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Thriving with Bad Credit - Best Merchant Account Providers You Can Rely On |
It may be hard to find merchant account providers who will work with you if your credit isn't absolutely perfect.
That doesn't mean you don't have choices, though. Yes, you do.
There are a lot of companies that work with merchants (business owners) who have bad credit. The best part is that as you build your credit card processing history, you may be able to get better rates in the future.
Find a payment processing company that works with merchants who have bad credit? Read this to learn everything you need to know. First, though, we want to tell you about the best companies we know that work with businesses like yours.
Easy Pay Direct is a standout option for businesses with bad credit. Their high-risk merchant account services are tailored to meet the needs of companies that may have struggled to secure payment processing solutions elsewhere.
One of the key strengths of Easy Pay Direct is its robust risk management tools, which help to mitigate potential issues before they become significant problems.
This proactive approach ensures smoother transactions and reduced chargebacks, which is critical for businesses with less-than-perfect credit histories.
Additionally, their transparent pricing model with no hidden fees makes it easier for businesses to manage their finances.
- Specialized in high-risk accounts, making it easier for businesses with bad credit to get approved.
- Robust risk management tools help reduce chargebacks and potential fraud.
- Transparent pricing with no hidden fees.
- The application process can be lengthy and requires detailed documentation.
- Monthly fees can be higher compared to some other providers.
- Customer service can sometimes be slow in response during high-volume periods.
eMerchantBroker is renowned for its dedication to serving high-risk businesses, including those with bad credit. They offer tailored solutions that cater to the unique challenges faced by these businesses.
eMerchantBroker excels in providing a variety of merchant account options, including high-risk merchant accounts, which are designed to handle industries with higher chargeback rates.
Their competitive rates and flexible terms make them an attractive option for businesses looking to stabilize their payment processing.
Furthermore, eMerchantBroker offers excellent customer support, guiding clients through the complexities of managing a high-risk merchant account.
- Specializes in high-risk industries, increasing approval chances for businesses with bad credit.
- Offers competitive rates and flexible terms tailored to high-risk businesses.
- Strong customer support with knowledgeable representatives.
- Setup fees can be higher compared to other providers.
- Monthly fees and transaction costs may vary depending on the risk level of the business.
- Some customers report longer processing times for account setup.
Dharma Merchant Services stands out as an ethical and customer-focused merchant account provider, even for those with bad credit.
While traditionally known for their support of socially responsible businesses, Dharma also provides solutions for high-risk accounts. Their transparent fee structure and commitment to fair pricing make them a reliable choice.
Dharma Merchant Services also emphasizes excellent customer service and support, ensuring that businesses are not left to navigate their financial challenges alone.
Their approach to merchant services combines ethical business practices with practical solutions for those with less-than-ideal credit scores.
- Ethical and transparent fee structure with a focus on fair pricing.
- Excellent customer service and support, offering guidance and assistance.
- Supports a wide range of industries, including high-risk sectors.
- May have stricter approval criteria compared to some other high-risk providers.
- Initial setup can be more involved, requiring detailed financial information.
- Higher fees for high-risk accounts compared to their standard accounts.
A merchant services provider is a business that facilitates credit card and other payment processing for companies.
When it comes to bad credit merchant services providers, these are specialized entities that cater specifically to businesses with less-than-ideal credit histories.
Contrary to what many business owners might believe, it is entirely possible to find a merchant account provider even if your credit isn't perfect.
Numerous companies are equipped to assist businesses facing credit challenges.
Merchant account providers primarily offer services that enable businesses to process payments for their products and services.
Essentially, a merchant account acts as a holding tank for the money earned from sales.
Upon approval of a sale, funds are transferred from the customer's account to the merchant account, where any applicable fees are deducted before the remaining amount is sent to the business's bank account.
Many providers also offer payment processing services, allowing business owners to manage all their payment needs in one place, which can be very convenient.
Merchant services providers often extend beyond basic payment processing, offering additional services such as:
- Loyalty and gift card programs
- ATM placement and maintenance
- Business funding (working capital)
- Payroll and bookkeeping services
- Inventory tracking and management
Various factors can necessitate the need for a merchant services provider that caters to businesses with bad credit.
