Bad Credit Merchant Accounts

Merchant account service fee rates are often based on credit rating.  Bad credit merchant accounts are designed for businesses with less than desirable credit scores.  Read this article to find how to get a merchant account, even if you have bad credit.

Did you know that it is still possible to set up a merchant account if you have a bad credit rating?  Bad credit is only one reason why a high risk merchant account may be required, and as there are a large number of businesses in the high risk category, so merchant accounts have been designed to meet their needs.  Other factors, besides bad credit, that can lead to needing a high risk merchant account include the type of business engaged in (some are more risky than others) and processing orders when a credit card is not present (as with telephone orders or mail orders — referred to as MOTO).  You are more likely to find a merchant account easily if you have a lower monthly volume and sell goods or services at a low to moderate price.

Applying to a company that specifically handles merchant accounts for those with bad credit can save you time and the embarrassment of being rejected over and over.  If you are in this situation, research carefully to make sure that you are linking yourself to reputable firms.  As in any industry in which customers may be feeling hard-pressed or even desperate, there are scammers out there, ready to take your money.

You should know, however, that there are some things that can make it very difficult to obtain a merchant account.  These include:

• being listed on the VISA/MasterCard watch list
• current or recent bankruptcy
• conviction for fraud

Companies that offer merchant accounts for those with bad credit are often international or offshore merchant accounts instead of domestic banks.  Knowing the risks of the business, they have strict eligibility requirements.  But some credit card processing companies have a fall-back for applicants that do not meet those requirements.  They may be able to bring in a third party to accept the risk and make the relationship possible, and/or you may be required to post a reserve fund as security.

As with anytime that you are seeking a service for which charges can be imposed in various ways (set-up fees, monthly fees, per-sale fees, equipment rental, etc.), you need to gain a full understanding of those fees and compare them across the various merchant accounts you may be considering.  Review websites and other promotional material carefully.  A bad credit merchant account is bound to have less favorable fees than a regular merchant account.  This is to be expected, because more risk is involved for them.  If there is no listing of fees, consider it a bad sign.  If the list seems short, keep in mind that this may be intentional to conceal hidden fees. If you are concerned that a company is not on the up-and-up, don’t provide them with any personal information, and contact your state’s Better Business Bureau and your state’s attorney general’s office.