all that's been said and done, your merchant account application at your local bank was stamped DENIED. Total bummer. All of us feel bad when rejected, and more or less, go through moments of anger and sadness, especially if you really worked your hardest. You are already taking more than the usual risk if your business is already classified as high risk such as adult, travel, pharmacy, escort service, dating service, telemarketing, high volume, and multilevel marketing. But, there will come a time that you'll feel alive and again, and at that moment, how do you bounce back?
One of the ways to demonstrate resiliency is to know where did everything go wrong. It is humanely possible to miss certain trivial points that when summed up, constitutes to major flaws. So, knowing the basic reasons why merchant account applications are denied is crucial first step, below are the common reasons:
documentary deficiencies
grave complaint record filed to the Better Business Bureau (BBB)
ripoff record
misrepresenting certain, if not, all information about yourself and your business
Papers in work
Deficiencies in documents refers to lack of paper work submitted. Standard paperwork submitted are application forms containing the merchant legal name doing business as (DBA) name,URL,email address, and ,telephone number, drivers license or passport, incorporation documents or business license,monthly processing statements, months bank statements. If your business already has a website, then the paper work needed are
Better Business Bureau (BBB) Report Printed for DBA, Legal Name and URL, yahoo.com search results printed for DBA, Legal Name and URL, list of domains printed from: whois.webhosting.info/(URL),and merchant website, with product description and policy pages printed.
Discern if you really and truly had submitted all these forms, technical as it may see, but, failure to completely send in the requirements reflect your business' ability to comply with simple rules. But, remember that some of the documents are only required if they are applicable to your situation.
Red marks on your BBB report card
Better Business Bureau (BBB) is an 80-year old, non-government, non-profit organization created to serve as watchdogs of the marketplace and report developments to the public. Their members include most businesses but not all, to say the least.
BBB handles disputes between customers and businesses. From unsatisfactory customer service, to delayed refunds, non-payment of bills,past due accounts, and other customer concerns imaginable. They act as intermediary provide ways to compromise so that as much as possible, the cases won't have to reach the court.
If your business has a complaint report filed at the BBB, they will notify you and tell the specifics of the customer complaint. It is in your interest to show up and settle do that future repercussions are avoided. Take note, that the BBB does not recommend any business, they operate on neutral ground, making sure that both the right consumer's and merchant's rights are intact as much as possible.
Ripping ripoff
A ripoff, in its business sense, is a situation where you pay too much for an item that you bought. This happens when you buy a water lawn mower for $89 when the actual price is only $50. Unlike a scam, in a ripoff situation, you actually get the product but in a higher price. But, how can you be sure if you have been a victim of a ripoff? The best measure is to ask for receipts and try to make inquiries if that's the actual price. This is practical especially for expensive items or services.
Altering egos
Misrepresentation is also one cause of denied application. Once you submitted the documents, officers do background checks. They coordinate with credit unions (Experian, TransUnion, and Equifax), the BBB, people who you work, and others to verify the authenticity of the information of your office. They check if your processing volumes reconciles with your monthly statements, or if you really have an office, (if you indicated a separate work address) , by asking the landlord of the building you're occupying, and so much more. Bottomline, they check if you're business is what you say it is.
Knowing your weaknesses
With the knowledge of the common reasons why high risk businesses' applications for merchant accounts are denied is a sure- way to be more cautious and plan your next move. You can always go to another bank, contact a merchant account provider, or opt for an offshore merchant account. No matter which path you want to take, learn from your mistakes.
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Contributor's Note
Bailey Thompson works as a freelance financial consultant for an international investor relations company. Has been a freelance correspondent for business magazines specializing in offshore merchant account services. On the side, is also an antique dealer, with background on offshore merchant account, is currently testing it's waters by setting up an offshore merchant account in a bank somewhere in the European continent.
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