your business in a more intimate fashion. A high risk merchant account goes through a thorough underwriting process. The underwriting process is performed to determine the level of risk and liability associated with a given merchant and their business model. Underwriters are not shy about asking high risk merchants for intimate financial and other details of their business. They are not the FBI, CIA, DEA, ICE, TSA, FDA, or any other governing body for that matter, but they are determining the fate of your high risk merchant application package. If underwriting does not feel comfortable with your business for any reason; they will not approve you. So the best thing you can do is be upfront, honest, forthcoming, cooperative, and timely for all that they ask. The more responsive you are; the quicker the process will go and the higher the chance of approval although approval can never truly be guaranteed within the high risk merchant space.
Taking the Next Step
At this point you should be ready to apply for a merchant account. The agent you speak with should be there to make it a painless process for you. They should help you complete the application and understand what you are filling out; going as far as to fill out the application for you over the phone which usually doesn’t take more than fifteen minutes. Then they should help you understand whatever supporting documentation you will need to complete your application package for underwriting. And, they should thoroughly explain anything you might not understand so don’t be afraid to ask questions.
This should put you on the fast track to processing payments painlessly but if your still unsure, you can speak with an expert at Painless Processing and we will guide you along the path to payment processing success because we make payment processing so easy… it’s Painless.