Getting declined for an e-commerce merchant account can be frustrating, particularly when the response gives you little detail about why the decision was made.
When you apply to accept online card payments, an acquirer or payment provider looks at more than whether your business is legitimate. Your sector, business model, ownership structure, transaction profile, expected volumes, markets and chargeback exposure can all form part of the assessment.
A decline from one provider doesn’t necessarily mean another will reach the same decision. Different providers have different underwriting criteria and risk appetites — in other words, the types and levels of risk they’re prepared to accept.
This guide explains why e-commerce merchant account applications may be declined, what you can address before applying again, and what to consider when choosing your next acquiring partner.
Why e-commerce merchant account applications get declined
Sector and business-model risk
Acquirers and payment providers decide which sectors and business models they’re prepared to support based on factors such as chargeback exposure, fraud risk, regulatory requirements and their own internal policies.
That means a legitimate e-commerce business can fall outside one provider’s criteria while still potentially being considered by another.
Company and ownership structure
Holding companies, cross-border subsidiaries and more complex ownership structures can require additional review.
The provider needs to establish who ultimately owns and controls the business and understand how the different entities relate to one another. More complex structures may therefore require additional documentation and verification.
Markets and jurisdictions
Where your company, directors, beneficial owners and customers are located can affect the checks required during onboarding.
Certain jurisdictions or cross-border structures may require additional verification. Requirements and risk appetite can differ between providers.
Limited trading history
A newly established e-commerce company naturally has less trading and processing history for an acquirer to assess.
That doesn’t automatically prevent onboarding, but you may need to provide more information about your business model, expected transaction volumes, average transaction value, customer base and expected payment flows.
Chargeback and refund profile
If you’ve processed online payments before, your previous performance may form part of the assessment.
Acquirers may look at transaction volumes, chargebacks and refunds to understand the risk profile of the business. If you’ve previously experienced elevated chargebacks, being able to explain what happened and what you’ve changed can provide useful context.
Incomplete or inconsistent KYB information
Missing or inconsistent documentation can prevent an application from progressing.
For example, ownership information that doesn’t align across corporate documents, expired identification or insufficient information about the company’s actual activity may require further clarification.
Providing complete and consistent information from the outset makes it easier for the provider to understand and assess your business.
What to do before you apply again
Submitting exactly the same information to another provider without understanding the potential issue may lead to the same questions. Before applying again:
Check your documentation
Make sure your corporate and ownership information is current and consistent.
If your company has a more complex ownership or group structure, providing a clear organisational chart can make it easier for the underwriting team to understand how the entities and beneficial owners fit together.
Explain your business clearly
Be prepared to explain:
- What you sell
- Who your customers are
- The markets you operate in
- Your average transaction value
- Your expected monthly processing volume
- The time between payment and delivery or fulfilment
The payment-to-delivery timeline can be particularly relevant for e-commerce businesses because longer fulfilment periods can increase exposure to refunds or chargebacks.
Bring your processing history
If you’ve processed payments previously, have the relevant information available, including transaction volumes, refund rates and chargeback history.
If there were issues in the past, explain what caused them and what has changed since. Clear context and supporting evidence can help an underwriter understand the current position.
Be transparent about a previous decline
If you know why another provider declined the application, explain it.
Being open about the concern and, where relevant, showing what you’ve done to address it, gives the next provider more context when reviewing your business.
How underwriting works at an EMI
Paynovate is a Belgian electronic money institution licensed and supervised by the National Bank of Belgium.
Like other regulated payment institutions, we’re required to understand the businesses and people we work with and complete the necessary compliance and risk checks.
You’ll sometimes hear payment providers talk about their risk appetite. Put simply, this means the types of businesses, sectors and transaction profiles a provider is prepared to support, and the level of risk it is comfortable taking on. Different providers can therefore assess the same business differently while still operating within the same regulatory framework.
When an e-commerce application reaches Paynovate, we assess:
- The entity — company registration, corporate documents, beneficial owners, directors and whether the structure makes sense for the stated activity.
- The activity — what’s being sold, to whom and how the business operates.
- The payment flow — expected volumes, average transaction value, the time between payment and delivery, and expected refund and chargeback levels.
