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CHAPTER 14: How We Work with High-Risk Merchants
New Merchants
As I already noted, what makes applicants without prior processing history especially challenging to work with is the fact that they haven’t yet proved to be capable of managing a merchant account. And it is difficult to overestimate the importance of experience. Now, if you’ve just opened up a new convenience store and needed a merchant account for it, no processor is likely to give much consideration to your payment processing experience, or lack thereof. However, things change quickly when we focus our attention on the card-not-present part of the merchant spectrum, in which we at UniBul are interested.
So, with that in mind, here is a short list of what we look for in a new merchant:
- U.S.-based. Experience has taught us that, when it comes to new businesses, it only makes sense for us to focus on domestic merchants. It is a numbers game and, even though your business may be perfectly legitimate and very promising, if it is not U.S.-based, there is an overwhelming chance that it would not be worth our effort. Sorry.
- Proper documentation. It is critical that you have all of the registrations, permits and licenses that you might need and we will ask for them all. We will not proceed with the application, until and unless we obtain them.
- Technical preparedness. If you will be operating an e-commerce business, your website will have to be fully developed and complying with all e-commerce requirements. In other words, at the time you contact us, you will need to be ready to go.
- Sufficient promise. Our target client is a high-volume business or non-profit. We provide high-end service and low-volume businesses are just not profitable enough to justify the ongoing investment of resources. And the thing is that a low-volume merchant account needs just as much maintenance as a high-volume one. So what is the threshold? It is difficult to say, and it is decided on an individual basis, but it is certainly in the tens of thousands of dollars in monthly volume.
Once we are ready to proceed with the application, we will first attempt to set up an account for your business with a domestic acquiring bank, which would give you the best possible terms. If that is not an option — that is to say if your business is too high-risk — we will look for an acquirer abroad.
Merchants with Payment Processing Experience
If you are looking for an additional account, to be used concurrently with your existing one, we will need to establish whether or not our account would be generating enough volume to justify the effort. Again, you will need to be completely honest with us regarding your intentions, as even if we do go forward and set up the account for you, if you then can’t generate the minimum volume we need, we would close it down. Such an outcome would not be beneficial for you, as it would look suspicious to subsequent processors you might approach.
- Processing statements. Once we’ve established the reasons you need a new merchant account and before we go any further, we will need to see your latest processing statements. In there, we will primarily be focusing on four things:
- Processing volumes. As already noted several times, we need to be sure that the effort is worth it.
- Growth rate. We need to know whether your processing volumes are growing, declining or stagnant. Needless to say, if they are growing, we will be happy to work with you, even if the starting point is somewhat lower than we might typically like it to be.
- Chargeback rate. This one will have to be under control. If you have been in business for some time and have not found a way to manage chargebacks, you have a problem. If we determine that it could be a manageable one, we would try and help you to bring chargebacks down. If, however, the rate is too high, we may decide that the situation is hopeless.
- Rate of declined transactions. This is a great indicator for the overall health of your business.
- Documentation. Once we’ve gone through the reasons why you are looking for a new merchant account and have examined your processing statements, we will ask you to provide the necessary paperwork. This will include things you should have readily available, as your previous processor would have already asked you for them when they were working on your application: articles of incorporation, licenses, utility bills, etc. It goes without saying that an application form would also be requested.
- Additional paperwork. It is a virtual certainty that during the application process you will be asked to provide additional documentation and will probably be asked for an explanation on some issue or other. Be ready and follow up promptly.
Now, you may have noticed that we have no requirement for a merchant with previous processing experience to be U.S.-based. All we ask for is listed above and if we like what we see, we will do our best — and that is usually enough — to find a solution for you.
The Takeaway
I can’t emphasize enough just how important it is that you are honest and straightforward with us before and during the application process and, for that matter, after your merchant account is up and running. Setting up a high-risk merchant account is complicated enough as it is and we need all the help we can get to find a solution you will be happy with. And that is what you need, isn’t it?
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