Declined Merchant Account Application: What Happened?

Sometimes, despite the fact that we have completed a credit card applicatoin for a merchant account, a merchant can nonetheless be the victim of a rejected application.  Not every merchant is guaranteed approval, and although Visa / MC maybe in a position to provide structured home loan approvals it isn't relevant to each profile and there's a realistic look at a straight out rejected application.  In this article we'll look at the factors and focus on a few of the main reasons why a merchant application may be declined.

BUSINESS TYPE: All payment processors have restricted and prohibited types of business.  They are companies who's very product, conduct or particular services are considered too high-risk for Visa and MasterCard. These pre-determined restricted companies usually will include anything illegal, for example gambling, or anything that may pose as a risk to security.  Even "sketchy" businesses whose policy maybe to supply their customer with something the merchant cannot guarantee like financial profit. There is no getting around this, you simply can't offer Visa and MC services.

BAD HISTORY: This is another scenario that we just have no solutions for.  When the merchant has anything within their past for example fraud, they may be rejected.  There's a business "black list" that applications are checked against (referred to as M.A.T.C.H) this database is exclusively produced by the payment processors who've been wronged by merchants that in some way, have gone against their contract with their payment processor thus leading to the payment processor to loose money. In order to resolve this issue, the merchant will have to correct the issue with their previous payment processor and they will be removed from the list.  When the merchant is presently bankrupt or comes with a personal bankruptcy of an unresolved status within their credit profile, they can be rejected services.  A bad credit score history could also cause a decline.  Such things as excessive customer complaints the result in the customer failing to pay Visa (also called a "chargeback") could be another reason why a payment processor would deny a merchant the ability to process transactions. Payment processors will definitely decline any application with a past full of "charge backs".

INSUFFICIENT VALID IDENTIFICATION: When looking at a merchant's applications, Visa and MasterCard look for proper identification, they weant the security in knowing that a merchant is who they say they are.  Not providing a social insurance number, driver's license or any other valid I.D. to aid in proving your identity and your business' existence will guarantee a declined credit card application.  It is advisable to provide precise support documentation for you and your business, to make sure that you can be clearly identified and how you conduct business.

INCONSISTENCY: It is very important that the valid identification a merchant is providing matches all the information in the merchant's application.  If inconsistency is the factor, the merchant will be declined the ability to accept credit cards.  For instance, a business telephone number should link a person directly to the business. This seems like common sense but the application are very long and at times can be confusing.  The worst thing that a merchant could do is provide information and support documentation that contradicts the information on the application. For instance, in the GST Form, that was issued whenever the merchant began their business, isn't the same address as the current location, the support document won't help. If you are submitting an application make sure you are consistent within the application and support documentation you have provided.

BAD CREDIT BALANCE: the word BALANCE is really important here.  Visa and MasterCard adjudicate an individual's personal credit profile for apparent reasons.  They need to justify the lending request.  The company earnings projection is just as much a part of the adjudication as the personal credit assessment, because they need to see how much money you are taking in, on an average transaction.  They require information about how much the company makes in a month to be able to assess the amount of lending needed.  For those who have inadequate personal credit and therefore are doing transactions well over 500.00 and it is a brand new business, there's no balance within this profile. The ticket is high meaning Visa and MasterCard hav a lot to lose without even processing many transactions.  The business is new so there's no reputation for success.  The ticket we just used as an example is simply too high for an applicant with a bad credit score to be trusted with. They will not be approved for this type of large volume transaction request. It is too great a risk for the provider to take.  If the credit and lending request do not compliment each other with a delicate balance the applicant will be declined

Use this article as cautionary advice and take the appropriate steps to prevent or resolve any of the issues with applications we have discussed in this article.