Why Do Credit Card Processors Serve Only Certain Types Of Businesses?

If you’re a small business owner, you may have wondered why credit card processors seem to only work with certain types of businesses. You may have also asked yourself whether or not your business is eligible for credit card processing services.

This blog post will discuss the reasons why credit card processors are selective of the businesses they support. It will also provide information on how you can determine whether or not your business is eligible for these services.

Risk

One of the primary reasons why credit card processors are selective of the businesses they support is because of the risk involved. When a credit card processor supports a business, they are essentially taking on the responsibility for any fraudulent charges that may occur. Therefore, they are more likely to work with businesses that have lower levels of fraud.

This means that businesses in industries with high levels of fraud, such as online gambling or adult entertainment, may have difficulty finding a credit card processor that is willing to work with them.

Rest assured that there will always be a merchant account provider for high risk business, which will allow that business to accept payments from its clients seamlessly. More often than not, these merchant account providers will be offshore but will be able to provide the same level of support that any onshore merchant account provider can. 

Compliance

Compliance is another reason why credit card processors are selective of the businesses they support. To protect consumers, the credit card industry has put in place several rules and regulations that businesses must follow. These rules and regulations are known as the Payment Card Industry Data Security Standard (PCI DSS).

Businesses that do not comply with the PCI DSS are considered to be high risk. This is because they pose a greater threat of data breaches, which can lead to consumers’ personal and financial information being stolen. As a result, credit card processors are less likely to work with businesses that do not comply with the PCI DSS.

Chargebacks

Finally, another reason why credit card processors are selective of the businesses they support is because of chargebacks. A chargeback occurs when a customer disputes a charge on their credit card statement. This can happen for a variety of reasons, such as if the customer never received the product they ordered, if the product was not as described, or if the customer was charged twice for the same purchase.

When a chargeback occurs, the credit card processor will refund the customer’s money and then ask the business to pay them back. If a business has a high number of chargebacks, this can be a major financial burden. Therefore, credit card processors are more likely to work with businesses that have low rates of chargebacks.

Determining Eligibility

Now that you know some of the reasons why credit card processors are selective in the businesses they support, you may be wondering how you can determine whether or not your business is eligible for these services. The best way to do this is to contact a merchant account provider and ask them about their eligibility requirements. Merchant account providers are the ones who provide businesses with the ability to accept credit card payments.

While each merchant account provider has its eligibility requirements, there are some general requirements that most of them will have. For example, most merchant account providers will require that your business is in operation for at least six months and that you have a good credit score.

Additionally, most merchant account providers will also require that you have a valid business license and that you are registered with the state in which your business is located. If you meet all of these requirements, then there is a good chance that you will be able to get a merchant account and start accepting credit card payments.

You should also be prepared to answer questions about your business, such as its size, industry, and location. By doing this, you can ensure that you can find a credit card processor that is willing to work with your business.

Keep in mind that even if your business is not currently eligible for credit card processing, this does not mean that it will never be eligible. As your business grows and becomes more established, you may find that you become eligible for these services.

By understanding the reasons why credit card processors are selective in the businesses they support, you can be better prepared when it comes time to apply for these services. By knowing what processors are looking for, you can increase your chances of being approved and getting the services you need to run your business smoothly.