What Goes Into the Underwriting Process?

After you submit your merchant account application, there is a review period where an underwriter will examine specific documents to determine if your merchant account can be approved. Your monthly processing volume will also be determined at this time.

Underwriters look for financial stability, level of risk, and personal credit to assess the possibility of chargebacks and business legitimacy.

Factors Considered During the Underwriting Process

Merchant Industry / Business Type – Businesses, especially eCommerce, are categorized by their level of risk. Merchant applications are often rejected due to the level of risk of the business.

Number of Years in Business – A business that can verify it has been in operation for an extended period of time shows legitimacy to the underwriter. This is important because underwriters avoid illegitimate businesses to reduce fraud and legal issues.

Credit Card Acceptance Method – With eCommerce stores, a sale is collected before the product is physically delivered to the customer. This increases risk of chargebacks. Businesses can decide to collect sales after the product is delivered, but this method is unconventional in most cases.

Billing Model – For recurring billing, a merchant automatically charges a customer for goods and services on a pre-set schedule, versus a single sale on an online store. Recurring billing is a great way to reduce risk of chargebacks because the payment is automatic and the customer knows what goods they will receive.

Business Owner’s Credit – A merchant’s personal credit is taken into account to show financial accountability.

Financial Stability – Bank statements and processing history may be evaluated to show that the business is profitable.

High Ticket & Monthly Processing Volume

Merchant accounts with higher transaction tickets are put at a higher level of risk because larger sales have a higher impact when chargebacks occur.

On the merchant account application, you must provide an estimated monthly processing volume. This is taken into consideration among other factors being reviewed and the underwriter ultimately decides the approved sales volume.


High risk merchants can find the underwriting process to be very stressful, especially if they receive multiple rejections. Working with a flexible merchant account provider, specifically one that specializes in high risk accounts, will make the underwriting process much easier and stress-free!