What to Do if Your Business is Declined Card Processing
If your business experiences a decline in card processing, it can be a significant setback. It is essential to understand the reasons behind the decline and take appropriate action to address the issue promptly. Here are some steps to follow if your business encounters this problem:
1. Investigate the cause: Start by analyzing why your card processing has been declined. Look for any potential issues with your payment gateway, merchant account, or banking processes that may have contributed to the problem.
2. Contact your payment processor: Reach out to your payment processor to discuss the situation and seek guidance on resolving the issue. They can provide insights into the decline and help you find solutions.
3. Review your merchant account: Assess your merchant account to ensure that it is in good standing and compliant with all relevant regulations. If there are any outstanding issues or discrepancies, address them promptly.
4. Verify customer payment details: Double-check the payment information provided by your customers to ensure its accuracy. Invalid or expired card details can lead to processing declines, so verifying this can help prevent future problems.
5. Offer alternative payment methods: Consider offering alternative payment options to your customers, such as mobile payments or online wallets. This can allow for smoother transactions and provide customers with more flexibility in paying.
6. Improve your payment processes: Evaluate your payment processes and identify any areas of improvement. Streamline your procedures to make them more efficient and reduce the chances of future declines.
7. Enhance customer communication: Communicate openly with your customers about the decline and any necessary steps they can take to resolve the issue. Transparency and clear communication can help maintain positive relationships with your customers.
8. Monitor and analyze: Continuously monitor your card processing to identify any recurring issues or patterns. Regularly analyze your transactions and seek feedback from your payment processor to make informed decisions and prevent future declines.
Experiencing a decline in card processing can be challenging for any business. By following these steps and taking proactive measures, you can address the issue effectively and minimize its impact on your operations. Remember to stay diligent and responsive to ensure smooth and reliable card processing for your business.
Starting a business has financial complexities. It can feel like a minefield, so new business owners often approach their existing bank for funding, business bank accounts, and card processing. But what if your application is declined?
Here, we’ll explore working in ‘high risk’ industries and how to choose the right bank for your needs.
Allow me to introduce myself — I’m Libby James, Co-founder of Merchant Advice Service. We specialize in helping business owners who have been terminated or declined card processing, which is common when starting a company. I’ve successfully secured alternative card payment facilities for high-risk businesses, and I’d like to share my tips.
Card Processing Explained
Merchant Services has grown significantly, with many businesses accepting card payments. There are two categories of card processing — face to face payments and customer not present transactions.
Face to face payments require a Chip and Pin Terminal and Merchant Account. The Merchant Account authorizes payments and moves funds.
Customer not present transactions include telephone payments and eCommerce sales. Both rely on a Merchant Account to authorize payments and a Payment Gateway to encrypt customer card data.
What to do if Your Card Payments Application is Declined
Your card processing application can be declined for various reasons. It’s crucial to determine why the bank rejected your business before seeking alternatives. Here are possible explanations:
1. Adverse credit: Previous companies and personal credit are considered when reviewing a new card processing application.
2. High-risk industry types: Examples include travel agents, furniture distributors, pharmacies, and tech companies. The list might surprise you.
3. No processing history: Some banks require a solid processing history before considering applications, particularly for higher risk sectors.
4. Business plan/documents: A firm business plan and relevant paperwork, such as terms and conditions, are important for new companies. Banks struggle to accept applications without these.
Why is Your New Company Deemed High Risk?
Applications are often declined because they fall outside a bank’s acceptance criteria. Historical chargebacks and fraud within a sector are key factors determining whether a company is high risk.
Chargebacks occur when customers raise complaints and receive refunds. It’s your responsibility to contest these issues and recover funds. Terms and conditions and a complaints procedure play a significant role in the application process for new businesses.
Can You Get an Account Elsewhere if You’ve Been Declined?
Just because one bank rejected your application doesn’t mean another won’t want your company. Determine why your application was declined and approach alternative card processors accordingly. For example, if your credit caused the rejection, disclose your credit history on the next application.
Each bank has individual criteria, so it’s important to find one suitable for your company. Unbiased Brokers can help you establish the best fit, as they are up to date with bank criteria.
Terminated Accounts for New Business
Challenger banks like PayPal offer quick setup times for payment processing. However, they often terminate new or smaller businesses after a short period. Your notice period depends on your existing bank, and immediate termination can be a headache for new companies. It’s essential to find cost-effective and suitable card processing.
What to Expect when Using an Alternative Payment Processor
While using a well-known and reputable bank is ideal, it may not be an option for certain industries. When looking for alternative payment processors, consider service levels and security for online trading. Providers who accept higher-risk business applications may require additional paperwork. They might also impose a rolling reserve on your account.
What’s a Rolling Reserve?
A rolling reserve is a deposit that counters payment processing risk. The bank sets a reserve percentage of processed funds that remains on your account for a few months. It protects both your business and the bank, serving as a safety net.
Cost of Card Payments with Alternative Processors
Processing costs with higher risk banks may not be as high as you think. When approaching banks, bring a copy of your quoted costs. This helps manage expectations and potentially negotiate lower fees.
When approaching new providers, consider the reasons your previous applications were declined. Understand the potential issues banks may have and address them in your new application:
1. Have a detailed business plan and strong financial projections.
2. Ensure your business fits within a bank’s risk appetite.
3. Provide proof of your chargeback procedure and Terms and Conditions for high-risk businesses.
4. Be open to terms like Rolling Reserve or longer settlement times.
Present your application in the best possible light to increase your chances of passing underwriting checks. Prepare all necessary paperwork, do thorough research, and be willing to seek alternatives if denied.
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
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