merchant account with bad credit

How to Get a Merchant Account with Bad Credit

A merchant account is an essential part of any modern business. As more people turn to the convenience of shopping online and use cashless payments for goods and services, business owners must keep up by offering convenient payment methods for their customers. Payment processing capabilities can increase sales while also improving trust between your brand and its clients with improved customer service.

While obtaining a merchant account should be a simple process, many traditional financial institutions and banks reject applications from high risk businesses due to poor credit histories from the company or even from the business owner. However, merchants can still get a payment gateway for credit card processing by discovering a service which specializes in high risk businesses.

Finding a no credit check merchant service provider is very simple these days. A quick search reveals hundreds of companies offering merchant cash advance, merchant accounts, and payment processing for businesses with low credit scores. Companies such as Durango merchant services provide a broad range of options for bad credit businesses to discover, however, choosing the correct provider is extremely important to avoid high fees and improve your credit score over time.

Here are several things to know if you want to get a merchant account with bad credit:

Reasons for Bad Credit

The first thing to understand is why your business has poor credit in the first place. Depending on how your company is structured, banks and financial institutions will look at the credit history of either the business or the business owner. If your personal credit score is very low, this could become a major factor in obtaining a merchant account.

Similarly, if your business has bad credit histories such as many chargebacks, fraudulent activity, or a continually negative balance, this will affect any application for merchant services. The key to finding high risk merchant accounts is to know why your business has been rejected by banks, where your credit score currently stands, and the reasons for your poor credit.

How to Get a Merchant Account with Bad Credit

As previously mentioned, there are a vast array of merchant service providers which offer solutions for high risk businesses. However, it pays to take caution when choosing a provider as there may be some catches, additional fees, or long contracts written into any agreement for a poor credit merchant account.

The best practice is to thoroughly research providers which specialize in high risk industries. Once you have decided on a payment processor, getting up and running is quite quick and straightforward. A typical process may look like this:

  • Decide where you want to open a merchant account. Some businesses may choose to use offshore payment processing as opposed to services within the United States. This could potentially be beneficial as there are typically no credit checks when opening a merchant account overseas. However, fees and charges will usually be much higher than opening an account in the United States.
  • Complete an application with as much detail as possible. A common mistake made by businesses which are concerned about their credit scores is that they tend to omit or change important information when seeking merchant services. While it is tempting to try and make your credit history look better, providing full and accurate information on an application form will allow the merchant service provider to find the best and most appropriate payment processing for your business.
  • Submit all relevant documentation. You will need to send some documentation to support your application. Typically, recent bank statements, company registrations, and other related documents are needed when applying for merchant services. Ensure you have your paperwork in order and ready to send when making an application.
  • Get approved and start credit card processing. Applications can have a very fast turnaround time. At EthosPay, for example, we pre-approve applications within 24 hours and can have your business accepting card payments within 72 hours.

Cost and Fees of a Poor Credit Merchant Account

As you might expect, the fees and charges associated with a high risk merchant account are generally higher than those of low-risk merchant accounts. However, accepting slightly higher setup costs, in the beginning, can save money in the long run.

As your business starts using a payment gateway to accept cashless payments, your credit score will gradually improve. Additional services such as chargeback prevention and detailed reporting are also essential to help your business maintain a good standing with your chosen merchant account provider.

As your credit score improves, you will be in a stronger position to negotiate lower fees and costs associated with your merchant account.

Benefits of a High risk Merchant Account

There are numerous benefits to opening a high risk merchant account. These include:

  • Access to the ever-growing market of clients making purchases with credit and debit cards
  • Convenient payment methods for clients, improving both customer relations and company reputation
  • A noticeable increase in sales and healthier profit margin for your business
  • Access to additional services such as chargeback prevention, in-depth transaction reports, and much more designed to help improve credit scores
  • A payment gateway and credit card processing capabilities for automated payments
  • The ability to apply for additional services such as a merchant cash advance to expand your business

At EthosPay, we specialize in high risk and poor credit merchant accounts for a broad range of industries. Our short application form takes just a few minutes to complete with pre-approval for a merchant account granted within 24 hours. Our 99% approval rate is among the best in the business and we can have your payment gateway and credit card processing capabilities set up and ready to go in less than 72 hours. Our rates and fees are highly competitive and our experts work closely with your business to find a tailored solution for your specific needs. Receive a free quote today by filling in your information on the homepage and see how EthosPay can change the way you do business forever!

merchant account beginners guide

Merchant accounts - the beginners guide

Including the definition of a merchant account, the providers of merchant account, and costs involved with a merchant account.

Read more
mobile merchant account myths

Mobile credit card processing myths

A myth-busting look into mobile credit card processing and the benefits of using this relatively new technology for your business.

Read more

Trusted by 2672 merchants.

We’ve helped match all kinds of businesses with the perfect merchant banking solution.