Merchant Account Denied


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Merchant Account Denied

Has your application for a merchant account been denied? Don't panic; this does not mean your business cannot get a merchant account, merely that the provider has stricter underwriting standards than other providers.

At Express Merchant Accounts (EMA), we work with high risk businesses, offering you an opportunity to get a merchant account with competitive rates to grow your business. A high risk merchant account is just like a normal merchant account, but there may be restrictions on volume and the need for a reserve fund to hold back some percentage of your sales to cover potential chargebacks. After your business is established and you have a track record, you can eventually forgo the reserve account requirement.

Why Were You Denied a Merchant Account?

There are many reasons a merchant may be denied. The following are some of the most common reasons a merchant account application is denied.

New Company

A new business has a greater risk than an established business that wants to change providers. This is because your business cannot show a track record of viability, a history of chargebacks, or actual sales and transaction volume.

Bad Credit

Many merchants are denied credit card processing services because they or their business have bad credit.

Industry Type

Your industry may raise a red flag to providers. Industries with a history of fraud or high chargeback rates often have trouble obtaining merchant account services. High risk industries include:

  • Adult websites
  • Gambling
  • Guns, ammunition, and alcohol
  • Membership clubs and recurring billing
  • Online auctions
  • Nutritional supplements
  • Travel businesses
  • Affiliate marketing and multi-level marketing

Average Ticket Size

If you have a very high average ticket price, you will have a lower chance of being approved for a merchant account. This is because larger transactions have a higher cost if there is a chargeback, which translates to greater risk for the merchant account provider and bank.

Expected Transaction Volume

A high expected transaction volume means a higher chance of chargebacks and greater risk to the merchant account provider. Be sure you apply for processing volume that is based on your expected volume. Be conservative and request the minimum processing volume you need, as you can apply for additional volume as needed. Remember that processors also want to see an expected ticket price and monthly transaction volume that's in line with your industry average.

You are on the TMF List

Processors cross-reference applicants against the Terminated Merchant File list before signing up new accounts. A merchant can unknowingly get on the TMF list if their merchant account was closed for a variety of reasons, including processing outside the expected volume or being difficult for customers to reach by phone or email.

You don't need to give up after a merchant account denial. Contact EMA today to learn how we can help you, even if other merchant account providers have denied you for service.