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How to Get Approved for a Merchant Account

Try these strategies for improving your chances
July 8, 2002

Q: What do you consider a high-risk merchant? And if I am one, can I still get a merchant account?

A: There are many examples of high-risk merchants, such as telemarketers (inbound or outbound), Internet/e-commerce businesses, merchants in the travel and cruise industries, Internet auctions and businesses offering membership clubs.

But owning a high-risk business doesn't mean you won't be able to open a merchant account. It does mean, though, that it may be more challenging to set one up. Merchant account providers--banks and independent sales organizations--will also consider how long you've been in business, your credit history and any previous merchant accounts you've held with other processors.

Your length of time in business matters because merchant account providers want an assurance that you understand the business environment in which you operate, can identify the potential risks you face, know how to prevent or reduce fraud, and understand how to manage credit card acceptance. Regardless of risk, this kind of knowledge comes only with first-hand business experience.

Learn more about electronic payment systems with Protocols for Secure Electronic Commerceby Mostafa Hashem Sherif and Ahmed Sechrouchni.

Your credit report will show how well you've repaid past loans, and if you've had any liens, judgments or bankruptcies filed against you. A favorable credit history will go a long way toward establishing your credibility as a prospective merchant.

And if you've had an earlier, well-maintained merchant account, it's a positive indicator of how you're going to deal with your new processor. Terminated merchant accounts will show up on the Member Alert to Control High-Risk Merchants file, also known as the Combined Terminated Merchant File. If your previous processor terminated your merchant account because you defaulted on it, or if you incurred too many chargebacks, this may negatively impact opening a future account.

To increase your merchant account eligibility, follow these tips:

Operating a high-risk business does not exclude you from being able to process credit cards. When you shop around for the right transaction-processing organization, go into it knowing what to expect. Follow the strategies outlined above, and the experience of opening a merchant account will hopefully go smoothly. And in the end, getting approved will put you on your way toward generating more revenues for your business.

Cardservice InternationalSenior Vice President of Sales John Burtzloff is in charge of sales strategy and execution and thus is responsible for managing all aspects of the company's marketing, communications, telesales, check guarantee, new accounts and sales support activities.

The opinions expressed in this column are those of the author, not of All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.