If you’re running a business and struggling to get approved for a merchant account—or getting stuck with high processing rates—you’re not alone. Many business owners face this challenge, especially if they operate in high-risk industries, have limited credit history, or simply don’t know what providers are looking for.
We’ll break down why merchant account approvals are tough to get, why you might be facing high rates, and what steps you can take right now to improve your chances and lower your costs.
Why Merchant Account Applications Get Denied
Before diving into solutions, let’s understand the most common reasons why merchant accounts are denied:
1. High-Risk Industry Classification
Certain industries—like CBD, adult entertainment, travel, subscription-based services, or credit repair—are labeled as high-risk by most payment processors. This classification alone can lead to automatic rejections or high fees.
2. Low or No Processing History
If you’re a new business without much processing history, providers may see you as a risk. They can’t predict your performance, so they either deny the application or offer high rates to compensate for the perceived risk.
3. Poor Personal or Business Credit
Yes, your credit score matters—even for your business. A low credit score signals financial instability, which makes payment processors nervous about potential chargebacks or defaults.
4. High Chargeback Ratio
If your business has a history of chargebacks (more than 1% is a red flag), most traditional merchant services providers will either decline you or place you in a high-risk category.
Why You Might Be Paying High Merchant Rates
Even if you do get approved, high fees can cut into your profit margins. Here’s why you might be paying more than you should:
- High-Risk Industry Surcharge: If you’re in a high-risk category, expect to pay higher transaction fees, monthly service charges, and even reserve requirements.
- Lack of Shopping Around: Many business owners settle for the first provider that says “yes.” However not all providers are created equal, and some take advantage of uninformed merchants.
- Flat-Rate Pricing: Some processors use flat-rate models that seem simple but come with higher costs, especially as your transaction volume increases.
What You Can Do to Get Approved and Reduce Rates
Don’t lose hope—there are practical steps you can take to turn things around.
✅ 1. Work with a High-Risk Friendly Provider
Instead of applying with mainstream providers who might reject you, work with merchant account providers who specialize in high-risk businesses. These companies understand your industry and are more likely to approve your application with reasonable terms.
✅ 2. Build Your Processing History
If you’re just starting, consider using alternative payment options like PayPal or Stripe to build your processing history. After a few months of clean transactions and low chargebacks, you’ll be in a better position to negotiate with traditional merchant providers.
✅ 3. Improve Your Credit Score
Take steps to boost your personal or business credit. Pay bills on time, reduce debt, and avoid unnecessary credit inquiries. Even a small improvement in your credit can open more doors with merchant providers.
✅ 4. Be Transparent in Your Application
Don’t try to hide or misrepresent your business model. Be upfront about your products, services, average transaction size, and monthly volume. Transparency builds trust—and trust increases your chance of approval.
✅ 5. Ask About Interchange-Plus Pricing
Instead of settling for flat-rate pricing, ask providers if they offer interchange-plus pricing. It’s more transparent and can be much cheaper in the long run, especially if your business grows.
✅ 6. Negotiate!
Yes, you can negotiate processing fees, monthly minimums, chargeback fees, and more. Don’t be afraid to ask for a better deal—especially if you’ve done your homework and can prove your business is stable.
Final Thoughts
Not getting approved for a merchant account—or getting hit with sky-high rates—is frustrating, but it’s not the end of the road. The key is understanding the reasons behind the challenges and knowing how to work around them. With the right partner, a little persistence, and a smarter approach, you can get approved and keep more of your hard-earned revenue.
If you’re tired of getting denied or overcharged, consider working with providers that specialize in high-risk or hard-to-place merchants. They’re out there—and they want your business to succeed. For more information visit our website Trinity Consultings and talk to our expert team.