Let´s say you just created your brand-new software company. The idea is excellent, and expectations are high. You want to start selling your products or services as soon as possible. Still, you just find out that your niche is considered a high-risk business for payment processors. So you are wondering, is it possible to get High-Risk Merchant Account With Instant Approval?!
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You may be tempted by promises of “instant approval” from merchant account suppliers who aim their marketing activities towards new and unexperienced high-risk merchants. This temptation might be even more significant if you’re conducting an eCommerce company and you absolutely have to have the ability to accept credit cards.
In this informative article, I will clarify what “instant approval” actually means and why it’s generally not a fantastic idea, however desperate you are to receive a merchant account.
I will also delve into how the high-risk merchant account approval procedure works and what you could do to make it run a bit smoother and quicker. Ultimately, I will suggest several reputable high-risk experts who may assist you in setting up a secure and reasonably priced merchant account.
An Instant Approval For A High-Risk Merchant Account! Really?!
First things, first! Let´s get an elephant out of the room! Although it is possible to set up instant credit card processing, there is no such thing as a High-Risk Merchant Account Instant Approval. Period.
You should raise a red flag if you come across a merchant account provider that promises instant approval for higher risk merchants. Because too many variables are involved, usually, it takes at least five business days to get an answer from the acquiring bank.
If merchant account providers say that they can get you one faster; it is simply not true unless under the term “instant” they presume 5 to 10 business days. Even if you deal with the best companies in industry, the high-risk merchant account approval takes patience, time, and lots of KYC (know your customer) documents.
So, What Is Then High-Risk Merchant Account Instant Approval?
I have seen ads and promotions about “instant approvals”, “fast approvals”, and even “sign up now and start processing payments today”. In the best scenario, it is misleading publicity, in worth – complete scam.
Some of the high-risk merchant account providers practice two-step approval. The first is pre-approval from merchant account provider itself, and the second is approval from the acquiring bank.
So, this pre-approval can be obtained quite fast, but it doesn’t mean that you have been approved for full merchant account already. The simple reality is that usually, merchant account provider’s business model relies on registering as many merchants as possible to make a profit.
Delays and difficulties usually come into play when those providers try to get approval for your high-risk merchant account from the acquiring bank. The risk investigation managers at these banks really are not fancy to approve high-risk merchant accounts due to the increased chances that you’ll run into problems in the long run.
Typically, providers that market “high-risk merchant account instant approval” tend to do everything to lock you into long-term contract with hefty penalty for early termination. What they market as “instant approval” in most cases really means that they’re approving your account and getting you to sign a long-term contract before they actually have any acquiring bank which is ready to work with you.
How Long Does It Really Take To Get Merchant Account Approval?
Usually, it could take a day or two for regular, low-risk businesses to get approval for a merchant account. For the high-risk merchant accounts, providers must take deeper and more comprehensive research into your capability of sustaining the expected reserve amounts required for your account. It means that high-risk merchant account providers will carefully study your business’s banking history, your sales volumes, and your chargeback rate.
These documents alone take several days to be reviewed and analyzed. High-risk merchant account providers might also have a sneak peek into your own personal banking history, especially if your business is new and doesn’t have any processing history.
Comparing to low risk businesses, high-risk merchants must present more requirements, and these might go through more departments and scrutiny.
According to several reputable merchant account providers, to get approval for high-risk merchants account can last from five working days to up to five weeks.
How To Make Merchant Account Approval Faster?
The golden rule is that you should apply for high-risk merchant account when your company has good financial standings. Acquiring banks tend to approve high-risk merchant accounts faster if your bank account amount indicates that you have enough funding for your business.
It is crucial to understand that working with a reputable high-risk specialist might significantly speed up all processes.
Prepare such documents as business registration certificates, detailed information about your business, information about all benefactors; business bank statements account for the past three to six months and in some cases also personal banking statements. For online merchants it is must that your eCommerce website has clear users’ policies and return policies, as well as your business contact information should be publicly stated on your site. Specific requirements vary from one provider to another, but here is a generic list of the usually requested information:
- Articles of Association (if applicable)
- Articles of Incorporation (or sole proprietorship documentation)
- Business Plan
- Completed Merchant Account Application (from your merchant account provider)
- Copies of supplier’s agreements (for retail merchants)
- Also Copies of your business bank account statements (usually last three to six months)
- Copies of your personal banking statements (usually for the last three months)
- Personal reference letter from your bank
- Personal Utility Bill (used to verify your address)
- Photo ID or Passport
- Processing statements for at least the last three months (in case you have some)
- Résumé or CV of the business owner
- Screenshot of your business website’s home page (if applicable).
