Understand The Merchant Underwriting Process

1. Understand The Merchant Underwriting Process MERCHANT STRONGHOLD Merchant Stronghold is based in Clearwater, Florida. We provide the best credit card processing services for all type and size of businesses. Also, we are #1 High-Risk Merchant Service Provider in 2015, and 2016.

2. INTRODUCTION It is important to open a merchant account to carry out financial transactions especially if your business requires a payment gateway through which you can accept payment by multiple payment methods. To acquire a merchant account you have to first find a card processor, which meets your needs and provides you services at a reasonable price. When you apply for this account, you cannot start by just filling an application form. The application (in turn your business) has to go through a wide analysis process. This process is merchant underwriting. A team of high-risk analysts or an individual analyze your business to find out any type of risk. All according to this analysis your application is either approved or rejected. This whole process might take a day or two, depending on the provider you choose. There are alternatives to this. It may take lesser time for approval, as those alternatives do not require underwriting. But they have their own drawbacks due to which they are rarely recommended.

3. MERCHANT UNDERWRITING PROCESS Merchant account is basically a line of credit. In case of chargebacks, the amount is cut from the merchant’s account. But, if there are not enough funds in the bank to pay for chargeback then the provider pays that amount right away to the customer. So the essential part of underwriting is to evaluate the risk level of merchant’s business.

4. WHAT PROVIDERS CHECK Industry Type: Risk is in every kind of business but the level of risk varies from business to business. Few businesses are less likely to fraud and chargebacks as compare to others. Higher the level of risk, higher the amount of documentation. Return Policy: Businesses that indulge in shipping products are risky because there are chances of non-delivery of product, wrongly delivery or delivery of broken product that might result in chargebacks. Business History: If you are not new in the market and have applied for a merchant account, underwriting will involve reviewing of your credit history as well as chargeback history (to know chargeback ratio) before approving or rejecting your application. Financial Stability: To check the financial stability, underwriting may include your bank statement and credit. This is very important for the businesses while applying for a new merchant account, as it directly affects the decision of underwriting approval.

5. After Effects of Poor Merchant Underwriting Incorrect Limit: You should set limits for your business as per requirement. It should not be too high or too low, as both will put your business at risk. Limits lower than required will hinder the regular processing of transactions. As a result, it may constrict the flow of cash or timely payments from the customer. If a limit is too high, this may lead to unexpected fraudulent charges. Hidden Fee: An additional fee is there if the volume exceeds the limit. However, even if you have set your limit, some providers let it exceed without notification. And they also charge you with a penalty. Downgrades: Once your high risk merchant account is set, you are inclined to transaction downgrades if certain required features and security measures are not set along with the account. Although, setting up these features will cost you more. But it will help you in long run and enable smooth processing of transactions.

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