Underwriting tips to get your merchant account ready for processing FAST!
When signing up for a traditional merchant account, you will go through the Underwriting process.
This process allows the back-end banks facilitating your merchant account to understand your business model.
This ensures that you have much more stable credit card processing, drastically reducing the chance of facing a reserve, held funds, or an account shut down.
Below are most of the items asked for during the Underwriting process and what they are.
Drivers License or Government ID → learn more
ID to validate who you are.
3 Months most recent bank statements → learn more
Sometimes up to 6 months are needed, this all depends on your business model. Each type of business has different risk factors, which may require additional documents.
Last 3 months of processing statements → learn more
This is to show that your business is actually doing the amount of revenue you are trying to get approved for. In certain instances, such as startups, this is not needed and we can still get your account approved.
Recent Tax Returns → learn more
Recent tax returns are not always needed. This depends on the risk profile of the business and the person applying for a merchant account.
Voided Check → learn more
The voided check allows your funds to be deposited into your bank account, it also helps to verify that the bank account belongs to the business owner.
Customer Agreement or Client Agreement → learn more
The customer agreement or client agreements is typically used for service based or MOTO business types. For example, if you sell a coaching program, you need to have an agreement stating what the customer is receiving for their purchase.
Why is Underwriting essential, and what role does it play in having a reliable merchant account?
To understand this, we need to look at a few key things.
Every year, millions of merchant accounts are shut down, disrupting business owners’ ability to process payments.
Why does this happen?
As a consumer, you can dispute a credit card charge up to six months after the fact. If a dispute arises, the money is pulled from the business’s account, leaving the business owner to fight the charge.
If the business has closed and a charge is disputed, the credit card processor is on the hook for the refund.
Consider this: the risk to the processor is a combination of the likelihood of your business closing, the chance of chargebacks, and your sales volume.
There are two main ways processors manage this risk:
First, the aggregator model used by companies like Stripe, PayPal, and Square.
This model allows quick setup with minimal vetting, leading to rapid account freezes or closures when issues arise.
This is not inherently good or bad; it’s just how their model works.
Unfortunately, this has led to millions of businesses that use Stripe having sudden account terminations and held funds.
Second, there’s the underwriting model, which is less common because it’s more complex but drastically reduces the frequency of account issues.
At Easy Pay Direct, we specialize in effective underwriting with the right banking partners.
We take the time to understand your business operations thoroughly and board you with our banking partners that do – so account issues rarely happen.
Our approach allows you to maintain more control, minimize disruptions, and focus on business growth.
In addition, we built a gateway that allows you to put multiple merchant accounts into it- and automatically distribute your volume across them.
That way, if one of your accounts gets shut down or has an issue – the others are still up and running.
Combined with our extensive experience across various industries and dedicated customer service, we ensure greater stability and reliability for your business.
Choose Easy Pay Direct for the fastest safe way to process payments.