It is easiest if you already have some history of processing transactions from your industry! If it is your case, also prepare a complete report about your current processing history.
Things To Look Out For Before Signing A High-Risk Merchant Contract
While there’s absolutely no way not getting around certain fees that are enforced on high-risk businesses to mitigate potential loss for processors, you can still find merchant account providers that may offer your competitive services.
Most unethical, high-risk merchant account providers will advertise fast or instant approval and then will try to lock merchants into long term contracts with high fees, high rolling reserve, and most importantly, hefty early termination fees (ETF).
First of all, read any contract before you sign it! Pay attention to the small print. Ask questions about anything unclear to you. See how fast the provider communicates with you back.
Today the trend is to move away from long term contracts. When possible, try to avoid anything longer than one year. The best is to stick with month-to-month contracts, although those are usually offered only by payment service providers.
Although it is expected that processing fees for high-risk merchants usually are much higher than it is for their low risk counterparts, you shouldn’t pay more than 10% per transaction.
There is absolutely no way to avoid rolling reserve for high-risk merchants; again, it should be no more than 10% for 180 days.
Which is the best Merchant Account provider for High-risk merchants?
If your company is deemed risky, you are aware of just how difficult it might be to obtain a merchant account provider that’s ready to supply you with quality service at a fair price.
Any business is unique with individual requirements, especially if it falls into high-risk category. So, there are no universal solutions. However, this year I have done extensive research about high-risk industries. I have scavenged merchant forums about this topic. I have also read literally tons of real user reviews about high-risk merchant account providers.
Again, there is no such thing as a high-risk merchant account with instant approval. However, there are a couple of decent high risk merchant account providers that stand out with faster and higher approval rates.
For example, PaymentCloud has a well-earned reputation in many reviews and merchant forums. They are famous for helping high-risk businesses that can’t find credit card processing elsewhere. Among other good qualities, it is always pointed out that the company provides ethical and honest sales practices. It is not so common in this payment processing business. PaymentCloud’s services include everything its users need to take payments online.
Another name that frequently comes up is Instabill. The best thing about Instabill is its aptitude to set up accounts for even the hardcore risk businesses relatively fast. They also has good acceptance rates. It is reported repeatedly that even businesses like online gambling websites can usually get up and running with Instabill.
What To Do If You Need High-Risk Merchant Account Fast?
If you are just started and have no processing history or your processing volume is still under $5000, it might be impossible and too expensive to obtain a full merchant account. In this case, your only alternative is payment service providers (PSP).
Usually, the onboarding process with PSP is faster and simpler for a full merchant account. Payment service providers take on the full financial risk of each business under its account. They usually operate on a pay-as-you-go or monthly basis, and there’s no penalty for canceling the service.
Conventional payment service providers have frequently rejected companies who make their earnings of alcohol, tobacco and medicinal products, air travel, adult entertainment, software, applications, insurance, and other branches from this high-risk industries list because of the higher risk of bankruptcy and fraud in those industries. However, there is a handful of reliable PSP’s which specialize in working with high-risk merchants of all sizes.
Take Cardinity, for example. This is a licensed all-in-one payment system registered on Visa and MasterCard networks. Cardinity offers advanced payment gateway features like Customizable checkout, Accept payments, mobile payments anywhere, Customized invoices, Full featured global payment gateway, and relatively fast onboarding process.
Another good example is Swiss-based company SecurionPay. It is a payment service provider which specializes in all kind of high-risk businesses. SecurionPay offers a complete all-in-one payment system with limitless integration possibilities.
Getting approval for a merchant account is not easy for everyone. Still, it is an incredibly challenging task for recently founded high-risk business owners. Although it might seem like an impossible mission, with adequate preparation, you can get it done.
After a few bumps on the road, it’s too easy to get the feeling that you have to sign up with any provider who will take you. Also, the unavoidable delays in getting your high-risk merchant account approved can make the publicity of “instant approval” seem irresistibly tempting.
Listen, you have to resist that temptation. Instant approval isn’t what its advertisers declare it is. Instead, it’s an almost certain way to lock yourself into unfavorable contracts for the long term.
In my experience, if you are a newly founded business, the easiest way is to start with payment service providers who specialize in working with high-risk merchants. Try to keep your chargeback rates low. Your business and personal account balance high and after three months, apply for a full merchant account. It might significantly increase your chances to get approval faster.
It is also smart to get a contract with at least two high-risk merchant providers. In case one is shut down, you will have an immediate backup ready.
What are your thoughts? Do you have other tips how to get approved for high-risk merchant account faster? Drop me a line on Facebook or Twitter. I am curious to know.