Merchant Account Services in Canada

There are allotting of reasons, all valid, why a credit card company or rather Merchant Services Provider will not accept an application.  There are just as many components that allow merchants to offer credit cards as a method of payment to their customers.  But when looking at declined applications, it is consistent why and when applications are declined.  One can be declined for any of the following reasons, not to say they can’t be absolved, but here are the most common

• Restricted or Prohibited business type
• High risk associated with business profile
• Open Bankruptcy
• No credit or poor credit without financial or “co signer” support
• New business, from home, high ticket prices
• Not enough or inaccurate support documentation
• History of fraud or excessive chargeback’s

I have found, in my personal history whilst working with Merchant services providers, hosts and member branches, that sometimes, an application that has been declined, maybe approved elsewhere….this was always strange to me as I do my best at all times to get people up and running!  So I decided to take a deeper look into why these applications that we’ve declined, with what seemed to me to be good reason, are getting approved some where else…..not just any where else, but one North American company specifically…

We use two or three different credit card providers, from the list of the top 5 biggest in Canada, so when I get dually declined and a merchant finds services with another company, it is usually with a stipulation.  When it is not, it is always the same provider who is the absolute largest in North America.

So these providers who are essentially lending money to merchants are so careful with who they provide services too, that the only one company who will approve them is also the largest.

Just like any business “it’s all numbers” and when you are the biggest provider with the most customers and largest amount of transaction volume coming in, you can pretty much handle the “loss” that these more risky accounts may present.

In addition to sheer power of volume, merchant providers may approve an “iffy” account with a stipulation.

Some examples of stipulator approvals are as follows:

1. Funding delay: the provider will “hold” your deposits for 5 – 10 business days in order for them to fully clear without costing them.
2. Reserve fund: sometimes the provider will request a dollar amount (some times up front, sometimes an accumulative system based on per transaction) be put aside so if there are issues in the future, the provider is protected with a bank account for the merchant, of their own.
3. Limited volume: another option is for the provider to put a limit or cap on what the merchant can accept in a day, this way they cannot accumulate any dangerous amounts of transactions that may harm the provider later.