Can You Get A High-Risk Merchant Account With Instant Approval?

Nobody enjoys waiting to be cleared for a key business service, especially one so closely linked to sales as a merchant account. While third-party processors such as Square, Stripe, and PayPal let businesses start processing almost immediately, all three companies explicitly will not serve most high-risk industries.

So what should you do if you see advertisements for so-called “instant merchant accounts”— or merchant accounts with same-day approval—that claim to accept high-risk businesses?

Read the fine print.

This post explains what “instant approval” really means and why it’s a bad idea for high-risk businesses, no matter how desperate you are to get a high-risk merchant account.

What Does Instant Approval Mean For Merchant Accounts?

Instant approval for merchant accounts usually means that a business can start processing credit cards immediately after concluding the sign-up process.

Instant approval is rare in the payment processing industry. For low-risk merchants, the underwriting process for a merchant account takes at least a day or two.

Even if you do get approved quickly, you probably won’t be able to access your funds quickly with same-day or next-day funding. After you take your first credit card transaction, the processor may hold your funds for a certain amount of time while the company looks into your business’s financials.

Which Payment Processors Offer Instant Approval?

When a payment processor does offer instant approval, it’s usually because it’s not actually giving you your own merchant account.

These third-party processors instead serve as a kind of middleman for your credit card transactions. When the transaction is processed, the processor itself is considered the merchant by the acquirer, the bank/service that handles the backend resolution of the transaction. You are, in effect, buying into the third-party processor’s merchant account. Because of this, no new merchant account needs to be created or underwritten, and the payment service provider can allow you to start processing right away. Examples of third-party processors include Square, Stripe, PayPal, and Shopify Payments.

Even then, however, this instant approval isn’t exactly what it seems. While you can start processing right away, your account is still subject to verification and review. This means you will not receive same-day or next-day funding right away, as the funds from your first transaction will likely be held until your application is fully vetted. For example, new Stripe accounts undergo a seven-day delay in receiving their first deposit.

Additionally, since these companies are essentially putting their own merchant accounts at risk, they generally steer away from allowing high-risk businesses on their platforms. There are exceptions, however, such as Square’s support for CBD businesses.

Can You Get A High-Risk Merchant Account With Instant Approval?

While some companies offer expedited review processes, you can’t really get “instant approval” for a high-risk merchant account. Despite those “instant approval merchant account with no credit check” ads that you’ll occasionally see, it always takes longer to obtain final approval for a high-risk merchant account than it does for a low-risk business.

The Truth About High-Risk Merchant Accounts & Instant Approvals

While traditional low-risk businesses can get approved within a day or two, high-risk merchant accounts require a minimum of three to five business days to be approved. The process can take as long as three to five weeks.

Why so long? Approving a high-risk business requires more extensive investigation into the credit history of both the business and the owner, as well as the nature of the business.

Why Credit Scores Matter To Merchant Account Approval

A merchant account with instant approval can be elusive if you have bad credit, even if your business wouldn’t otherwise be considered high risk. Having a credit score under 580 can be a similarly complicating factor in your quest for a merchant account. Merchant account providers perform a credit check on those who apply for a merchant account, and applicants with poor personal credit may be turned down.

Those with poor credit who find a provider that accepts them will often have to sign a longer-term contract (often with an ETF) than they otherwise would. They also face higher processing fees, and they may have to deal with a reserve fund as well.

Can You Get A Merchant Account With Instant Approval & No Credit Check?

The only way to reliably get payment processing service with instant approval and no credit check is to go through a third-party processor. As discussed above, however, you aren’t technically getting your own merchant account by going through one of these companies.

For an informative guide to getting a merchant account with poor personal credit, read our post on how to get a merchant account with bad credit. The article points you toward several high-risk processors that cater to merchants with bad credit scores. Don’t worry — we’ve vetted these processors for quality!

What Instant Approval Actually Means For High-Risk Merchants

With providers advertising “instant credit card processing approval,” there’s usually some fine print specifying that approval takes 24-48 hours — faster than normal but not “instant.”

These providers aren’t telling you that merchant account approval is a two-step process. First, you must be approved by your fast-approval merchant account provider. Second, you must be approved by the acquiring bank or back-end processor that underwrites your account and processes your transactions. This process takes anywhere from three days to five weeks.

Warning Signs For High-Risk Instant Approval Merchant Accounts

So what separates a high-risk merchant account provider with an overzealous advertising campaign from a predatory service? Here are some things to look out for:

How To Get A High-Risk Merchant Account Fast

While the approval process for a high-risk merchant account is unavoidably a lengthy one, there are steps you can take as a merchant to speed things along and increase your chances of being approved. The following actions serve to avoid the kinds of problems that might lead to delays in getting your account approved:

Final Thoughts: Beware Promises Of Instant Approval For High-Risk Merchant Accounts

If you’re a high-risk merchant (and even if you’re not), it’s not simple or easy to get approval for a merchant account. If you get turned down a few times, you might feel compelled to sign up with any provider that will take you. Also, the inevitable delays in getting your account approved can make the possibility of “instant approval” seem very tempting.

Resist that temptation. Online merchant account instant approval isn’t what it appears to be, and it can set you up for serious problems down the road. Do a Google search for “high-risk merchant account,” and you’ll find numerous ads from predatory processors looking to cash in on your desperation. Alternatively, we can save you some time with our picks for the best high-risk merchant accounts.