How Your Funds Are Transferred From Your Merchant Account to Your Pocket

You will find a number of different techniques on the market today for merchant's to easily accept payments from their customers. Whether they are credit card or debit card transactions, with today's practical solutions a merchant can literally process their transactions anywhere and at any time by using one method or another. There are a wide variety of solutions. There are physical payment processing terminals that use card swipe and chip and PIN insert that require ethernet or telephone line connections. There are credit card machines that accept credit cards that run on a wireless network much like a cell phone, these are often referred to as, GPRS payment processing terminals. There are also e-commerce solutions and over-the-phone products that are all created to ensure that merchants are paid securely by their customers in an effort to protect both parties involved in the transaction.

At the end of every day, and once the merchant has closed their batch, their funds need to be deposited into a merchant account.

We're not going to bore you by getting to technical. The digitalization of funds and how they materialize into your account is a company specific process.

When it comes to the physical connection and fundamental function, all of the merchant solution (credit card machine, wireless payment terminal, and e-commerce) are able to function because of their connection to a bigger network of companies who're processing intricacies from the deposits. So to start, the payment processing solution needs a way to "call out".

Every payment processing company works together with a host or provider company on the technical side. This 3rd party host is important because they process the information received from the credit card machine, and then they turn the data into a processing file at which point they deliver it to the Central Bank of Canada.

Once the merchant has completed a full day, they will normally run a "close batch". which initializes the process of depositing all the transactions to their account. As soon as the "close batch" is completed by the credit card machine, the third party host company or processor transmits the processing file to the Central Bank of Canada. Then the merchant's bank branch searches for that processing file at Central Bank so they can finish depositing the money into the correct account. The merchant's bank receives the information and processes the file and puts "the money in your pocket"! This system of data processing is initiated by the information that the credit card machine machine is processing, converted by the third party provider, and finally completed by the merchant's home branch.

This process is incredibly safe and secure. Each step in the process is encrypted, encoded and merchant specific and more importantly its traceable! This system has been engineered to stand up to the highest security risks and it is guaranteed to be safe for any merchant to use with confidence. The idea of digital money has existed for years,  but it is still incredible to examine and to know how the money can be broken down into 1's and 0's and put back together again at another end to become tangible.

Poor Credit? Don't Worry, You Can Still Be Approved!

Do you think that you can’t be approved?  Well even if you have poor or bad credit (even had a bankruptcy) it is possible to still get approved for a merchant account.  Remember there is always a way to be approved even if you need a co-signer and/or end up paying more in MDR (merchant discount rates) fees.

How and why bad credit affects your application approvals on a merchant account.

No individual wants to face being denied approval. Nothing good can come out of being denied or declined.  You may have already been denied or rejected on a credit card or mortgage application maybe even faced with embarrassing “not approved” in the worst situations.  But you never expected to hear it on a merchant account application. So you would think when you apply to accept payments it wouldn’t matter, you’re taking money and depositing into your bank account, right?  The banks are getting the deposits; you would think that’s what they would want, right?  So why did your payment processing acquirer decline you?

Well, the truth is, the application process of a merchant account is very similar to a credit application.  Even though you’re not asking for money or a loan, right?  Well, that just might be the case.

The way acquirers asses every merchant application they look at the merchants individually as if they are the ones asking for credit. The main reason is the procedure by which payments are accepts and who is ultimately accountable for transactions.  Here is a great example, the travel industry.

This industry is at a very high risk.  The reason for this is often referred to as Future Delivery.  Future Delivery is the period that is delayed between the customers paying for a purchase and the time they actually receive the products, goods or services they purchased.  Say you’re planning a trip, most likely you’re not buying your airline ticket at the airport and instantly leaving to board the plan.  In most cases, there could be days, weeks, or even months that can go by before you actually go on your trip.  There are a lot of things that can happen during this delay.  In worst cases the airline can go bankrupt.  If the airline, or the merchant in this example, goes out of business, what happens to the cardholders who bought the tickets to go on a trip?  They call their credit card companies and issue a chargeback.  Chargeback’s are disputes initiated by the Issuing banks of the credit cards to the Acquirers of the merchants.  The Acquirers would then go back to the merchant to request additional information from the merchant to respond to the Chargeback.  If the Chargeback cannot be won in the merchant’s favor, the Issuer debits the Acquirer who will in turn debit the merchant.  But what if the merchant is out of business?  The Acquirer is then left on the hook for the transaction.

As you see in the example the Acquirers take credit worthiness of merchants very seriously.  If you have bad credit or no credit, the Acquirer needs to consider and way the risks of what the chances might be if your business shuts down and if you will leave them liable for transactions.  Of course, the longer the future delivery, the more difficult it would be to get approved.  And while being a retail outlet accepting card present transactions could make it easier to get approved, without a good credit history, you can expect any Acquirer to be weary of approving your application.  Good credit equals a durable reason of a merchant staying in business because you will be more likely to purchase and make other payments for a mortgage, bills, products or services. Also keep in consideration that having no credit at all can be just as bad as having bad credit because without a credit history, there is no way for an Acquirer to assess your application, leaving  no assurances that you will be able to maintain or uphold your business.

Benefit yourself and your credit; make sure all your finances are checked thoroughly before making the application for a merchant account. Keep in mind if there are any reasons in your history that could affect your application and ultimately be declined, prepared to make additional or alternative arrangements for your application.

If you’re like most people who struggle to be approved and are always denied due to their poor, new or bad credit we can help you be approved for a merchant account, just contact us. We can most likely help you get approval on a merchant account even if you have the worst credit in the world as long as you can get a co-signer and as long as your business model is not on the restricted list or have been added to the TMF List.