Instant Approval Merchant Account Guide: How To Get A High-Risk Merchant Account Quickly
The invention of the telegraph in 1837 enabled instantaneous communication across vast distances for the first time. Since then, we’ve become rather accustomed to instant electronic communication. So why, in the 21st century, does it take so long to get approved for a merchant account?
Getting swift approval for a merchant account is uncommon, particularly for high-risk merchants. Accordingly, there are a number of merchant services providers promising high-risk merchant account instant approvals. You may well be tempted by claims of “instant approval” — particularly if your business is considered high-risk. In this post, we’ll explain what “instant approval” really means and why it’s a bad idea, no matter how desperate you are to get a merchant account.
We’ll also delve into how the high-risk merchant account approval process works and what you can do to make it run more smoothly and quickly. Finally, we’ll recommend a few reputable high-risk specialists.
Table of Contents
- Can You Get A High-Risk Merchant Account With Instant Approval?
- Can You Get An Instant Approval Merchant Account If You’re Not High-Risk?
- Why Credit Scores Matter To Merchant Account Approval
- 4 Ways You Can Improve Your Chances Of A Guaranteed Merchant Account Approval
- Is An Instant Approval Merchant Account The Best Choice?
Can You Get A High-Risk Merchant Account With Instant Approval?
Despite those “instant approval merchant account no credit check” ads you’ll occasionally see, it always takes longer to obtain final approval for a high-risk merchant account than it does for a low-risk business. While traditional low-risk businesses can get approved within a day or two, high-risk merchant accounts require a minimum of three to five business days to be approved. The process can take as long as three to five weeks.
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 several reasons why a business might be classified as high-risk in the first place. You’ll have to submit far more documentation and wait far longer for this process to be completed than a low-risk business would.
With providers advertising “instant credit card processing approval,” there’s usually some fine print specifying that approval actually takes 24-48 hours — faster than normal, but not “instant.” What these providers aren’t telling you is that merchant account approval is actually a two-step process. First, you must be approved by your fast approval merchant account provider. Second, you must be approved by the acquiring bank or back-end processor that underwrites your account and processes your transactions. This process takes anywhere from three days to five weeks.
2 Warning Signs For High-Risk Instant Approval Merchant Accounts
Providers offering “instant approval” sometimes take shortcuts with the approval process so that they can get you on the hook for that long-term contract and usually a hefty early termination fee (ETF) as well. What they advertise as “instant approval” (or being “preapproved”) in most cases really means that they’re approving your account — and getting you to sign your contract — before your acquiring bank or back-end processor has determined whether to approve your account. If they ultimately don’t approve you, you may already be up and running with your credit card terminal or payment gateway. At that point, the denial may result in your account being frozen or your funds being withheld. Your account may even be closed altogether, which can get you placed on the Terminated Merchant File (TMF, also known as the MATCH List), which can prevent you from getting approved for any merchant account for up to five years.
Additionally, the sort of instant approval merchant account that advertises to high-risk businesses is also likely to promote “no setup fees.” However, merchant account providers have other ways to get money out of you — while there may be no literal “setup fee,” you’ll likely be charged other fees that make up the difference.
Can You Get An Instant Approval Merchant Account If You’re Not High-Risk?
Again, “instant approval” never actually means “instant.” For merchants who aren’t operating within an industry considered high-risk, final approval may come within a day or two, but it won’t come instantaneously.
However, even if your business is not in a high-risk industry, other factors may still slow down your time to approval. Having a high average ticket amount, being an international merchant, poor credit, or a previous account termination on your record can necessitate you having to provide additional documentation to prove your account-worthiness and delay your final approval.
How To Get Instant Approval Credit Card Processing Without A Merchant Account
Services such as PayPal and Square — known as payment service providers (PSPs) — are not merchant account providers in the traditional sense. What a PSP does is aggregate each of its business users into one big merchant account. Each business using the service becomes a sub-user. That means your business won’t be subject to much scrutiny before approval, and you may be approved within a business day.
Unfortunately, PSPs do not serve businesses in high-risk industries. But for businesses considered low-risk, there’s a lot to like about PSPs. Along with a quick and easy approval process, you won’t have to worry about long-term contracts, ETFs, or setup fees. PSPs offer transparent, flat-rate pricing. They also tend to bundle many different merchant services together (payment processing, a payment gateway, a shopping cart, etc.), making PSPs simple, accessible all-in-one merchant solutions.
However, PSPs have their own drawbacks. Because your business undergoes little underwriting before approval, your individual transactions are scrutinized much more heavily than transactions processed by traditional merchant accounts, where the stringent scrutiny occurs prior to approval, not after. This results in PSP merchants having a higher rate of transactions flagged as fraudulent or otherwise problematic (sometimes falsely so), which can result in having your account frozen or terminated. Also, merchant accounts generally provide a more personalized customer service experience that PSPs can’t match.
