Credit Card Processing for Bad Credit Merchants
Accepting credit and debit cards is almost mandatory in today’s payment processing landscape. If you want to accept credit card payments from your customers, you need to start by obtaining a merchant account. Merchant accounts perform a variety of tasks and all are beneficial to your business, but to get started most merchant service providers will perform a credit check. Merchant account providers are sometimes lenient with customers with bad credit. If you need credit card processing for bad credit merchants, you have options, so don’t panic!
Alternative Options for Merchants with Bad Credit
Use a Co-Signor
Applying with a co-signor with good credit will quickly get you beyond the risk department. If the merchant account provider is aware that there is a secondary party with good credit, the risk is much lower, therefore your application on will most likely be approved.
Find a Specialist
Finding a co-signer is not always easy if you can’t find a co-signer there are some merchant services that focus on high-risk merchant accounts. If an account is labeled as a high-risk account often times bad credit is involved. Chances are these specialty merchant service providers will approve you.
Use a Third-Party Provider
There are many options where third-party payment processing services are available, such as Paypal. Third party payment processing handles the entire transaction, therefore making a merchant’s credit score of little importance.
Offer a Rolling Reserve
Tell the processor that you’re willing to leave a “reserve” of funds with them for a while just to cover them in case you default. A rolling reserve is typically only available to merchants with the funds to support this alternative option.
Offer an ACH Delay
An ACH delay is essentially a delay in the deposit of processing funds to your bank account. The processor withholds your funds for a few extra days as a guarantee that all of your transactions are secure and non-fraudulent.
Important Considerations for Getting a Merchant Account with Bad Credit
Whether or not you have bad credit will never be made public to your customers or competitors. Your account with a merchant service provider may only be affected slightly by a higher fee due to the risk they are taking on by processing your transactions. Your personal credit is an indicator of your willingness or ability to repay debts that you cause, and it is clear that all merchants carry the risk of causing a processing bank a loss.
Once you establish a history and strong working relationship with your merchant services provider, you can petition to reduce your fees and/or reserve terms, given that your processing fees always clear (you do not return monthly fees or refunds NSF) and you haven’t experienced any chargeback problems on your merchant account. Finding a merchant service provider that offers an advanced chargeback management system can help reduce your chances of experiencing any fallout or fees from frequent chargebacks. Typically, processing banks like to see at least 3 months of positive transactions before considering improving the terms of your contract.
Having bad credit does not have to leave a negative effect on your business. Finding a merchant service provider that can work with you is and support the growth of your financial success is not as wearisome as it may initially seem. With a little research, the right merchant service provider will be willing and able to help your business process credit and debit card payments. Please contact a Merchant Services LTD specialist to learn more about credit card processing for bad merchants or click here to apply for a merchant account for your business.