In a previous article, and in a follow-up on our guide on how merchants should cope with a termination of their merchant account, we reviewed our process for working with high risk merchants. Well, just as then we felt that we needed to go into details about some aspects of the high risk merchant account application process, which we had not had the time to clarify in our initial article, this week we felt that we should do a follow-up on the follow-up.
This time, we thought that we should focus a bit more narrowly on the procedures we follow when working with U.S.-based high risk applicants. Domestic merchants represent a significant share of the total number of our new applicants and so they deserve special attention. We would probably have to go through the same exercise in regards to non-U.S.-based merchants, but that would be a project for another time. Now let’s examine how we work with American merchant account applicants.
Prior Processing History Helps, but Is not Mandatory
At UniBul, we specialize in working with high risk merchants and in our previous articles on the subject we have reviewed our requirements for new applicants and explained in some detail precisely what we mean by “high risk”. If you haven’t read these articles, it might be a good idea that you do so for the sake of clarity, before proceeding any further. Furthermore, we should preface everything that follows with a reminder that the procedures we are about to examine apply exclusively to high risk applicants. This is what we do and, anyway, the low risk merchant account set-up is a fairly straightforward procedure and doesn’t really need a detailed examination.
Previously, we also pointed out that at UniBul we are more flexible with domestic applicants, in that we accept applications from high risk merchants without prior processing experience, whereas when it comes to international applicants, previous processing history is requisite. Now, if you are based in the U.S., experience would still count heavily in your favor, but we would be happy to work with you even if you are just starting out in a high risk industry, so long as you can comply with our requirements. Now let’s take a look at our process.
Domestic vs. Non-U.S. Payment Processing
Our primary objective at the onset of a merchant account application process for a U.S.-based business is to find a domestic acquiring solution for them, if at all possible. A U.S.-based acquiring bank would offer you the best terms you can possibly qualify for. While international acquirers might be able to occasionally match a domestic bank’s pricing terms, or even beat them, they could not possibly compete on any other count. For example, payouts with a domestic acquirer would be done on a daily basis (you would be getting today’s sales deposited into your bank account tomorrow), through direct ACH deposits and for free. International acquiring banks, on the other hand, are forced to rely on wire transfers, which are expensive, and, much more importantly, funding is usually done on a weekly, bi-weekly or monthly basis, depending on your volume. And we know how important to you is to have fast access to your money, because you have told us so many times.
Furthermore, the merchant account application process with a domestic acquirer is a much more straightforward one, simply because each of the participating parties is a U.S.-based organization. You know what types of documents you will be asked to provide — Articles of Incorporation / Certificate of Registration, Tax ID, bank letter and statements, business licenses, etc. — and will have no trouble to supply them. If you are just starting out in business, you may also be asked for a business plan and other documents to assure the acquiring bank that your business has strong potential and so justify their decision to underwrite it. And if the potential is there, they will want to underwrite your business, whatever the risk. On the other hand, if the potential return does not look all that promising, the chances of approval will be lower. An additional advantage of an application process with a U.S. acquirer is that it is typically completed much more quickly, compared to one with an offshore bank.
Yet, there is a whole number of reasons why a U.S.-based acquirer will not want to underwrite your account. These reasons need not concern us here, but what is relevant to the matter at hand is that, should we fail to find a U.S.-based acquirer willing and able to work with you, we would look abroad for alternatives. We work with acquirers all over the globe and will contact the ones we’ve established are best suited to service a business like yours. A critical thing to understand here is that acquirers in different parts of the world have to comply with different sets of industry regulations, which is what allows an acquirer half a world away to work with a business, which none of its domestic counterparts would touch.
Should we select an offshore acquiring bank for your business, you would have to be prepared for a somewhat more exotic application process. You may be asked to provide documents you are not used to supplying and you may even be asked to mail hard copies of them (rarely, but it does happen), after you had already emailed all of the soft copies in. Moreover, it is quite likely that the process would drag on for several weeks. However, don’t be annoyed, but just follow through on whatever it is the acquirer asks for. Once the process is successfully completed, you will be contacted with instructions on how to connect your website with the acquirer’s processing system and, once you’ve done that, you would be ready to go.
As previously noted, it is hugely important that, once you start processing payments with a new acquirer, you keep detailed documentation of your transaction activities and are prepared to provide it on request. Acquirers are very cautious with high risk merchants, particularly at the beginning of a processing relationship and keep them under close scrutiny as a matter of course. After all, there is a reason why an industry should be classified as high-risk, isn’t there? Once it is satisfied with the usage of your high risk merchant account, your acquirer will take a step back and relax a bit, although it will still remain vigilant. As long as you keep a firm grip on chargebacks, customer complaints and fraud, your merchant account will remain in good shape.
So the bottom line is that, provided your business is properly incorporated, has all of the necessary licenses and generally follows all applicable rules, there will be a merchant account solution available for it. It is our job to identify what this solution is and to guide you through the application process. What we ask of you is that you provide all documents and information that we may need. As long as we have your full cooperation, we’ll make sure that you get the high risk merchant account you need.
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UniBul enables American and international businesses to accept payments for the things they sell on their websites.
