As with any business their are
risks involved that companies
try to minimize. When they asses
you they look at any potential
risks and look at other factors.
They may have requirements you
need to fulfill before they can
accept you as a client.
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The biggest risk is the credit risk. This
risk is the risk the provider takes in
case your not able to pay them the amount
you owe. This is for fees associated with
the merchant account including the discount
rate, monthly fees, lease payments, etc.
Since they have no previous history of
you, they also take on the risk of volume.
The other big risk merchant account providers
take is fraud. The result
of this is chargebacks which can adversly
affect your merchant account status and
if there is a substantial number they
may cancel your account. A chrageback
is when a customer successfully disputes
a charge made to their credit card.
Finally, the last risk is a lower risk
that pertains to guarantees and warranties
that you provide to your customers. If
you offer a 3 year money back guarantee
and your business folds then your provider
will face claims as the result of your
dissatisfied customers.
Factors
Merchant Account Providers Consider
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Background Check It
is quite common for a Merchant Account
provider to perform a background check
on the applicant and in the instance it
is for a corporation it would require
credit checks on the companies senior
officers. Some Merchant account providers
may require credit references from suppliers.
»
Your Products or Services.
Physical products are easier to evaluate
then services and intangible items such
as an internet download. It is more common
for customers to file a dispute for such
items. Also, items with a short delivery
date are more favoured then ones with
a longer delivery date.
»
Average Order Size/ Average
Monthly Sales. You should always be
conservative when placing these amounts.
Don't exaggerate these figures or you
will set yourself up for disaster.
»
Location of Your Business.
Most providers only deal with U.S. Based
businesses so make sure your with a provider
that can provider international services
if you have international clients.
»
Your Website. The Merchant
Account provider may view your website
to check that the information is correct
and precise.
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Merchant Account Provider:
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What
The Providers Can Require of You
Merchant
Account Providers may require the following
from you:
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that
you have a U.S. checking account
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that
if you intend to sell on the Internet,
that your website is operational
and legal. |
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that
you have a U.S. postal address
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they
may need a copy of some marketing
materials, displaying your return
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Most applications will ask if you are
currently involved with a pending bankruptcy
claim or have been convicted of a fraud.
You may also be required to produce a
tax return, evidence that the business
has been in operation fro a certain amount
of time, and you may also need to have
above average or excellent credit history.