- The people — the directors and beneficial owners behind the business.
- The history — previous payment-processing activity, where applicable, and what that history tells us.
A full review, not just a standard-profile check
Our approach is relationship-led. We take the time to review and consider the information behind an application rather than assessing the business solely against a standard profile.
That doesn’t mean different regulatory checks or guaranteed approval. It means giving the business proper consideration, asking for additional context where it’s needed and understanding the application before reaching a decision.
We’ll keep in contact with you throughout the review so you know where your application stands, what stage it has reached and whether we need anything further from you.
What we’ll typically ask you for
The exact requirements depend on the business and its structure, but you should expect to provide information such as:
- Company registration and constitutional documents
- Current beneficial ownership information
- Information about directors and beneficial owners
- A clear description of the business, including what’s sold and to whom
- Expected monthly processing volumes and average transaction value
- Payment-to-delivery or fulfilment timelines
- Previous processing history, where available
- Chargeback and refund information, where relevant
- Additional information required to understand your ownership structure, markets or business model
Providing complete information upfront can help reduce unnecessary back-and-forth during the assessment.
Key terms, quickly
KYB (Know Your Business)
The process of verifying a company, its ownership, activity and other relevant information as part of onboarding.
UBO (Ultimate Beneficial Owner)
The individual or individuals who ultimately own or control a company, including where ownership runs through other entities.
Chargeback ratio
The proportion of transactions that result in chargebacks. Chargeback performance can form part of an acquirer’s assessment of an e-commerce merchant.
Acquirer
A financial institution that enables merchants to accept card payments and participates in the processing and settlement of those transactions. Acquirers have their own underwriting requirements and risk appetite.
What we consider when reviewing an application
Not every business will be eligible for onboarding.
We need to be able to understand and verify the business, its ownership and how it operates. We also assess whether the sector, business model, markets and expected payment activity fall within our regulatory requirements and risk appetite.
We won’t be able to support businesses whose activities fall outside our regulatory or risk requirements, or where we’re unable to satisfactorily establish and verify the company, its beneficial ownership or its business model.
For e-commerce businesses, we also need to understand the customer journey: what the customer is buying, how the product or service is presented, when it’s delivered and how refunds, cancellations and disputes are handled. Clear and transparent customer journeys help us properly assess the underlying payment risk.
Where we need additional information, we’ll ask for it and keep you informed throughout the review process.
If your business is more complex to assess
A more complex application isn’t necessarily an unsuitable one.
Your business might have multiple entities, operate across several markets, have a less straightforward ownership structure or work in a sector that requires additional review.
The most useful thing you can do is make the business easy to understand.
Show the structure. Explain the business model. Provide the numbers. Give context around previous processing performance or an earlier decline where relevant.
The better the information available to the underwriting team, the better equipped they are to give the application a full and informed review.
Tell us about your e-commerce business →
Frequently asked questions
Why was my e-commerce merchant account application declined?
There isn’t one universal reason. Factors can include the provider’s sector or risk policy, your business model, ownership structure, markets, limited trading history, previous processing performance or incomplete information.
A decline from one provider doesn’t necessarily mean another provider will reach the same decision.
Can I reapply after my merchant account application has been declined?
Potentially. You may be able to approach another provider or reapply once the issue behind the original application has been addressed.
Before doing so, check that your documentation is complete and consider whether there is additional information you can provide about your business, structure or processing profile.
Does a decline mean there’s something wrong with my business?
Not necessarily. A provider may decide that a particular sector, business model or transaction profile falls outside the type or level of risk it’s prepared to accept.
Another provider may assess the same business differently.
Is an EMI easier to get approved by than a bank?
Not necessarily. An EMI isn’t a shortcut around underwriting, KYC, KYB or AML requirements.
Different institutions have different risk appetites and onboarding approaches. The important question is whether your business fits the provider’s criteria and whether the provider has enough information to properly assess it.
How long does merchant account assessment take?
It depends on the business, structure and information required.
A straightforward application with complete documentation may require fewer follow-up questions, while more complex structures or business models can require additional review.
Will Paynovate keep me updated during the review?
Yes. We’ll keep in contact with you throughout the process so you’re aware of each stage and whether we need any additional information from you.
