If you’re an entrepreneur with a growing small business looking to open a new merchant account (or simply trying to find a processor with better rates), you’re not alone. To ensure you get your application approved though, it’s important to prepare ahead of time.

Whether you operate a large online operation or a small physical store, opening an account with a provider who understands the needs of your business is a crucial step on the road to success. Here are four steps to make sure you get your merchant account approved (and, just as importantly, keep it open).

Are you ready to get approved?

1. Do Your Homework

a laptop with a notebook, coffee cup to the side

Get online and start taking notes – it’s never too early to begin your research.

It’€™s important to research several merchant account providers before you even fill out your first application, so that you fully understand what kind of rates and options are out there. Questions you should ask yourself while you’re investigating include:

  1. Do these providers have experience operating in my industry?
  2. Do they consider me high risk or low risk? (You can find out where your business falls on the risk spectrum with a little preemptive research)
  3. Do I need a robust point-of-sale system, or any of the associated technology (like a terminal, tablet set, or more) with my merchant account?
  4. Should I consider processing mobile payments (because my business is on the move or might be in the future)?
  5. Am I a high or low transaction volume merchant? If you’re high volume, it’s a bad idea to get saddled with a substantial cost-per-transaction fee (whereas low volume businesses don’t need to worry as much)

2. Organize your Financial Records

a series of organized, colorful books and binders on shelves

Color coding your documents is a great way to stay organized.

While conducting research, you should simultaneously be organizing your business’s financial records. Are your taxes sorted out? Do you have any outstanding debt? Have you already tried using credit card processing, but had excessive chargebacks which landed you on the Terminated Merchant File (TMF)?

Here is a list of the types of paperwork you’ll need to provide (depending on the processor) when applying for merchant account services:

  1. Your resume
  2. A copy of a personal utility bill
  3. Business/Marketing plan (or business overview) – this could be an explanatory letter that outlines your monthly volume, industry code, investors and more
  4. Documentation for business or sole proprietorship
  5. Articles/Memorandum of Association
  6. Bank statements (both personal and business statements from the past 90 days)

Another important document to provide is your company’s processing history over the last 90 days (if you have one). Necessary details and documents include:

  1. The amount and volume of A) transactions, B) refunds, and C) chargebacks
  2. A reference letter from your personal bank
  3. The name of the processing bank
  4. Screenshots of your website(s)

Gathering everything can take some time, so it’s a good idea to begin early.

Apply for only one merchant account at a time. Submitting applications simultaneously may raise some red flags with vendors, and hurt your chances of getting approved.

3. Talk With an Agent

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Sometimes talking over the phone is simply better than texting (or emailing).

Sometimes, it really is better to have a middleman. Knowledgeable agents who operate in the payment processing industry are happy to work together with you and discuss possible merchant account solutions for your business – all you need to do is reach out to them.

A qualified agent will know tens to hundreds of payment processors, each with their own distinct strengths and weaknesses. There is no one-size-fits-all answer to merchant services, and agents understand this. Much like using a lawyer for business incorporation paperwork, working with a professional is a great way to ensure you get the best possible merchant account for your company.

4. Read the Fine Print

a magnifying glass being held on top of a laptop

You can never be too careful when it comes to legally binding agreements.

After getting approved for a merchant account, be sure to review the merchant agreement first. Double check that there are no hidden fees, extra costs, or anything else that change the agreed-upon conditions. In many instances, payment processors have fluctuating rates based on volume and other factors (including what you negotiated for during the application process).

When in doubt, you can always hire a lawyer who’s comfortable with the legal language scattered throughout a merchant account contract to take a look at everything. Having your merchant agreement reviewed after approval can help you avoid potential problems down the road.

Note for Companies in High-Risk Industries

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Sometimes we need a little risk in life to obtain the best rewards.

If you’re operating in a high risk industry, it’s likely going to be more difficult to get your merchant account approved. However, you should still be able to open one as long as you are transparent and honest throughout the application process.

One thing banks and payment providers hate are chargebacks. If you have a history of high chargebacks, then banks will want to know what you’re doing to alleviate this – otherwise they likely won’t even bother with your application. If you ended up on the TMF list, you should contact the provider or business that placed you there and work toward extricating yourself.

Having a lawyer help you navigate this process is a good idea, but you can also check out this article if you’re more of a do-it-yourself kind of person.

Even if you’re on the TMF list you can still get a high-risk merchant account, it’s just more of a challenge. High risk providers and specialists who work with others in these industries can usually help you find some sort of solution, although the rates won’t be ideal. If possible, it’s a good idea to get off the TMF before submitting your application.


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The Importance of a Reliable Merchant Account

Having a positive relationship with your merchant services provider will ultimately help your business out in the long run. Don’t rush the application process, because getting stuck with a merchant account that nickels and dimes you all the time could severely cripple your business’s growth.

Regardless of your industry (as long as it’s a legal one), you’ll be able to find a payment processor out there who can take care of you and your business. Take your time and do your homework, so you can find one ready to grow with you.

Ready to find the ideal processor? The veteran payment consultants at Motile LLC are sitting in the wings, and look forward to getting your company on the right track.

About the Author

Geoff Scott is a Payments Consultant for Motile LLC, where he strives to connect users across the internet with processing solutions for their small businesses. He also loves Thai food, craft beer, and an exhilarating game of squash (when he's off the clock, of course).