Business owners with low credit scores will find that many providers consider their personal credit history when assessing risk.
If you or your business have filed for bankruptcy, you will likely fall into the bad credit category.
Fortunately, bankruptcy does not stay on your credit report forever—Chapter 13 lasts seven years, while Chapter 7 remains for ten years.
It's important to be aware of your FICO credit score. Scores of 580 or below may classify you as a credit risk.
Established businesses with a payment processing history may fare better, but new businesses with low FICO scores may encounter difficulties.
Judgments from criminal or civil courts, or liens, can significantly impact your credit. However, if you're making timely payments on a lien, there's more leniency compared to unpaid taxes.
Some merchants with bad credit opt to use payment aggregators like Stripe, PayPal, or Square instead of traditional payment processors.
While these aggregators provide necessary payment processing services, they share a single master merchant account among multiple businesses.
This can be risky if one business accumulates too many chargebacks, potentially freezing the funds of all merchants under the account.
It's generally safer to work with a merchant services provider that offers dedicated accounts and individualized payment processing services.
When selecting a merchant account provider for bad credit, keep the following in mind:
As a business with bad credit, you'll be considered high-risk.
While this label means higher rates and fees initially, improving your processing history can lead to better contract terms or opportunities to find providers with more favorable rates.
Expect to sign long-term contracts due to your high-risk status.
Ensure all fees and terms are clearly explained before signing, and be cautious with contracts for payment processing equipment to avoid excessive costs.
High-risk merchants may face rolling reserves, where a portion of sales is set aside monthly as a cushion against chargebacks.
These funds are held for six months before being released back to the merchant, a process that continues until reserves are no longer needed.
Though obtaining a merchant account with bad credit involves more steps, it is achievable.
Follow these tips to get started:
- Research MSPs specializing in bad credit merchants and ensure they meet your needs.
- Compare quotes from your top choices to find the best deal.
- Negotiate for favorable terms, such as lower processing rates or waived fees.
- Submit your application and all required documentation.
- Once approved, thoroughly review the contract and ask questions about unclear terms.
With patience and diligence, you can secure a merchant account even with bad credit, enabling your business to process payments efficiently.
Facing the challenge of being labeled high-risk in credit card processing? Brace yourself for increased costs and a few more hurdles along the way.
Here's a detailed look at what to expect.
As a high-risk merchant, you'll likely encounter higher fees when setting up your merchant account and securing payment processing services, at least initially.
Monthly and annual fees from merchant service providers are common, and you might also face application or approval fees.
Be vigilant about hidden fees—always inquire about these before signing any contracts.
Expect transaction fees to be nearly double compared to standard-risk merchants.
While some providers offer tiered pricing, opting for interchange-plus pricing can be more transparent and often more economical.
High-risk merchant accounts often come with a cap on how much you can process monthly. Exceeding this limit might result in frozen funds until the end of your billing cycle.
To avoid this, be upfront about your expected processing volume each month.
Transparency is crucial in the credit card processing industry, and being honest with your merchant service provider can lead to better cooperation and solutions.
Top high-risk merchant account providers recognize the challenges you face and often offer additional services to help you, such as:
- Chargeback Protection: Assists in managing excessive chargebacks.
- Chargeback Prevention: Helps identify and mitigate potential chargebacks before they occur.
- Fraud Protection: Detects potential fraud cases that could lead to chargebacks.
A poor credit score today doesn't doom you forever. With diligent effort, you can improve your credit and eventually qualify for a standard-risk processor with more favorable terms.
In the meantime, choose your bad credit merchant account provider wisely. Ensure they come highly recommended and consider the ones we've highlighted here.
- Easy Pay Direct: Offers flexible options and a streamlined application process, making it a strong contender for businesses seeking to overcome credit hurdles.
- eMerchant Broker: Known for its specialized services catering to high-risk industries and bad credit scenarios, providing robust support and customized solutions.
- Dharma Merchant Services: Renowned for its transparent fee structure and commitment to ethical business practices, appealing to those who value transparency and fairness.