High Risk Merchant Account Underwriting Process

Feb 7, 2024 | High Risk

The merchant account underwriting process can be overwhelming. This is particularly true for high risk merchant accounts, and those merchants who have been declined by traditional banks and aggregate payment processors.

In every industry, some companies challenge regulations and create a bad reputation for those who are legitimate merchants. Due to these untrustworthy few, banks and payment processors see high risk merchant accounts as something to avoid altogether, and in turn, are very restrictive.


In-House Pre-Underwriting For High Risk Merchant Accounts
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Signature Payments understands the difficulties these business owners applying for high risk merchant accounts face, and not only do we make the underwriting process a smooth and streamlined process, but our team of experts are able to offer solutions to virtually any busy type in any industry.

If you’re unsure of what to expect, and if you’re looking for a payment gateway to apply for a high risk merchant account with, keep reading for valuable advice to prepare you for the application and underwriting process for a high risk merchant account.

Keep in mind, however, that all payment processing providers are different, and some of these principles followed during the process is specific to Signature Payments and may differ from one payment processing company to the next.

In-House Pre-Underwriting For High Risk Merchant Accounts

Signature Payments offers its applicants the ease of an in-house team of experts to process their application with pre-underwriting the terms of their high risk merchant account. With the knowledge and experience of working specifically with high risk merchants, we know the struggles you face and how to cater to your unique business needs.

Merchants like loans payday lenders, and those with reputational risk like CBD oil retailers, are going to likely be denied for high risk merchant accounts. These companies are too insecure for most payment processing companies, but where they decline, Signature Payments approves.

As stated above, different high risk merchant account providers have different standards. Although Signature Payments can provide solutions for almost any industry, when moving through the procedure, it is always best to ask up front that kinds of high risk merchant accounts that the provider in question avoids or views unfavorably.

The Ideal High Risk Merchant Account Application

The Ideal High Risk Merchant Account Application

There’s no standard for a perfect candidate. There are, however, a few elements that will speed the application process up. A suitable applicant will already have a solid history of communicating with their customer base directly and a chargeback ratio that is minimal.

While Signature Payments can tend to be more lenient, most payment processing companies look for merchants with a chargeback ratio of under 1%. Some might likely be willing to accept a ratio below 1.5%, provided that the merchant’s history doesn’t show evidence of increasing ratios over time.

There are standards that payment processing providers look for when it comes to underwriting high risk merchant accounts, and they might have a minimum quantity processing threshold of $50,000. Others will willingly board smaller high risk merchants, as long as they fulfill the other underwriting conditions.

Items That Cause Concern Or Raise Red Flags

The red flag throughout underwriting is a bad reputation in transactions. Underwriters may refuse an application or need additional explanation if there’s an indicator of bad practices evidenced by the Better Business Bureau or the Consumer Financial Protection Bureau.

Another sign for underwriters is if the retailer has a background of litigation, negative press, or any other items that indicate poor or business practices. But, past issues might not always be a deal breaker. If you have something on your history that could be construed in a manner that is negative, it’s best to disclose it throughout the application process for your high risk merchant account.

Other red flags include:

  • A consistently high or increasing chargeback ratio
  • Frequently changing or attempting to change processors
  • Bad credit or low credit score
  • Other retailer accounts on a bank statement
  • Financial instability, or main source of earnings coming from a different company
  • Sharing an account with another retailer

What to Anticipate when Applying for a High Risk Merchant Account

What to Anticipate when Applying for a High Risk Merchant Account

After all the documents have been turned in, you might have more work ahead. The underwriters usually acquire insight into your business from these items independently, but they want clarification.

Remember that asking for more documents is neither unusual nor unusual for underwriters to request an interview. This is not a wrong signal, and underwriters are just attempting to understand your business needs and payment history to get your high risk merchant account approved.

Since the underwriting process when applying for a high risk merchant account can sometimes be confusing, it is invaluable to have resources and relevant information to