Every business will need various forms of documents in order to register and activate. Such documents typically serve as proof of qualification or reference points to the concerned organizational bodies on why you are fit to do business.
And applying for a high-risk merchant account is not exempted from such requirements. As a matter of fact, unlike other merchant accounts, businesses that fall under the high-risk category will have a good number of requirements that should be fulfilled long before your business can offer a reliable payment gateway for credit or debit card processing.
High-Risk Merchant Definition
First of all, a merchant account is a kind of bank account that allows a merchant to accept and process credit or debit card payments from their customers.
Now, a high-risk merchant account is a subset of merchant account, granting high-risk merchants and businesses to have access to a merchant account and allow the same payment gateway for their customers.
There are a variety of factors that determine if you or your business falls under the high-risk category. These include your business chargeback ratio, fraudulent activities, and the nature of the business, legal issues, credit history and more.
In general, applying for a merchant account if you are under the high-risk category can be more difficult than the low-risk businesses. Thus, choosing the right high-risk merchant account provider is a must and you need to ensure that you follow and submit all the necessary documentation when applying.
4 Steps in Preparing Your Documentation for a Successful Merchant Account Application
- Know The Basic Requirements
High-risk merchant account providers vary. They are different from one another and comes with a unique set of conditions on how to apply and acquire a merchant account from them.
And the very first step that you need is not to prepare your document files but rather inquire about the basic requirements of the high-risk payment gateway that you need. You can contact them through phone calls, email or live chat or some providers already provide their documentary requirements on their websites.
Do not just go on filing your application form without being too sure of every condition and terms place as a requirement by a certain provider. This should give you some insight into knowing the rates and other options they can offer.
In order to help you with your investigation, you also need to research online and read reviews from other customers, contacting the customer care support of the provider, look for frequently asked questions, or contact family or friends who have used their service before.
Some other things that you need to learn at this stage are:
- Types of payment options available
- Relevant experience of the provider in the industry
- Do they meet your business’ basic requirements
A good research won’t just give you an insight concerning the provider but also the kinds of documents you will need when applying for an account.
- Organize The Paperwork
After doing step one, you will have to start organizing your documents. Some of the most common kind of paperwork required by high-risk merchant account providers include:
This gives the provider a general idea of who you are as an entrepreneur.
- Financial records
High-risk merchant account provider oftentimes requests for your financial records in order to know if you qualify for a high-risk merchant account.
While you organize your financial documents, ensure that all your taxes are sorted out as well as settling debts and know if they can cause problems to your application.
- Business Plan or Overview
This is a general overview of what your business actually stands for. It is typically an explanatory letter that outlines your business’ monthly income, industry code, investors and other vital information.
- Proof of Earnings or Bank Statements
Most high-risk merchant account providers will require a business to provide business and personal bank statements for a 90 day period.
- A copy of your utility bill
- Memorandum or Articles of Association
- Documentation for your business or sole proprietorship
Some other supplementary documents that a high-risk merchant account provider may ask for include:
- A reference letter from your bank
- Screenshots or link to your website
- Total volume and amount of transactions, refunds or chargebacks
- Name of the processing bank
These are some of the general requirements when applying for a high-risk merchant account providers. Some providers will definitely have stricter requirements, so make sure that you take note of that.
In addition, most of these required documents can be challenging to acquire. Thus, it is important that you start as soon as you have the list of the basic requirements that the high-risk merchant account provider asks.
- Talk With An Agent
Once you’ve acquired and prepared all the necessary paperwork required by the provider, it is crucial that you speak with an agent in order to assist you in the next steps as well as ensuring that you present the documents properly.
In addition, an agent can serve as your middleman, giving you feedback and advice on the best step you can take in order to make your high-risk merchant account approval faster and easier. Most agents will be happy to work with you and ensure that you engage in a meaningful conversation while discussing possible payment processing solutions for your business.
And when choosing an agent, you can ask for recommendations from previous customers. Always take note of their years and level of expertise as well as their talent fee charge.
- Carefully Read The Fine Print
After you arrange your paperwork, you need to make sure that you study the conditions and terms of the creation of your high-risk merchant account.
This should go a long way in keeping you well-informed of any developments in the future that you might not know. So, take your time in studying every item on the contract list and do not just read. Make sure that you understand and study them in detail.
In some cases, high-risk merchant account providers tend to have hidden fees, fluctuating rates, or extra costs that can change from time to time. So make sure that you ask for any items you don’t understand and clarify them.