Erald, April 1, 2016
If you run your own business you will need to take credit card payments from customers, and applying for a card reader or merchant account services can be a stressful task. Banks check your business and personal credit rating, and may find some nasty surprises in your history that you didn’t even know about like failed mortgage or credit card payments. If they don’t like what they see, they will prevent you from using merchant services with them and from getting a credit card reader.
Worse yet, even if your credit history checks out, they still have a massive list of reasons why they could decline you from taking customer card payments with a card reader.
Lack of documentation: Banks will ask for a whole host of information about you and your company “including details of the merchant’s legal name, their DBA (Doing business as) name, their URL, and their contact details including email, address and telephone number. The most standard requirements for accompanying documentation include driving license, passport, proof of incorporation or business license, monthly processing statements, and monthly bank statements. If your company already has an online presence, then this entails further paperwork, including a BBB (Better Business Bureau) report for your DBA, Legal Name and URL, printed yahoo.com search results for your DBA, Legal Name, and URL, a printed list of your domains from whois.webhosting.info, as well as print-outs from your website showing product descriptions and merchant policy.*” This means if you fail to provide any of these following details the bank will have a right to decline your application. (Source)
You don’t process enough per month: This is a killer for small businesses, if you don’t process at least a certain amount per month (usually £1000+). You might be deemed too small to take on. Similarly, if you process a below average amount for the industry that you are in you may also be rejected. For example if the average turnover for a company in your industry is £20,000 a month and you only do £5,000 a month, this could be another factor that blocks you from taking card payments and ultimately inhibiting your business’s growth.
You are deemed a “high risk” – Banks have a list of industries which they will reject because of their high risk nature. This includes industries that have a high level of chargebacks, refunds, fraud or high level of fatal accidents like mining or agriculture. Banks decide who they want to accept so can reject you purely on their interpretation of your business’s risk level.
ALSO: You will be asked to set up a business account with a bank if you want to take card payments and may also be asked to put a cash deposit (which can be over £10,000) to cover chargebacks. Chargebacks are disputed transactions, a reversal of funds requested by the customer from your account back to the customer. The bank has these deposits in place to protect itself from losing money through disputes, and you as the merchant have to pay the price.
Now this sounds pretty awful. Thousands of companies are rejected for merchant accounts every year. Cash flow is vital to a business and not being able to take card payments will seriously hinder your success. If you have bad credit, not enough capital for a large deposit or just keep on getting rejected for a merchant account. What is the solution?
Sign up to a service like SmartTrade App and be running in minutes. No credit checks, no merchant accounts, no escrow, no deposits, no minimum turnover and you don’t even need a card reader. Just card payments, plain and simple.