Getting payment processing approval right the first time matters more than most businesses realise. Here’s a hard truth… About 37% of merchant account applications from small businesses get denied initially. That is NOT a little percentage. That’s A LOT of businesses missing sales because their documents were messed up. The good news?
Photo credit: Unsplash
The majority of those denials can be prevented. By following a comprehensive checklist, getting payment processing approval is much easier – even if you run a high-risk business in industries like peptides, supplements, and nutraceuticals.
Here’s what’s inside:
- What Is Payment Processing Approval?
- Why Most Applications Get Rejected
- The Payment Processing Approval Checklist
- How To Speed Up the Approval Process
What is payment processing approval?
Payment processing approval is the underwriting process that takes place when a merchant applies to accept card payments. An acquiring bank or payment processor evaluates application information ranging from business paperwork and credit history to website validation and chargeback potential.
Think of it like applying for a business loan.
Who owns the business? Is the website legit/legal compliant? What’s your financial history? How likely are you to engage in a chargeback dispute? Get these questions right and you’ll get approved faster. Leave one off and you can slow your application down – or even have it denied.
Why most applications get rejected
Understanding why applications fail is the first step to fixing them.
The most common reasons for rejection include:
- Incomplete or mismatched documentation
- A website that’s missing required compliance pages
- A high projected chargeback ratio
- Poor or limited credit history
- Operating in a flagged industry without the right supporting paperwork
The annoying thing? Most of these are easily avoidable prior to application. Businesses just don’t know what to look for until it’s too late.
And the cost isn’t just the rejection itself…
Issuers reject approximately 10% of ecommerce dollars. Dollars that are leaving your door before you’ve even accepted one transaction.
The payment processing approval checklist
This is the section to bookmark and work through before submitting any application.
There’s one item under each heading below that underwriters consider. If you check all of these boxes prior to applying your chances for a quick, hassle-free payment processor approval increase significantly.
Business documentation
Processors must know 100% who they are dealing with. All documents must be legit.
Make sure these are ready before applying:
- Government-issued photo ID for all business owners
- Business registration certificate or certificate of incorporation
- EIN (Employer Identification Number) or relevant tax ID
- Voided business check or recent bank statement
- Last 3x months of processing statements (if the business has any)
Pro tip: Everything name/delivery address related MUST correspond on all documents. If there is one letter off on a voided check versus the application they will deny it instantly…. PERIOD.
Website compliance
Your website is your window dressing for underwriters. If it appears to be half done they will judge your application accordingly.
The following pages need to be live and easy to find before applying:
- Clear product or service descriptions
- Refund and return policy
- Privacy policy
- Terms and conditions
- Contact information (phone number, email, or both)
- Shipping and delivery timeframes (for physical products)
Publishing these pages shows activity before you start signaling. It demonstrates transparency and professionalism, two traits underwriters seek.
Financial health
Credit history is examined carefully by processors to assess overall risk. Having good financial history will help get you approved faster.
Here’s what to have prepared:
- 3 to 6 months of business bank statements
- Proof of consistent and positive cash flow
- Business credit history (personal credit history may also be reviewed)
Caution: New businesses with no processing history are viewed more strictly. A clean bank statement package and good creditworthiness can mitigate this greatly.
Chargeback management
One of the quickest ways to have your application denied is with a high chargeback rate. Underwriters see this as a signal that you cannot manage disputes.
71% of businesses faced attacks related to payment fraud in 2023. Processors understand fraud results in chargebacks and chargebacks cost money. They want to know there are preventative systems in place.
Show chargeback management is taken seriously by:
- Documenting refund procedures clearly on the site
- Having a fraud prevention system or tool in place
- Keeping chargeback ratios below 1% wherever possible
- Using 3D Secure (3DS) customer authentication at checkout
PCI DSS Compliance
This is the one that catches most businesses off guard.
A mere 14.3% of companies achieved PCI DSS compliance in full last year. Yet PCI compliance is absolutely mandatory for payment processing approval. Websites and checkout infrastructure must be 100% PCI compliant ahead of application submission.
This includes:
- SSL certificate installed and active on the site
- No storage of cardholder data without proper encryption
- A secure and vetted payment gateway
- Regular security scans and vulnerability testing
Failure to complete this step will not just delay your application. It will outright deny you the ability to appeal.
How to speed up the approval process
Doing everything above already puts you far ahead of other applications. However, there are some extra steps you can take that will shave time off your approval.
Use a processor that specialises in your industry. Some payment processors don’t cater for all industries. If you’re in a high risk niche, using a specialist processor can eliminate a lot of unnecessary hassle. They’ll know what documentation is needed and how to get the application accepted.
Submit all documents at once. The number one reason for delays is incomplete applications. Don’t wait for someone to ask you for something, submit it with your original application.
Be consistent. All names, addresses and business information should be identical on every form. Inconsistencies, no matter how minor, alarm underwriters.
Make sure your website is compliant before you apply. It bears repeating. Applying with a website that lacks the required policy pages is asking for delays — if approved at all.
That’s a wrap
Payment processing approval doesn’t have to be a slow or painful experience.
If your ducks are in a row (clean docs, compliant website, healthy finances, proactive chargeback strategy) most apps will zoom through surprisingly quickly.
Complete each line item on this checklist prior to submission. The reason why…as rejection rates will attest…. most businesses don’t submit a DOA business. They simply aren’t READY.
Now there’s no excuse not to be.
Monica Costa founded London Mums in September 2006 after her son Diego’s birth together with a group of mothers who felt the need of meeting up regularly to share the challenges and joys of motherhood in metropolitan and multicultural London. London Mums is the FREE and independent peer support group for mums and mumpreneurs based in London https://www.londonmumsmagazine.com and you can connect on Twitter @londonmums
