The Process of Underwriting!
Some of the key things that are reviewed in setting up electronic payments.
Getting a merchant account, is an important step for any businesses that sells services.
Merchants need to understand the following process:
Billing policy – Businesses that bill too far in advance are at greater risk for a chargeback. Knowing how does the business bill is important.
Example: A travel agency who sold travel destination packages six months in advance and cancel the trip.
Business type – Businesses at a higher risk are industries with vague products or services; which are more highly to be examined in detail than those with concrete offerings.
Chargeback history – A business with a lot of chargebacks tied to their old merchant account will have a hard time with underwriting. A chargeback can be issued by the cardholder; if the merchant does not fulfill the product or services being rendered as agreed.
Owner/signer credit score – Credit score plays a big role during merchant account underwriting. However, some processors will review financial statements instead in the case of poor credit. if the original signer’s credit score is insufficient, businesses with multiple partners can also try the application with a different signer.
Requested volumes – This are weighed against the processing volumes requested on the application. New businesses usually start with smaller volumes to build a trustworthy relationship before increasing their processing volumes.
Years in business – Long terms in business go a long way in merchant account underwriting; it speaks for their legitimacy and they are more prepared to respond to something like a chargeback and often have a more stable cash flow.