Making sure that money comes in is a primary concern of most small business owners, especially high risk merchants. That money used to come in the form of cash at the register—paper money and coins that were bundled together and taken to the bank at the end of the day. In e-commerce, credit cards are the “coin of the realm”. Having the ability to accept credit card payments is the key to ensuring the success of your enterprise. The problem is, merchant accounts can be hard to get. As industry insiders, E-Commerce 4 IM has been helping high risk businesses get the merchant accounts they need for years. We can help you lay the groundwork for a successful application to a merchant bank so that you can accept credit card payments. If you are thinking about setting up a merchant account, you can save yourself time and hassle by contacting us at 1-800-570-1347 or on our website.
What is a merchant account?
A merchant account is in some ways a line of credit extended by a bank to your business. When a credit card charge is processed, the funds are held for the period of time. Then, the money is deposited in the business’ bank account; that is when those funds are available for your use. The merchant agreement also allows the bank to make debits from the business’ bank account for credit card processing fees and chargebacks. That is where the difficulties sometimes arise.
A chargeback occurs when the merchant account bank demands that a business makes good on a fraudulent or disputed transaction. Every bank has a certain level of risk that they are willing to accept when it comes to potential chargebacks. Since the use of a credit card by a customer guarantees that they will receive a good or service, the bank could wind up losing money on the charge if the business in has insufficient reserves to cover the value of the chargeback. That is why the whole application process exists—to determine the risk a business might pose to the bank.
Putting your best foot forward
When you apply for a high risk merchant account, making sure that your application is complete and that your business’ house is in order is essential to success. A strong application is especially important if you run what banks term a “high risk” business: firearms sales, online gambling, weight loss and skin care products, gym memberships, multilevel marketing, and coaching products are all examples of high-risk ventures. E-Commerce 4 IM specializes in helping high-risk businesses navigate the merchant account application process successfully. Here are our tips for success:
Your website must include the following critical elements:
- Refund or cancellation policy: Your customers need to be clear on what your policies are, and so does your bank.
- Terms & conditions: Banks want to see clear policies that they can feel comfortable with, especially when it comes to how payments are processed and how disputes will be settled.
- Transparent pricing for each product and service: The products should make sense for your line of business, and the prices should be available for review. The currency used in the purchase should be seen with the amount as well (US Dollars, Euros, etc.).
- SSL page(s) for personal and credit card information: This industry standard secure connection is how you encrypt customers’ payment information. Lack of data security could result in you losing the ability to process credit cards. Typically, this is provided by your shopping cart provider or payment gateway.
- Customer service telephone number: Banks like it if customers can reach a live human being to help them with their issues.
- Shipping & Handling methods and projected delivery times: This information will show the banks that you are serious about delivering the product or service.
- Overall, a clear description of the goods and services listed on site: Your customers need to understand what you are selling, and so do the banks.
The documents that you provide to the bank can make or break a merchant account application. At a minimum, you should be prepared to include:
- Voided Check or letter from your business account bank: A business account is essential for any enterprise wanting to accept credit cards.
- W9 or SS-4 from the IRS: These are the IRS documents that establish you as an independent contractor or a business with an Employer Identification Number.
- Three months of bank statements: These give the bank an idea of your cash flow.
- Three months of prior processing statements: If you’ve accepted credit cards in the past, these statements will tell the bank the number of charges to expect, along with the highest and average value of those charges.
- Most recent tax return: This helps assure the bank that you are in the good graces of the IRS, and verified income. Depending on your business, this may not be required.
- Fulfillment Agreement: If you use a third party shipper, you’ll need an agreement guaranteeing that your products will be shipped.
- Driver’s license: The banks need to know who you are, after all.
- Articles of Incorporation: These are the formal documents filed with your governmental authority that establishes you as a company.