Retailers who wish to obtain a merchant account are required go through the underwriting procedure in order to ensure that they are qualified and legitimate merchants. Through completing the underwriting process, merchants are able to obtain a merchant account and implement payment solutions.
Procedure of underwriting
The underwriting procedure incorporates a number of different factors that influence the agreement made between a merchant and a processor. The credit history of the individual applying for the merchant account is considered carefully to determine their credit worthiness. Other factors that are taken into consideration include the type of business entity, the business owner’s rating and the range of clients that the company will engage with.
In the event that the merchant applicant does not sign a personal guarantee, their guarantee is categorized as business credit. As a safety precaution, the acquiring bank is likely to consider the applicants personal line of credit to ensure that the person is not a fraudster.
Furthermore, other factors that determine the end result of the underwriting procedure and the applicant’s success are the merchant’s previous banking history with regards to bankruptcy. If the applicant was previously bankrupt, this will influence the underwriters report.
When obtaining a merchant account, it is imperative that the retailer carefully considers their credit history and ensures that they are credit worthy. It is also advised to enlist the services of a professional consultancy firm to make sure that the entire merchant account procedure is completed in compliance with the jurisdiction’s regulations. Through the assistance of knowledgeable consultants, applicants are able to ensure they complete the procedure in a professional and timely manner.