The Truth Behind a High-Risk Merchant Account Instant Approval
As a business owner, you should be cautious when choosing your merchant account provider especially when you come across one that offers high-risk merchant accounts with instant approval.
High-risk merchant accounts, or even those regular ones, require a time frame to obtain approval from an acquiring bank. Keep in mind that there’s no such thing as instant approval merchant account, unless instant for them means somewhere between 3-5 business days, or 3-5 weeks.
You may have seen various advertisements promoting online merchant account instant approval which you may find quite deceiving, but if you come to think of it, guaranteed merchant account fast approval merchant accounts takes patience, time, and a lot more processing efforts, even more with those high-risk businesses.
Here in this article we will be giving you the truth about high-risk merchant services, as well as things that you can do to help you expedite the process of getting one.
Real or Fake: High-Risk Merchant Account ‘Instant’ Approval
As a business owner, you are pretty much aware that it’s no fun trying to run your business with a “cash only” type of payment only because you can’t get approved for a merchant account. This could lead not only to disappointed customers but worst, lost sales.
Under these circumstances, the temptation to sign up with the first provider who will actually accept your business can be pretty tempting. But unfortunately, it’s also a really bad idea, considering that there are many other that can get you a high-risk merchant account, and with better rates
The simple reality that it always takes longer to obtain final approval for a high-risk merchant account than it does for a low-risk business is already a hard pill to swallow, what more getting approved for the first time and then discovering that it is a shakedown?
Traditionally, low-risk businesses can expect to be approved within a day or two while high-risk merchant accounts require a minimum of three to five business days to sometimes as long as three to five weeks to be approved.
Why so long? Approving a high-risk business requires a far more extensive investigation into the credit history of both the business and the business owner. Poor personal credit on the part of the owner is one of the several reasons why a business might be classified as high-risk in the first place.
If that’s the case, then you’ll have to submit far more documentation and wait much longer to complete the process as compared to how a low-risk business would.
So, how can some providers even claim to offer “instant approval”? Well, for one thing, it’s not really instantaneous at all.
If you see a provider advertising “instant approval,” there’s usually some fine print included with the offer specifying that approval actually takes 24-48 hours. While that’s a lot faster than the normal timeframe, it’s still not exactly “instant.”
What these providers aren’t telling you is that approval for your merchant account is actually a two-step process. First, you must be approved by your merchant account provider. Second, you must be approved by the acquiring bank or backend processor that is actually going to underwrite your account, and process your transactions.
If you haven’t guessed by now, we highly recommend that you avoid any merchant account provider claiming to offer an instant approval high-risk merchant account. This approval process is incomplete and can easily lead to your account getting shut down shortly after you start using it.
No matter how inconvenient it is for you to wait for the approval process to run its course, in the long run, it’s a worthwhile trade-off to get a fully approved account that will be stable and reliable.
A High-Risk Merchant Account: 4 Things to Expedite the Approval Process
Applying for a high-risk merchant account and earning an approval the next day or sometimes even the next week, for that matter, is not always realistic. There are steps, however, that you can take to expedite the approval process.
- Always be honest
Have full and complete disclosure with your merchant account provider. Attempts to hide a previous business is only going to hinder your chances. These financial institutions have all the means to check your business’ background, and credit history. Needless to say, high risk merchant account providers will not work with you if you haven’t been honest about your processing or credit history.
Remember, getting credit card processing for a business is a win-win situation between the provider and the merchant, and thus, they try their best to give you approval even if you’re a high-risk merchant account holder. Granted that your papers and documentation are valid and honest.
- Gather all the documents needed
Have all the needed documents ready and send it to your chosen account provider in a timely manner. This is for due diligence and underwriting purposes. Even though sending all the needed documents incrementally is still accepted, you might be sending a wrong impression to your provider indicating that you’re somewhat disorganized.
- Thoroughly study fees and red flags
How can you tell if your provider can and cannot work for you? Well, if the provider doesn’t charge any fees upfront until the merchant begins processing transactions then you can already tell that it isn’t a scam.
Do not just settle for the first payment processing company that comes your way. Make sure that the company you go with has an integrated high-risk merchant account payment gateway. It’s also easy to contact different payment processors at the same time to compare rates and services. Better yet, ask around for other high-risk business that you know, for their trusted payments processor.
Keep in mind too that there is no such thing as a high-risk merchant account instant approval, so steer clear of any expectations of instant approval.
It will be best for you to know all these things, and see the terms and conditions before you sign that contract.
4. Trait checklist
Some merchant account approvals take weeks. Nevertheless, based on a number of components, you might get faster approval for your merchant account. Here’s a checklist.
- Do you have a high credit score?
- This can help them identify whether or not you make your payouts on time.
- Do you have funds in the bank?
- This can indicate that your business is stable, and have some money saved for security deposit with the bank.
- Do you have a fully functional site?
- You should have already established a fully functional website by now.
- Have you collected and completed all the needed documents?
- Prepare your documents and submit it all at once if you can.
- Do you have legitimate identification?
- You must ensure that all your documents are up to date.
- Can your business stand for the long haul?
- Show your business plans, profits, and even revenue forecasts to show your business’ stability and growth.