When it comes to choosing a credit card processing service provider, you might be tempted by claims of "instant approval" (sometimes referred to as "guaranteed approval") from high-risk merchant providers. To determine whether you should be swayed by these claims, let's take a closer look at what instant approval means and how it could impact your business.
What is Instant Approval?
In actuality, there isn’t such a thing as truly instant approval for any type of merchant services account. The reality is that it always takes longer to obtain final approval for a high-risk merchant account than it does for a low-risk business. In most instances, traditional low-risk businesses can expect to be approved within a day or two. On the other hand, high-risk merchant accounts typically require a minimum of three to five business days (and sometimes up to several weeks) to be approved. Approving a high-risk business requires a far more extensive investigation into the credit history of both the business and the business owner. You should also take into account that you’ll have to submit significantly more documentation and wait far longer for this process to be completed than a low-risk business would.
How is it That Some Providers Claim to Offer Instant Approval?
If there is no such thing as instant approval, then how is it that some providers claim to provide instant approval? What these providers aren’t telling you is that approval for your merchant account is actually a two-step process.
First, you must be approved by your merchant account provider. Second, you must be approved by the acquiring bank or backend processor that is actually going to underwrite your account and process your transactions. The second step of the approval process is where the delays and difficulties come into play.
Every processor has their own criteria for determining whether you’re high-risk, and their own documentation requirements you’ll need to meet before they’ll even consider approving you for an account. While your merchant account provider is highly motivated to approve your account, your processor has every reason in the world to not approve it.
Fortunately, there are some really good merchant account providers out there who specialize in getting high-risk accounts approved, and they’ll work with you to get your paperwork in order and find a bank that can approve you for an account.
Can I Speed Up a High-Risk Merchant Account Approval Process?
To speed up the approval process, you should work with a reputable merchant account provider that specializes in high-risk processing. Working with a partner that has a proven track record and experience in your industry will help to expedite the signup and approval process. You should also make sure that all paperwork is in good order. You’ll need to provide far more information when applying for a merchant account as a high-risk business owner. If you can present all of this information with your initial application, it will save a significant amount of time during the approval process. Some examples of documentation you may be asked to provide include:
- Completed Merchant Account Application
- Résumé or CV of business owner
- Photo ID or Passport
- Business Plan
- Personal Utility Bill
- Processing statements for at least the last three months
- Copies of supplier’s agreements
- Copies of your personal banking statements
- Personal reference letter from your bank
- Copies of your business bank account statements
- Articles of Incorporation
- Articles of Association
- Screenshot of your business website’s home page
It is also important to be honest with your merchant provider about all aspects of your business. Merchants are often tempted to misrepresent facts that might lead to them being disapproved for an account. In many cases, you may still be eligible for account approval in spite of a less-than-ideal track record, especially when working with a merchant services provided that has experience with high-risk businesses. It is best to be honest in your application process, as being deceitful or misrepresenting facts about your business will almost always result in disqualification or account cancellation.
To learn more about credit card processing for high-risk merchant accounts and speed up your approval process, contact BankCard Services today.