Can you get set up to accept credit cards without underwriting?

In this 4-minute read:

  • What is underwriting?
  • Do all payment processors require underwriting?
  • What do you need for the underwriting process?
  • How to avoid underwriting 

When a business owner is looking to set up credit card processing, that’s usually something that they want to set up quickly. The quicker you can set that up, the sooner you can start accepting payments for your offerings and bringing in some profits. 

With so many credit card processing options out there, it can be difficult to determine which solution will be the quickest to set up and the best for your business. 

Throughout this article, we’ll discuss credit card processing options that require underwriting, what that means, and if you have alternative solutions. 

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What is underwriting when it comes to processing credit cards?

Underwriting is a procedure that your payment processor or merchant account provider uses to vet your business and determine if you are a good candidate for their solution. This involves assessing whether or not your business will be a risk to work with. 

For standard merchant processing accounts, this process can be lengthy and rigorous, because they need to make sure that your business intends to accept payments from honest customers that meet certain standards. This is why signing up and getting approved for a merchant account can take anywhere from a few days to several weeks. (This is also why traditional processors can usually offer better processing rates than the new third-party providers.)

Some things that the underwriting teams for credit card processors check for:

  • Is your company going to be a risk for fraudulent activity?
  • Will you be able to fulfill financial obligations? This is specifically relevant should you experience chargebacks or excessive refunds to customers
  • Does your business meet basic financial and ethical conduct requirements?

Do all credit card processors require underwriting?

Not all credit card processors have a rigorous underwriting process, however, all credit card processors (whether it is a merchant account or a third-party payment processor) do have some kind of application process that involves qualifying your business for their services. 

The most common solutions that require underwriting are traditional merchant processor accounts. You’ll be hard-pressed to find a merchant account that doesn’t require underwriting in order to get approved for their service. 

Even most third-party payments solutions have some kind of underwriting process where they require detailed information about your business. This is necessary to mitigate their risk and ensure they will receive the proper compensation for doing business with you. But, most third-party solutions are able to keep this process quick and simple, allowing you to get approved within a day or two. But be aware that you will likely pay more for processing if you go the third-party route.

One reason those third-party providers can have a short underwriting process (or none at all) is that they use their own large merchant accounts and assume more of the risk (which generally means you pay higher rates for processing when using a third-party provider). 

Learn more: Do I need a merchant bank account to accept credit card payments?

What will you need to present during the underwriting process?

Whether you choose to use a traditional merchant processor or a third-party provider that doesn’t require a rigorous underwriting process, it can be helpful to collect all of the information that you would need anyway. 

If you’re signing up for merchant processing, you’ll likely be asked for all of this information, and if a third-party solution determines that you could potentially be a risk to work with, you may undergo this process anyway. 

Here are some of the things you’ll want to have ready just in case:

  • How long you’ve been in business
  • Chargeback history (how often are you refunding items or correcting mistakes on charges?)
  • Billing policy
  • Owner’s credit score
  • Volume requests (how many transactions and how much money do you intend to process?)

How to avoid the underwriting process (or at least a lengthy one)

If you want to avoid the underwriting process altogether, you can consider signing up with a third party payments facilitator or service provider. That doesn’t guarantee that they won’t involve underwriting, because, as we mentioned, if your business provides any kind of risk to the payment processor, they may require additional information from you to continue your application. 

Also, traditional payments processors may require a more involved underwriting process, but it usually results in lower processing rates and potentially better, more personalized service than some of the third-party options.

You may also like: Is flat-rate processing really the cheapest? 

Womply can help you find the right credit card processor

If you are feeling overwhelmed by trying to find the best credit card processing solution for your business, we can help. 

Womply has direct relationships with several of the nation’s top credit card processors and can help you find the right solution based on the needs of your business. Plus, we’ll provide additional resources along the way to help you maintain and grow your customer base and stand out against your local competitors. 

Learn more today with our free demo


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