How to establish a Merchant account for a new business with poor credit?

When you establish a new e-commerce business, the first thing is to apply for a merchant account to accept online payments via credit card and debit card. A merchant account allows a processor to receive credit card payments at some fees and connect the payment gateway with the merchant bank account and customer payment options. When merchant applies for high risk merchant account then their credibility will be checked.

You can approach in following ways to get the merchant account for business with bad credit

Bank

The easiest way is to approach the bank directly. There are chances that bank can provide merchant account even the high-risk business profile. They might approve on the basis of your accounting history with that bank.

Enlisting with the co-signer

You can get the approval by enlisting with co-signer. On co-signer good credit, you get the merchant account. In that case, both merchant and co-signer are liable for any risk of default or chargebacks.

Third party credit card processor

If your business has bad credit history then you can approach the third-party processor. There are many specialized high-risk merchant account service providers who can accept payment on merchant behalf.

Consider following important things before approaching for merchant account services for bad credit business

Structure of the business

The structure of the business is important. The merchant account processor might not consider the credit history if your company is Limited Liability Company or Corporation. In such case, your account will be verified by the identity of the company. They might consider employer identification number to verify the merchant account.

Discount rate structure

In case of bad credit, the merchant has to pay high discount rate on each transaction to the merchant account service provider. It is easy to get the merchant account services with bad credit. The only disadvantage is that the transaction processing fees will be high.

Do not list any bankruptcy report

It is advised to never disclose the bankruptcy report while applying for the merchant account. Even at a bankruptcy, you can get the account approved by paying high discount rate. In this way, merchant account provider covers the risk of fraud.

Type of business

Suppose you are into a business of high-risk industry, in such cases account processor will do detail scrutiny of past credit.  There are high-risk businesses like gambling, adult merchants, pharmaceutical etc which pays high fees to get the merchant account services.

Overseas merchant account

The high-risk business tends to open merchant account overseas due to high risk in the home country. Overseas merchant account provider does not ask for bad credit. In such case, the cost of setting up the merchant account will be high.

Some merchant account providers like bank are very strict in approving the merchant account while there are other institutions that are very lenient in approving the  It is not a big deal to get the merchant account for high risk business.