Business Types Unqualified for Credit Card Merchant Services

Merchants operating in certain industries are barred from setting up merchant credit card processing services in the United States. Other businesses are greatly restricted from the ability to take credit cards but are allowed. In order to qualify, the latter group must produce a heap of documents, in addition to the paperwork that is required anyway during the application process. To top it off, such businesses and their owners must have a very solid credit history.

Who Makes the Qualification Decisions?

The decisions on who will be included in the so-called "black lists" of unqualified card acceptors are made by the merchant services providers, who are after all the ones that bear the ultimate liability for any financial losses, resulting from their merchants' activities. When making their qualification decisions, credit card merchant services providers to a large degree implement rules created by Visa and MasterCard, the two credit card payment networks.

You also need to understand that "black lists" change over time. Most of the time the changes involve adding new entrants, however on occasion a lucky merchant type does get out of them.

How Are Qualification Decisions Made?

Even though black lists are not immutable, there definitely are a couple of firm rules that credit card merchant services providers follow when making their decisions, which all but prevent some businesses from ever leaving these lists. These two qualification criteria are:

1. Whether or not the operations are legal. Needless to say, if a card acceptor engages in an illegal activity, it will not be allowed to accept cards.
2. What the merchant's chargeback level is. Some industries have historically produced excessive levels of chargebacks and therefore are designated as unqualified. Excessive levels are defined as chargeback rates in excess of one percent of the card acceptor's transaction count for any given month.

To make things even more complicated, once the credit card merchant services account is set up, the payment activity is monitored on monthly to ensure adherence to the above requirements. If found in breach with the rules, your account will be suspended or directly terminated, depending on your offense's gravity.

Unqualified Credit Card Merchant Services

Following is a list of the business types that will most definitely be on everyone's black list:

• Merchants engaging in illegal activity.
• Businesses offering advanced payments greater than 1 year.
• Any adult-oriented types of products and services.
• Cash advances and cash gifting.
• Charities lacking evidence or proof of 501( C ) (3) status.
• Check cashing establishments.
• Collection agencies or firms engaged in recovering and / or collecting past-due receivables.
• Companion and / or escort services.
• Credit card protection or identity theft providers.
• Credit repair and / or restoration offers.
• Debt consolidation or reduction services.
• Drug paraphernalia of any form.