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Obtaining a merchant account is an important step in taking your business to the next level and maintain a competitive edge in today’s market. Before you get started, it would be great to know what to expect while applying for a merchant account.

What is the underwriting process? What papers are needed to be provided? What do the underwriters want to see? How to speed up the process? Questions are numerous and we hope this article will cast light on some of them and will help you to be better informed about the underwriting process.

One of the things to start with is to ensure a positive credit rating. It is very important to be honest about previous merchant accounts, bankruptcies or liens. It is impossible to remove them from your credit report as this information became a part of the public record. To obtain your credit report, contact a credit reporting bureau and make sure that everything has been cleared up.

Also, if you’ve had problems with chargebacks previously, or have bad credit you should be forthright about it. It tells to the underwriter that you are an honest person and demonstrates that you want to step up to the plate and solve any issues that can be a cause for concern of for underwriter.

You should know that small and start up businesses are often declined by the banks when trying to apply for a merchant account. The reason for this is that they often have lower turnovers and pose a higher risk of disputes and chargebacks. To cover these risks, the banks initiate a minimum turnover requirement, securing a constant flow of funds in case if disputes or chargebacks occur. You should be ready to pay higher fees and to accomodate special account requirements.

If your business is a high-risk, higher setup fee and rolling reserve can be required. The actual total amount of the reserve and how the reserve is established will vary from bank to bank and from business to business depending on risk exposure. Most merchants consider reserve requirements as a negative requirement, but they can be like a safety net for businesses that are exposed to higher risk of chargebacks.

What is a list of required documents to get the merchant account?

  • Application form
  • The application form will contain information about you and your company, including addresses, social security number, ID or passport, phone numbers, email addresses, website address, bank account info, etc.

  • Certificate of Incorporation and related documents
  • Business financial statements
  • Unless your company is a start up, you will have to provide its financial statements. Personal financials may also be requested in addition to them.

  • Previous processing statements with your current acquirer.
  • If you currently have a payment service provider and are looking for a new service, you will be asked to provide your processing statements for last 3-6 months.

  • Business license
  • If your business activity is regulated and requires a license, you will be asked to provide it.

  • Voided check
  • You will need to provide a voided copy of a check for the bank account into which you will want your funds to be deposited. The check must have your company name on it.

  • Utility bill
  • Original utility bill to confirm home address of directors and shareholders no older that 3 months (it can be electricity or phone bill).

Also, if the following information is not on the site, the application cannot be submitted, so make sure these points on the website are met:

  • The Company’s name is clearly identifiable to the Customers.
  • The address of the company is present on the web site.
  • The transaction currency and price of all products is clearly displayed.
  • Shipping and Handling charges are clearly displayed.
  • A statement of estimated fulfillment time of contract and delivery policy is displayed.
  • A statement regarding the security of the transaction is displayed.
  • Company confidentiality and privacy policy is displayed.
  • Company contact details for Customer Support are clearly displayed.

If the site is under development, screen shots can be submitted that have the required information.

Once all forms and supporting documents have been received, your application will be assessed, you will then be contacted with a decision.

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