Why Credit Scores Matter To Merchant Account Approval
Even if your business is not operating in a high-risk industry, having a credit score under 580 can be a similarly complicating factor in your quest for a merchant account. Merchant account providers perform a credit check on those who apply for a merchant account, and applicants with poor personal credit may well be turned down. Those with poor credit who find a provider that accepts them will often have to sign a longer-term contract (often with an ETF) than they otherwise would. They also face higher processing fees. They may have to deal with a reserve fund as well.
One way to quickly begin processing payments with bad credit is to go with a PSP. These processors won’t check your personal (or business) credit during the approval process. Of course, as we’ve discussed, this option isn’t available to businesses in high-risk industries.
Can You Get A Merchant Account With Instant Approval & No Credit Check?
As we’ve established, there is no such thing as “bad credit merchant account instant approval.” This is definitely the case if you’re trying to avoid undergoing a credit check. However, with third-party processors (such as Stripe and PayPal), approval should come within a day or two, and you won’t undergo a credit check. If you have poor credit, a third-party processor is your quickest route to processing payments; though, technically, you don’t get your own merchant account.
Can You Get A Bad Credit Merchant Account With Instant Approval?
If you have bad credit and are seeking a merchant account, several providers will accept your business. These bad credit merchant accounts do not offer instant merchant account approval, but they deal with credit-challenged applicants regularly, so your approval process shouldn’t be too long or painful.
For an informative guide to getting a merchant account with poor personal credit, read our post on how to get a merchant account with bad credit. The article points you toward several high-risk processors that cater to merchants with bad credit scores. Don’t worry — we’ve vetted these processors for quality!
4 Ways You Can Improve Your Chances Of A Guaranteed Merchant Account Approval
While the approval process is unavoidably a lengthy one, there are steps you can take as a merchant to speed things along and increase your chances for a guaranteed merchant account approval. The following actions serve to avoid the kinds of problems that might lead to delays in getting your account approved:
- Work With A Reputable High-Risk Specialist: The signup process can be sped up by ensuring there is a good chance of approval beforehand. That means finding a partner with a proven track record and experience in your industry. High-risk specialists such as Durango Merchant Services will work with you to ensure that your paperwork is in order and can also work with a network of acquiring banks and processors to find one that will approve your business.
- Be Completely Honest About Your Business & History: Are you selling medical marijuana (in a jurisdiction where it’s legal)? Do you have a personal bankruptcy on your record? Have you previously had a merchant account shut down by your provider? High-risk merchants are often tempted to misrepresent inconvenient facts. Don’t do it! It will lead to you getting turned down for an account — or having your account closed immediately once the processor discovers your dishonesty. Be honest about everything, and you may still be approved for an account.
- Have An Informative Website: If you’re a merchant with a website, having all your relevant policies disclosed publicly on your website for customers to review can help reassure processors of your legitimacy. If you don’t currently have a website, have a look at our preferred small business website builders.
- Have Your Paperwork In Order: You’ll need to provide far more information when applying for a merchant account as a high-risk business owner. If you present all of this information with your initial application, it will save a significant amount of time during the approval process. We recommend that you scan all required documents as PDF files so that you can simply email everything you need to your provider as part of your application. See below for a discussion of specific documentation requirements.
While specific requirements vary from provider to provider, here’s a generic list of the most commonly requested information:
- Completed merchant account application (from your merchant account provider)
- Résumé or CV of the business owner
- Photo ID or passport
- Business plan
- Personal utility bill (used to verify your address)
- Processing statements for at least the last three months (if you’re switching providers)
- Copies of supplier’s agreements (for retail merchants)
- Copies of your personal banking statements (usually for the last three months)
- Personal reference letter from your bank
- Copies of your business bank account statements (usually for the last three months)
- Articles of Incorporation (or sole proprietorship documentation)
- Articles of Association (if applicable)
- Screenshot of your business website’s home page (if applicable)
Is An Instant Approval Merchant Account The Best Choice?
If you’re a high-risk merchant (and even if you’re not), it’s not simple or easy to get approval for a merchant account. If you get turned down a few times, you might feel compelled to sign up with any provider that will take you. Also, the inevitable delays in getting your account approved can make the possibility of “instant approval” seem very tempting.
Resist that temptation. Online merchant account instant approval isn’t what it appears to be, and it can set you up for serious problems down the road. Do a Google search for “high-risk merchant account,” and you’ll find numerous ads from predatory processors looking to cash in on your desperation.
Fortunately, it doesn’t have to be this way. There are reputable providers specializing in working with the high-risk community that will help you get your documentation squared away so that you can be approved by one of their partner processors. We’ve found Durango Merchant Services and Easy Pay Direct to be among the very best of these providers. They both have strong track records of providing high-quality service at reasonable prices. For more recommendations, check out our post on the best high-risk merchant account providers.
For more information on doing business as a high-risk merchant and on merchant accounts in general, check out the following resources!