Payment facilitators operate as the main merchant above a host of other, generally smaller merchants. A payment facilitator can process payments for businesses of all industries or of smaller businesses in the same industry.
Why are payment facilitators successful?
Simply put, payment facilitators are a third-party entity working with acquiring banks and merchants to help merchants process payments they otherwise couldn’t. Payment facilitators make money from transaction processing fees at the cost of assuming liability for their merchants. Fortunately, facilitators can choose who they work with and who poses too much of a risk.
Square and Stripe are representative examples of payment facilitators, but the merchant aggregator model is growing in popularity. For example, Airbnb and Uber are examples of merchant aggregators working under the same Merchant Identification Number (MID).
What services do payment facilitators offer their clients?
Payment facilitators take on the responsibility of compliance with all credit card operations requirements set by major card brands. They also provide customer service and technical support to all merchants and help merchants to manage their chargeback rates and instances of fraud.
Getting approved for your merchant account:
Payment facilitators can work directly with a bank to set up a merchant account and utilize fraud-fighting and chargeback prevention services for its sub-merchants. Some payment facilitators should consider opening a sub-merchant account through an account provider. This allows the payment facilitator to pass off some of the liability of its own merchants on to the overarching merchant, though this will result in less profit for the payment facilitator company.
The main benefits of doing this are reduced risk, the ability to use an existing infrastructure, and ease of opening a new account. To get started, you will need to submit an application to a merchant account provider, along with supporting documents that show your reliability as a merchant.
Here’s how to turn an underwriter’s “no” into a “yes!” and get approved
Depending on many factors, you are likely to be denied a merchant account by at least one acquiring bank or merchant account provider—especially as your profits are really starting to grow. No one likes rejection, but do not be discouraged! After all, success is not the absence of failure, it’s perseverance despite it.
Essentially, your application for a merchant account is judged based on risk. Financial institutions that process your payments are agreeing to trust your credibility and that you will remain financially responsible for all business operations throughout your partnership. If, for whatever reason, something goes wrong and you cannot pay money that you owe, your merchant account provider is then left to deal with the mess.
These are some of the most common reasons your application for a merchant account could be rejected, and how to move forward. These points are also essential to consider when partnering with any other businesses whose payments will be processed under your merchant account.
Your business is in a “high-risk” industry.
If your industry is generally considered to come along with a significant amount of risk, your best option is to work with a merchant account provider that specializes in high-risk merchant accounts. This option may be more costly, but the expense is worth it.
The business owner has bad credit or lacks payment processing history.
If you’re afraid your poor credit score will affect your application for a merchant account, you’re probably right. Apply with a provider that specializes in bad credit or high risk, and be willing to accept higher fees and higher rolling reserves. Underwriters will also take into consideration your business plan, you’re overall history of credit and any explanations you can offer as to why your personal or business credit score is lower than it should be.
Your volume is too low or too high.
PaynetSecure, for example, requires a minimum monthly volume of $50,000 because we specialize in high-volume payment processing. Other account providers may accept applications with a lower volume, or deny them because of their high volume.
Either way, be honest about your payment processing needs when applying for a merchant account. Your account will be monitored, and your funds can be placed on a hold if your payments exceed or consistently fall below a certain amount. Your account could also be revoked entirely. Of course, as your business grows and your payment processing needs change, PaynetSecure will work with you and provide the support you need to be successful.
Your business is too young.
Many applications are denied if the business has too little payment processing history. Showing reliability as a merchant is the most important part of your application. Good credit, low risk, and some kind of built-up history will reduce the risk of accepting your application.
Keep in mind that these are only a few of the factors that can affect your merchant account application. For a more information or if you’re ready to apply for a merchant account today. You can also call 702-637-4888 to speak directly with an expert.