subject: High Risk Merchant Account Approval In 3 Easy Steps [print this page] High Risk Merchant Account Pre-Application: Easiest Way to Begin. Often a high risk merchant wants to know whether or not a high risk merchant account will be approved before submitting a complete application. Of course, a business will also be interested in finding out what high risk processing rates will be. A quick way to obtain the information is simply to submit a high risk merchant account pre-application form, along with three months of processing statements. The business will be informed of the likelihood of high risk processing approval and will be provided with anticipated rates for high risk processing. Although a pre-approval not a guarantee of acceptance, it is helpful in helping a high risk merchant decide whether or not to move forward with the application process.
During this first stage of the high risk account account process, the most important documents are prior high risk payment processing history through which the underwriters determine chargeback ratios. Low chargebacks generally indicate that a company knows how to correctly manage a high risk merchant account. This will translate into reduced high risk processing rates being offered to the business. Higher chargeback rates represent a greater risk of contingent liabilities to the high risk processing acquiring bank. Businesses with higher chargebacks are often welcomed by high risk merchant account providers, but rates will be higher than with low chargebacks. Once the account is established, a good high risk merchant account provider works with the business to decrease and keep chargebacks low. Once chargebacks are well managed on the account, high risk processing rates can be reduced.
High Risk Merchant Account Application: Complete Package is Key. Applying for a high risk merchant account is not difficult. But, like most banking endeavors, it does involve a fair amount of paperwork. A high risk merchant account is similar to a short term line of credit with a bank and the documents required are similar. The acquiring bank will ask for an application form, scanned copies of a scanned copy of a drivers license or passport, business formation documents, and prior processing history. High risk merchant accounts that process over $100,000 per month will be asked for business bank statements and current financials (P&L and balance sheet).
The most important part of applying for a high risk merchant account is to provide the information requested in an orderly and timely fashion. Make sure all documents are easy to read, well-organized, and neatly presented. If the high risk processing bank requests more documentation, send it as quickly as possible. Otherwise, the high risk merchant account application will be pended until the information is received.
High Risk Merchant Account Approval. When the high risk merchant account is approved, the merchant will receive a contract from the high risk processing merchant bank. The contract will contain all applicable terms and conditions of the account. The bank issues a high risk merchant account identification number (MID). The MID is the signal that the business can begin using the account for high risk processing. Most high risk merchant accounts will not have any limits on processing volumes. Banks are pleased with a steady increase in high risk processing volume. If a business is planning an advertising campaign or otherwise expects volumes to grow quickly, its a good idea to notify the high risk merchant account acquiring bank a few weeks in advance of the anticipated spike in volume.
Many businesses will establish more than one high risk merchant account with different banks or in different jurisdictions to minimize risk. A backup high risk merchant account is always a wise business decision to protect business operations. More than one high risk merchant account can be load balanced and dynamically managed through a single high risk processing gateway.
by: Tina Brandon
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