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Shaw Merchant Group
Merchant Accounts for Bad Credit
Sunday, March 12 2023

If you are a merchant, then you know that having a merchant processing account is one of the most critical steps to achieving success in your business. Processing payments is the lifeblood of your business and without the ability to take payments, merchants will have a hard time succeeding. While merchant accounts are often taken for granted, they are absolutely essential. However, they are not always so easy to get. One of the barriers that many merchants face when getting a merchant account is bad credit. If your business has a history of bad credit, you might have troubles getting approved for a merchant account.


However, you should know that there are options out there for merchants that happen to have bad credit. Just because you have bad credit or are credit challenged does not mean that you won’t be able to get a merchant account. We offer merchant accounts that are specialized for merchants that suffer from low credit.

What do you need when applying for a bad credit merchant account?

If you are hoping to get a merchant account with a bad credit rating, then there are certain pieces of information that you will need to acquire your merchant account and increase your chances of approval. Here are some of the items that you will need when applying for a merchant account with a bad credit rating:


  • Official government ID
  • Voided check or bank letter
  • At least 3 months of bank statements
  • At least 3 months of processing statements
  • A social security number or EIN
  • A functional website for your business
  • Reputation of chargebacks under a rate of 2%


There’s no guarantee when you are applying as a merchant with bad credit, but we have one of the highest acceptance rates in the industry and when you apply with us, we provide a manageable path to success that you can use to obtain a merchant processing account even if you have had credit troubles recently.

How to make your application more attractive

If you want to have the best success at getting a merchant account with a bad credit rating, then you need to know what the underwriters will be looking for in this process. With inside knowledge as to what underwriters prefer to see during the application process, you can help to increase your chances at getting approved for a merchant account, even if you have a bad credit rating as a merchant.


Some of the most relevant factors that determine whether a merchant is accepted are:


  • Credit score
  • Processing history
  • Bank statements
  • Business website and assets


If you want to increase your chances at approval, then these areas are where you should try to focus your attention at improving. We can help to consult you on what underwriters are looking for in these areas because we truly care about the success of merchants and hope to provide each of them with approval.

Correlation between bad credit and increased chargebacks

One of the most significant challenges of taking on a merchant that has bad credit is that there is often a correlation between bad credit and increased chargebacks. Chargebacks are one of the most significant factors in approving merchant accounts and underwriters prefer to see very low ratios of chargebacks, but that’s not something that merchants are always able to provide.


The reason that these two factors often correlate is that a bad credit rating indicates a worse business model. With a bad business model, there is also a tendency for customers to issue chargebacks on their purchases at that business. If you want to achieve a merchant account, then it’s best that you focus on decreasing chargebacks and ensuring that customers are pleased and satisfied with their purchase.

Why are chargebacks so bad?

A chargeback is a transaction that reverses a prior purchase made by a customer. If you are wondering why a chargeback is so bad, then the answer is simple. When a customer files a chargeback with their credit card company, it not only recalls the money that you received for the transaction, but it also harms your reputation with the bank and credit card processing company. When your business has a lot of transactions that are chargebacks, it harms your ability to get a merchant account because it makes those companies concerned that if they do offer you a merchant account, they might end up in the negative due to chargebacks. As a business, you should always aim to keep your chargebacks low not only to raise your own margin, but also to make your business more appealing to merchant services providers.

Preventing chargebacks for your business

If you are a business owner, then keeping chargebacks to a minimum is in your best interest. There are a few ways that you keep your chargebacks down, but one of the best ways is to simply offer great customer service. While most people think of chargebacks as being a transaction that occurs when fraud or theft occur, it is actually most common when customers file a claim because they are not satisfied with the goods or services that have been rendered. To reduce chargebacks for your business, you should get into the practice of providing full refunds for people that are not satisfied with their products or services. A full refund is more cost-effective and provides you with a conflict-free way to reverse the charge without harming your reputation with the bank or processing provider.

Benefits of obtaining a merchant account

If you are able to successfully obtain a merchant account even with a bad credit score, there are many benefits that you can enjoy for your business. The most obvious is that you will now be able to accept payments for your business and create revenue, but there are other, more indirect benefits of getting a merchant account for your business as well. This includes the reputation and processing history that you gain from getting a merchant account, which will help you in future applications for your business.

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