Merchant Onboarding Process for Startups

Merchant services companies, located in the US often reject merchant account applications, coming from small-size startup merchants, coming from other countries. MSPs are reluctant to deal with them because of several reasons.

Startup Merchant

First, if a company is processing transaction volumes, which look insignificant to a US MSP, the MSP will not take the risk of underwriting such a company, because the MSP’s payment for that risk is too low. For instance, if a startup merchant processes $7000 worth of transaction monthly, the MSP gets only $70 to $100 in revenues.

Second, if a startup merchant is coming from a country, which is considered a high-risk location by MSPs and PSPs, they might also be reluctant to grant him a merchant account, because they get almost no control and plenty of liability if something goes wrong.

Finally, if a startup merchant is involved in some high-risk business, such as outsourced software development, tech-support, or (which is even more risky) gambling, porn, where chargeback rates are high, the MSP is reluctant to underwrite such a merchant and, potentially, deal with the chargebacks, issued by his customers.

 In our article on #Paylosophy you can find more detailed information on why merchant account applications coming from startup merchants often get declined.