What is a merchant account?

A merchant account is a specific type of bank account that allows merchants to accept payments. Typically, a merchant account is used for credit card and eCheck processing, but it can be used for a variety of payment processing needs.

To get a merchant account, one must apply with a merchant account provider. These merchant account providers work with acquiring banks, such as Chase and Wells Fargo, to provide merchant accounts to businesses looking to process credit card payments.

There are multiple types of merchant accounts depending on how the bank categorizes the merchant's industry. If the merchant account is used for card not present (CNP) or e-commerce transactions, it must be integrated with an online payment gateway. Otherwise, a physical terminal is required to capture payment information.

Easy Pay Direct works with all kinds of merchants, including what the banks call "high-risk” merchants. These merchants happen to be in an industry that the banks label as high-risk, which means that they are more likely to experience chargebacks, disputes, and fraud.

The most common reason for this is card not present transactions which present a higher risk of fraud. These merchants can have a particularly hard time finding a high-risk merchant account because a lot of payment processors refuse to participate in high-risk processing.

Even if these merchants find a “high-risk payment processor,” they can still frequently deal with holds or freezes on their money and shut down merchant accounts.

This is where Easy Pay Direct saves the day by finding them a high-risk merchant account provider that wants to work with their business and providing them with all the resources to meet their high-risk credit card processing needs.

Easy Pay Direct provides merchant accounts specifically tailored to a merchant’s industry. We do this by leveraging our banking relationships to apply for merchant accounts on your behalf.

However, we do not just apply for any merchant account; we use providers who want to work with your business model and underwrite their merchants. This is important because it ensures that a provider gets to know who you are and your business model before working with you, so they know what to expect moving forward.

This strategy guarantees that we find a merchant account provider that wants to work with you, making the likelihood of holds, freezes, and shutdowns much less, and providing stable credit card processing.

Another benefit is that you get to avoid the nightmare that applying for merchant accounts can be. Not only do most merchant account providers do very little underwriting, but it can also take many applications before you find a merchant account that is good for you.

Each application that you send out hurts your chances of getting approved for the next because multiple applications make you look desperate to a provider, which they perceive as high risk.

After we set you up with your first merchant account, we recommend getting an additional merchant account if you have over $250,000 in sales volume a year. This is to ensure stable payment processing.

Even though Easy Pay Direct takes all the precautions to prevent you from experiencing a hold, freeze, or shutdown, we can never know how banks might act. If they hire someone new or implement a new algorithm, your account could have action taken against it.

If you have a second merchant account that is already up and running and processing payments, you can pivot your revenue stream to this account and avoid holds, freezes, and shutdowns altogether.

All of this may seem complicated and a lot of work, but it would be better if you were doing this on your own. However, if you are working with Easy Pay Direct, we manage all of this to make your role very easy. We even assign you your very own Certified Payment Specialist (CPS), who will monitor your merchant accounts for you, giving you one point of contact for all of your merchant processing needs.

The first step on your path to a new merchant account is starting the Easy Pay Direct application, or if you would rather chat with someone to find out more, call us at (800) 805-4949*. We can get you set up in as little as 2 DAYS!

*Hint: This is easier because we can fill out your application for you!

• High Risk
• CBD & Hemp
• Enterprise
• Retail
• Mobile
• Online Gateway

At Easy Pay Direct your journey will begin with your application which we use to collect information about you and your business to match you with the right merchant account provider. From there, you will be connected with your very own New Client Specialist (NCS) who will help you complete this application and will be your contact to answer all of your questions.

Once we have the necessary information and have assessed your business model, you will be classified as a Gold, Platinum, or Diamond merchant based on your unique payment processing needs.

After this, you will be introduced to your Certified Payment Specialist (CPS), who will be your one point of contact for all of your payment processing needs. This ensures that when you call, you are talking to someone you know and who knows you and your business. They will apply for merchant accounts on your behalf and help you set up your new accounts and online payment gateway.

After that, you will be ready to start accepting payments. Your CPS will monitor your accounts and contact you whenever you want to chat or if they need to alert you of something that requires your attention, in addition to annual merchant account reviews.

For a more in-depth look at factors impacting what makes certain businesses high risk, let’s look at some of the top variables individually. Some of the high-risk factors listed above may seem arbitrary, but a business owner can control a few important elements of a company’s risk profile. Knowing what they are is important so you can proactively manage them.

Processing History

If your business is already accepting credit cards, then you are building a history that plays a part in your risk profile.

Three to six months of processing statements are enough to reveal risk-related trends in your processing activity, starting with whether you are actively taking credit card payments.

