Having a merchant account is essential for accepting card payments. However, securing and maintaining one – especially in high-risk or regulated industries – requires careful preparation and ongoing compliance. For businesses operating within strictly regulated sectors, obtaining approval for a merchant account can often be challenging.
For businesses in regulated sectors (e.g., gaming, CBD, adult, forex, crypto, pharmaceuticals), acquirers must verify legal compliance, industry-specific regulations, and risk mitigation measures to prevent fraud, chargebacks, and money laundering. One key factor that acquirers consider is the merchant category code, as different codes are associated with varying levels of risk and regulatory requirements.
Underwriting teams scrutinise every detail of your application, including your business model, financials, and operational history. A strong processing history is a key asset, as past performance signals future risk. Demonstrating stable transactions and low chargebacks can significantly improve your chances of merchant account approval.
For businesses requiring high-risk merchant accounts, transparency, financial stability, and proactive risk management are crucial. Clear documentation and robust compliance measures help secure a reliable, long-term processing solution. Ensuring adherence to PCI compliance can further strengthen your case by demonstrating a commitment to protecting customer payment data.
Here are our tips for a fast and successful merchant account application. Don’t rush through it – take the time to get it right!
Why Certain Businesses Are Considered High-Risk
Businesses are categorised as high-risk for various reasons. Typically, these are sectors that have higher-than-average chargeback rates, increased fraud risks, regulatory complexities, or reputational challenges. For instance, industries like gaming and gambling often experience high chargebacks due to disputes and claims of unauthorised payments. Similarly, CBD and pharmaceuticals face strict regulatory oversight, making compliance checks more intensive.
Forex trading and cryptocurrency businesses are also considered high-risk due to market volatility, regulatory concerns, and potential fraud risks. Additionally, adult entertainment businesses face reputational challenges, making many banks cautious about associating with them.
Due to these factors, businesses in these industries must obtain specialised high-risk merchant accounts. This type of account involves rigorous screening, detailed financial reviews, and continuous compliance checks. Therefore, partnering with specialists like CardCorp, who understand the nuances and requirements of high-risk payment processing, is key. Expert providers guide you through the application process, ensure compliance, and proactively reduce risks.
What Acquirers Look for in Your Application
When setting up a merchant account, acquiring banks thoroughly evaluate several aspects of your business:
- Legitimacy: Banks verify your business registration and necessary licences.
- Financial stability: Banks review your financial documents to confirm your business can handle payments responsibly.
- Compliance with regulations: Adherence to Know Your Customer (KYC) and Anti-Money Laundering (AML) rules is essential.
- Risk management: Clear evidence of fraud prevention strategies and chargeback management plans.
- Online presence: A professional, secure website clearly displaying pricing, refund policies, and customer service details.
Clearly presenting these details helps underwriters quickly assess your business, enhancing your chances of merchant account approval.
Preparing Your Documentation
Accurate and complete documentation is essential for successful merchant account approval. Ensure you include:
- Certificate of Incorporation and business licences
- Recent bank statements (last 3–6 months)
- Comprehensive merchant processing history (last 6–12 months)
- Supplier agreements, invoices, and shipping records
- Detailed organisational charts and clear ownership documents
Always submit high-quality, legible documents to prevent unnecessary delays or rejections.
Highlighting Your Merchant Processing History
A comprehensive merchant processing history clearly illustrates your financial stability. Stable processing volumes and low chargeback rates demonstrate reliability, positively influencing approval decisions. Acquirers heavily rely on past data to predict future risk.
Submit clear PDF documents or high-quality screenshots of your processing history. Avoid sending CSV or XLS files, as banks typically do not accept these formats.
Clearly Explain Your Business Model
Transparency about your business model significantly increases your chances of approval. Clearly describe your operational processes, revenue streams, and risk management plans. A detailed business plan or financial summary helps banks easily understand your operations.
Explicitly outlining your business structure and financial plans can accelerate the approval process.
Strengthening Your Online Presence
Your website significantly influences acquirer perceptions. Ensure compliance with Visa and Mastercard standards, clearly showing pricing, refund policies, and customer service details. Implementing robust payment gateway integration and SSL certification is essential for secure transactions.
A professional and secure online presence reassures banks and customers alike, reinforcing your credibility.
Advantages of Partnering with an ISO Payment Provider
Working with an Independent Sales Organisation (ISO), also known as an ISO Payment Provider, offers substantial benefits. ISOs have in-depth knowledge of bank requirements and can customise your application accordingly.
An experienced ISO payment provider like CardCorp simplifies your merchant account approval journey. By proactively addressing common issues, ISOs greatly enhance your application’s chance of success at no extra cost.
Avoiding Common Pitfalls in Merchant Account Approval
Being aware of common application pitfalls helps you avoid delays and rejections when setting up a merchant account. Common pitfalls include:
- Poor quality documents: Always provide clear, high-resolution images.
- High chargeback or fraud rates: Implement clear strategies to manage these risks.
- Insufficient processing history: Provide comprehensive financial documents even if historical data is limited.
- Ambiguous business model: Clearly document your operational processes.
- Regulatory and licensing gaps: Ensure all regulatory documentation is accurate and complete.
Practical Steps to Improve Merchant Account Approval
These practical steps can enhance your success rate when you set up a merchant account:
- Comprehensive documentation: Provide clear, complete, and accurate documents.
- Financial stability evidence: Demonstrate financial health through detailed bank statements and transaction histories.
- Robust risk management: Actively implement fraud prevention and chargeback management strategies.
- Optimise your website: Ensure complete compliance with payment network standards, clearly displaying terms, policies, and secure checkout options.
- Expert guidance: Leverage advice from experienced ISOs like CardCorp to refine your application.
Conclusion
Securing a merchant account, especially in high-risk industries, requires careful preparation, transparency, and adherence to regulatory standards. By providing clear documentation, demonstrating financial stability, and implementing strong risk management measures, businesses can improve their chances of approval and maintain long-term processing reliability.
Partnering with an experienced ISO like CardCorp can make the process smoother by helping you navigate complex requirements and proactively addressing potential challenges. Take the right steps today to secure a dependable merchant account that supports your business growth.