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Brief presentation from PaySimple that explores the world of underwriting for a merchant account.
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Merchant account underwriting
paysimple.com | follow @PaySimple | facebook.com/paysimple
When reviewing an application, underwriters assess the risk associated with the applicant’s business
“Referees of risk”
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
What they’re considering Business type
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Industry
Product / service offering
Formation (sole prop, LLC, corporation, etc)
Online vs. Brick & Mortar
Business type
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
What they’re considering Business type
Years in business
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Years in business
In the underwriter’s view, businesses with long tenures are more stable, so the risk of underwriting the account decreases over time
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
What they’re considering Business type
Years in business
Chargeback history
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Chargeback history
Extensive chargeback histories are a major red flag for underwriters
If the seller doesn’t have funds available to reimburse the buyer, the underwriting bank is left responsible for the funds
charge·back [chahrj-bak] noun.
1. banking - the return of funds by a seller to a buyer's debit or credit card account
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
What they’re considering Business type
Years in business
Chargeback history
Billing policy
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Billing policy?
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Billing policy? After goods or services are rendered
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Billing policy? After goods or services are rendered
Up to 30 days in advance
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Billing policy? After goods or services are rendered
Up to 30 days in advance
Far in advance
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What they’re considering Business type
Years in business
Chargeback history
Billing policy
Owner or signer credit score
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
Owner/signer credit score Credit score carries a lot of weight in the merchant
account underwriting process
Sometimes, business financial statements can be reviewed in lieu of a credit check
Businesses with multiple partnerscan apply with a different signerif the application is declined dueto credit score
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Here are some of the things they consider Business type
Years in business
Chargeback history
Billing policy
Owner or signer credit score
Processing volumes requestedwww.paysimple.com | follow @PaySimple | facebook.com/paysimple
Processing volumes requested All aspects of the application are weighed against the
processing volumes requested
Processing volumes indicate: Total dollar amount of funds processing Maximum single transaction amount
It is common for new businesses to start with lower volumes at first in order to build a processing history
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
Other alternatives
Upfront reserves
Holds
Daily fee withdrawal
www.paysimple.com | follow @PaySimple | facebook.com/paysimple
Here are some of the things they consider Business type
Years in business
Chargeback history
Billing policy
Owner or signer credit score
Processing volumes requestedwww.paysimple.com | follow @PaySimple | facebook.com/paysimple