To accept payments online
you will need to find a way to accept credit cards and debit cards online and for that, a merchant account is required. Merchant accounts are opened by merchant processors that allow you to take credit cards for a percentage of the transaction and they also transfer money into your bank.
There is no dearth of merchant processors offering merchant accounts but there is no standardization as every single processor has its own set of conditions for approving businesses for a merchant account. Usually, it’s not a problem but if you have bad credit, it may become a problem for you to get a quality merchant account. Most merchant account processors check the credit of the business as part of their regular approval check. In case you have bad credit, it is unlikely that you will be approved. Here are a few tips to help you get a merchant account with bad credit.
One of the ways for you to get a merchant account with bad credit is to get someone else to back you up. In simple terms, you will need to find a qualified cosigner who can cosign on your behalf and they will essentially act as a guarantor. The biggest benefit of using a cosigner is that your business can now apply to the top-rated processors that offer the best rates.
In case it’s not possible for you to get a cosigner for your business, you should check out companies that specialize in providing merchant accounts to high-risk businesses. There are several companies that offer merchant accounts to high-risk businesses and they also offer merchant accounts to people with bad credit. Do not restrict your search to only the local processors but also take a look at some of the overseas processors in order to get the best rates. Read Tips For Comparing Online Merchant Account Providers .
There are also some merchant account providers that may offer you a merchant account by taking some kind of guarantee or collateral. Some providers take a reserve deposit in order to cover their risk. Similarly, some providers require you to make an initial deposit into a reserve and they also keep rolling reserve. You should also talk to your local banks that you deal with as they might be more willing to help you get a merchant account.
Several banks offer merchant accounts
If you already have a business account with a bank, you may successfully get a merchant account from them regardless of your credit. They are not likely to pay too much attention to your bad credit in case you already have a positive account with them for many years. Also, you will save money on fees as well as start-up costs on the merchant account in case you already have an existing banking relationship with the bank. Also Know How to Get A CBD Merchant Account
Another important thing you need to keep in mind is that your credit score also determines the discount rate that is needed to pay for processing of the credit cards and debit cards. You should know that every time a credit card is swiped at your terminal, a certain percentage has to be paid to the merchant and this percentage is known as the discount rate. Obviously, you want to work with the merchant account processor that offers the lowest discount rate but discount rate is often linked to the credit score and some other factors.
If you do not have good credit, you should expect to pay a higher discount rate which means you will have to pay higher fees every time someone uses a credit card on your business. By getting a merchant account with your existing bank, you may be able to save some money with lower discount rate.
There are also several overseas merchant processors that offer credit card processing to people with bad credit. These overseas processors are especially popular with businesses in high-risk industries. These merchant processors typically do not require credit reports or other such things but you will have to pay far higher discount rates and start-up fees.
Overall, there are several ways to get a merchant account even if you have bad credit but you should be prepared to pay higher start-up costs and discount rate as compared to individuals with good credit score. However, you are not bound to pay the same discount rate and once you have developed a good rapport with your existing provider, you may re-negotiate the discount rate to lower your costs.
To get a lower discount rate, you will have to make sure that there aren’t too many chargebacks and you should also show an improvement in your credit. Usually, most providers are fine with renegotiation once you have been with them for a period of more than six months as six months’ history is usually enough for them to get an idea about your business. For more information contact credit card processing services