Processing history reveals factors like your chargeback ratio and refund ratio. It can also provide a snapshot of how fast your company is growing and whether your business is cyclical. Your processing statements also reveal some information about your customer profile, such as what percentage of your sales are international and what types of cards your customers use. Credit cards, debit cards, prepaid cards, etc. all have different risk implications.

Chargeback Activity

A chargeback happens when a cardholder reports that a charge on their card should be removed. A few of the most common reasons include:

• Unfamiliar charge
• Unfulfilled purchase
• Product not as described
• Fraud

Managing Chargebacks: Not only is a high chargeback ratio a risk concern for the processor, but it is also monitored by the major Card Brands (Visa, Mastercard, Discover, and American Express). An out-of-control chargeback ratio can result in your authorization to accept cards being revoked.

Often, when there are a lot of chargebacks, the reason codes can help identify what strategies will improve the chargeback ratio. For instance, the descriptor (the business information that appears on the cardholder’s statement) may need to be changed if many chargebacks are filed due to unfamiliar charges.

Personal Credit Score

A high personal credit score indicates that you manage money, credit, and personal financial risk well. That makes you the kind of person financial institutions want to work with.

Your personal credit score affects the business risk profile because the processor assumes you will handle the business finances similarly. They also depend on you to be responsible for any financial obligations if the business fails for any reason.

Regarding high-risk merchant accounts, a lower personal credit score can be considered together with other factors to offset the potential negative impact on application approval. For instance, strong financial statements can minimize the impact of a low credit score.

Bank Statements

Similar to processing statements, business bank statements tell a story. They reveal whether you keep a healthy balance in case of unexpected costs, like a chargeback, and what kind of operating margin you have available.

If you operate a high-risk business on a narrow margin, processors are more likely to impose a reserve on your merchant account. A reserve is a percentage of your sales that is held in an escrow account to cover expenses if you default on fees.

Most reserves are operated on a six-month rolling cycle, and reserve funds held for at least 180 days can be released. Other reserves are set with a cap. Once that limit is met, no additional reserve funds are collected.

Just as all processing accounts are not created equal, not all high-risk payment processors are suited to every business profile. Many high-risk processors prefer to work with one type of industry or business model over another.

It’s crucial to work with an experienced high-risk payment provider who can help match your business with the right back-end bank. We are equipped to leverage our extensive industry relationships and processing knowledge to help make your high-risk payment processing journey safe and easy.

As you consider which high-risk payment provider is the right fit for your company, it’s important to be informed about what the provider is really offering. Just because they are ‘high risk’ doesn’t mean they offer the specific features your high-risk business needs.

World Class Support

It’s essential to have a support team that is experienced and knowledgeable. From solving your processing dilemmas to integration support and helping to handle a processor risk inquiry, you need a team that’s there for you throughout your processing journey.

Industry Categories and Business Models

Be sure the processing partner you choose can support your industry and business model. The right provider knows which processors are actively accepting applications for businesses like yours.

Secure Payments

Your processor must have proper industry security certifications and be equipped to help you obtain them. Verify that your partner has strategic fraud prevention tools and chargeback mitigation options.

Custom Integration

Integrations can be a headache. It’s important to choose a provider with a wide range of integration options to help troubleshoot hang-ups along the way.

Easy Pay Direct is a one-stop merchant account provider and payment gateway. We offer direct integrations to the top shopping carts in the industry, as well as documentation and support to make your custom integrations easier.

With our patent-pending load balancing system, not only is your processing safe and secure with Easy Pay Direct, but it’s also easy to manage multiple merchant accounts all in one place.

It all starts with an application. Because this is a high-risk application, several documents are required to complete the submission. Known as “KYC” or Know Your Customer documents, many of these items are required by law. While the sensitive nature of some requested items may feel invasive, they are necessary.

Here are the most common items to have on hand when you submit your application:

• Driver’s License or passport
• Last three months of business bank statements (if your account is new, personal bank statements may be used to supplement any statements you don’t have yet)
• Last three months of processing statements (all current processors!) if available
• Articles of Incorporation (a Secretary of State business name filing may be sufficient if the business is not incorporated)
• EIN or social security number confirmation (IRS letter SS-4 or an I-9)
• Void check for the business bank account where deposits will be made

Once your application is submitted, the processor’s underwriting team will review it along with your supporting documents. If everything is in order, you should have your approval in as little as 3 days, although the process can take a couple of weeks. The best way to help speed things along is to promptly provide any additional documentation or information requested by the underwriting team.