Why Does My Credit Matter When Getting a Merchant Account?

When I was sending an email to a Business Owner today letting him know about our new Referral Partners Program, he sent me this reply below after I clarified how the program works.  He brought up a good point about getting a Merchant Account.

“OK I understand but we don’t even have a terminal as you require credit to accept credit cards which makes no sense in my opinion but that’s here nor there I guess.  I will pass on your name to anyone I know.”

This is a topic that comes up almost daily: “Why does my credit matter to get a Merchant Account?” Here is my reply to Mr. Smith to clarify why these companies need to do these invasive credit checks on the Business Owners that apply for a Merchant Account.

“Thank you Mr.Smith for offering to refer people to us in the future.

I am sorry that I didn’t explain to you when you first contacted me why that is, because I always explain to people who ask.

The reason that they need good credit to accept credit cards is that it’s similiar to short term lending, so they need to determine risk.  Personal credit is a good indication of how clean someone runs their business.

If you charge 10 customers today at $100 each, then your total credit card sales will be $1000 today.  The credit card processor that processes for your business will deposit that amount minus their fees into your bus account in 1-2bus days.

Then they will get their $1000 from Your 10 Different Customer’s Credit Card Companies in 30 days or more.

How much is that in 20-30days of business?

What people usually don’t understand is that the company that processes the business’ customers’ cards IS NOT THE SAME as the companies and banks that issue the cards to the customers.

You would require credit checks too if you were fronting this money so that a business can sell to people who don’t have money on them at the time of purchase or want to get incentives for purchasing through a credit card.

I hope that this helps.

BTW: If you can get a Co-Signer with good credit (doesn’t have to own any of your business), then I can get you processing.”


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