Why do some high risk merchant account applications get declined?

The main reasons a high risk application gets declined are as follows:

  1. Prohibited business type – Not everyone can get a high risk merchant account. Your product/service first must be legal, and then you need to secure a processor that supports that product/service. All processors have prohibited product/service categories with which they will not work. Some also have a restricted list that they will support, but with much more difficult approval standards.
  2. Merchant is on the MATCH/TMF for chargebacks or fraud – While we can be successful getting a merchant approved when it has been previously put on MATCH, we need to know the reason first. If a merchant was hit down due to fraud, often securing a new account is difficult. However, if the reason is excessive chargebacks and the merchant has taken steps to improve this over time, we can often help.
  3. Merchant is operating from a prohibited jurisdiction – Most processors won’t service merchants in certain countries, including Iraq, Iran, Syria, Somalia and Russia. Be sure to inquire first so we can ensure we can service your account.
  4. Underwriting suspects the merchant is performing some sort of fraud – Often we find documents look doctored or fabricated, so we need to request backup copies from the merchant. If the merchant cannot produce them, we have to decline. Also, if the merchant’s business practices are called into question and the company cannot respond to the satisfaction of compliance, then we usually have to decline as well.
  5. Merchant is unable to submit the required documents to underwriting – This happens quite a bit, but we have a set of required supporting documents that we must collect to satisfy underwriting. If we cannot produce them, there is sometimes a way around the problem, but often it’s a decline.
  6. An issue with compliance comes up during review, such as the method of sale, the licensing the merchant holds or doesn’t hold, issues with a suppler or the fulfillment process, or the website’s lack of PCI compliance. Be sure to check licensing requirements in your state before submitting an application. Licensing and permitting requirements vary considerably from one state to another, and many businesses are caught off guard by underwriters simply because they never realized licensing was necessary.
  7. Poor personal credit history — If the person holding the merchant account (typically a business owner) has a history of bad credit, this can trigger a decline. The bank’s reasoning is that the company’s ability to repay a chargeback is only as strong as the personal credit of the accountholder. If you have problems with your personal credit rating, cleaning them up before submitting a merchant account application helps improve the possibility of approval.

If you are in a very high risk business for one or more of the reasons above, or for some other reason, please contact us. With decades of experience helping businesses like yours overcome challenges to getting a merchant account, we can safely say that if there is a way to get you set up to accept credit card payments, we will find it!

Return to FAQ