Why is it Difficult to Acquire a Merchant Account for Credit Card Online Transactions

Applying for a merchant account is not as difficult as you think. However, there are some instances where approval is denied due to the following factors: risk involved, location, absence of physical store, and unstable credit history.

Getting an approved merchant account is not that difficult as long as you have submitted all the minimum requirements. The basic requirements have to be verified by providing additional supporting documents. When documents are complete, the approval time is usually within days or week. However for some reasons, applying for a merchant account is difficult due to the following factors:

Risk involved

An approved merchant account is not always guaranteed. There are some types of businesses that are difficult to get an approval due to the risks involved. The following are three possible risks in merchant account namely:

  • Credit risk

  • Fraud risk

  • Contingent liability risk

A credit risk is the risk an issuing bank takes upon granting a merchant account. One should remember that an approved merchant account is a credit line granted to the merchant whose amount is determined by the bank. A fraud risk is a type of risk common when there is an unauthorized transaction made using stolen credit card or number. This is widespread due to the presence of Internet hackers, which can access personal details and milk funds from business owners. The last type of risk is the contingent liability risk, which is associated with any indefinable service. This is difficult to establish since no proofs can be presented to support delivery of products or services. Sometimes, it is also evident in any business where unexpected closure due to bankruptcy may occur.


Most of the time, offshore businesses will be required to get a high-risk merchant account instead of an ordinary account because transactions are consumed online, which is a bit risky due to absence of client’s signature. With online business, the likelihood of fraudulent acts is highly possible.

Absence of physical store

One of the basic requirements when applying for a merchant account is the presence of local stores where they can set-up the terminal device for the credit card.

Unstable credit history

Although this is not an absolute determining factor for approval, establishing your credit history plays an important role in getting an approved application. With an unstable credit history, there are two possibilities that may happen; either you get disapproved or a higher fee will be imposed. Your account will be categorized as high risk; therefore, fees highly vary from an ordinary business. On the other hand, for new business owners where there is no credit history available; they will have a difficulty because the issuing bank doesn’t have any basis to predict its capacity to pay. Without the data to compare, the bank can’t establish the trend of payment and delinquency, if there is any.

About the Author: Credit card is essential for online transactions. Find out more about how to get an approved merchant account available at: https://www.takecardstoday.com/ to help you increase your sales.

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