After all that’s been said and done, your merchant account application at your local bank was stamped DENIED. Total bummer.

All of us feel bad when rejected, and more or less, go through moments of anger and sadness, especially if you really worked your hardest. You are already taking more than the usual risk if your business is already classified as high risk such as adult, travel, pharmacy, escort service, dating service, telemarketing, high volume, and multilevel marketing. But, there will come a time that you’ll feel alive and again, and at that moment, how do you bounce back?

One of the ways to demonstrate resiliency is to know where did everything go wrong. It is humanely possible to miss certain trivial points that when summed up, constitutes to major flaws. So, knowing the basic reasons why merchant account applications are denied is crucial first step, below are the common reasons:

documentary deficiencies
grave complaint record filed to the Better Business Bureau (BBB)
ripoff record
misrepresenting certain, if not, all information about yourself and your business

Papers in work

Deficiencies in documents refers to lack of paper work submitted. Standard paperwork submitted are application forms containing the merchant legal name doing business as (DBA) name,URL,email address, and ,telephone number, drivers license or passport, incorporation documents or business license,monthly processing statements, months bank statements. If your business already has a website, then the paper work needed are

Better Business Bureau (BBB) Report Printed for DBA, Legal Name and URL, yahoo.com search results printed for DBA, Legal Name and URL, list of domains printed from: whois.webhosting.info/(URL),and merchant website, with product description and policy pages printed.

Discern if you really and truly had submitted all these forms, technical as it may see, but, failure to completely send in the requirements reflect your business’ ability to comply with simple rules. But, remember that some of the documents are only required if they are applicable to your situation.

Red marks on your BBB report card

Better Business Bureau (BBB) is an 80-year old, non-government, non-profit organization created to serve as watchdogs of the marketplace and report developments to the public. Their members include most businesses but not all, to say the least.

BBB handles disputes between customers and businesses. From unsatisfactory customer service, to delayed refunds, non-payment of bills,past due accounts, and other customer concerns imaginable. They act as intermediary provide ways to compromise so that as much as possible, the cases won’t have to reach the court.

If your business has a complaint report filed at the BBB, they will notify you and tell the specifics of the customer complaint. It is in your interest to show up and settle do that future repercussions are avoided. Take note, that the BBB does not recommend any business, they operate on neutral ground, making sure that both the right consumer’s and merchant’s rights are intact as much as possible.

Ripping ripoff

A ripoff, in its business sense, is a situation where you pay too much for an item that you bought. This happens when you buy a water lawn mower for $89 when the actual price is only $50. Unlike a scam, in a ripoff situation, you actually get the product but in a higher price. But, how can you be sure if you have been a victim of a ripoff? The best measure is to ask for receipts and try to make inquiries if that’s the actual price. This is practical especially for expensive items or services.

Altering egos

Misrepresentation is also one cause of denied application. Once you submitted the documents, officers do background checks. They coordinate with credit unions (Experian, TransUnion, and Equifax), the BBB, people who you work, and others to verify the authenticity of the information of your office. They check if your processing volumes reconciles with your monthly statements, or if you really have an office, (if you indicated a separate work address) , by asking the landlord of the building you’re occupying, and so much more. Bottomline, they check if you’re business is what you say it is.

Knowing your weaknesses

With the knowledge of the common reasons why high risk businesses’ applications for merchant accounts are denied is a sure- way to be more cautious and plan your next move. You can always go to another bank, contact a merchant account provider, or opt for an offshore merchant account. No matter which path you want to take, learn from your mistakes.

Many merchants complain about the lack of information when it comes to high risk merchant account application. It’s not that there’s no information at hand; it’s more likely because merchant account providers do not provide standard customer service or are simply too lazy to share the nuts and bolts that the applicants need.

CASE IN POINT

For example, a merchant may have already submitted his application before the merchant account provider (MAP) reveals the improbable terms: that he may not receive payment until x number of months or that he may not be approved for a merchant account unless he changes his marketing plan. When this happens, the worst case scenario is that the merchant’s application may never be approved. If the company doesn’t offer a money back guarantee, he may lose money even before he earns it.

The dark side of high risk merchant application involves a possibility that the MAPs may take long to approve your account. The reason is that they need to assess your business in relation to the rate of frauds and chargebacks that might be incurred. Also, you may spend more on fees than a regular merchant account.

TRICKS OF THE TRADE

However, it’s never a dead end road for the high risk merchant. Here, I have compiled a list of some insider information you might want to check out first before diving headlong into your high risk/offshore account application.

Some accounts may be approved within 24 hours.
When it’s offshore (account) there is less likelihood that it will be declined.
Merchants with bad credit rating can still apply and get approved.
There’s no need to open a new bank account as the funds get transferred

directly to the merchant’s bank of choice.
Most high risk merchant account providers require from as small as $10,000 to $50 million on monthly credit card sales volume.
MAPs will provide pricing quotes after analyzing the merchant’s business’ status. The following are likely criteria for pricing the application:

1. business profile

2. personal credit of the owner

3. business lifespan

4. monthly processing volume

5. business solvency

6. processing history

7. fraud / chargebacks history

Some MAPs require minimal volume caps or none at all.
Merchants may choose your own international bank.
Merchants previously listed under terminated merchant file (TMF) list still get a chance to get their application approved, as long as they were not involved in fraud in the past.
When merchants apply for an offshore merchant account, they do not have to spend for credit card terminal or software to process your transactions.
Merchants may also accept a good number of international currencies as well as have the ability to offer other payment processing options such as by fax, phone, or e-mail.
Merchants may start accepting credit card payments in a matter of a week as soon as their application has been approved and the terminal or software has been set up.

GOING THE OFFSHORE WAY

Now, for businesses who have originally planned to go the route of offshore merchant account application, there is no need to convince them of the benefits they will earn. Going the offshore way means getting a ton of perks when it comes to taxation. Internal bank policies in international banks are not as strict as U.S. banks. The drawback is the higher processing costs and a holdback on proceeds as reserve to protect them against chargebacks in the future.