Unacceptable Businesses for Merchant Credit Card Processing

Businesses and non-profit organizations operating in some types of industries are unqualified to set up merchant credit card processing services in the U.S. Others are severely restricted, but allowed, provided they manage to produce a string of documents and have an acceptable credit profile. The criteria are set by the individual credit card services providers, according to guidelines set out by the Credit Card Networks of Visa and MasterCard. These "black lists" are not set in stone. Rather, they are regularly updated with the inclusion or exclusion of certain business types.

Yet, there are some permanent features of these lists and some industries are unlikely to ever leave them. Mostly the determination of which industry should fall in there is based on the legality of the provided services and the probability of generating unacceptably high levels of chargebacks. The first criterion is self explanatory. As far as the other is concerned, historical data clearly indicate that some industries have simply been unable to cope with chargeback risk.

I should also mention that, even when the merchant credit card processing account is set up, the business' chargeback levels are monitored by the processor on a monthly basis and, if they go over 1% of the total transaction count in any individual month, the merchant will be categorized as high-chargeback one and subjected to very heavy additional requirements. Organizations that are not able to fix their chargeback problem within three months will lose their payment accounts altogether.

Following is a list of business types which will fall into credit the non-qualified merchant credit card processing services category for most merchant account providers.

• Advanced payments greater than 1 year for any product or service.
• Any adult products and services, including but not limited to phone sex, web-based sexually oriented chat, images via the internet, sexually oriented dating services, companion and escort services, prostitution, adult toys, bookstores, strip clubs and other miscellaneous adult entertainment, services or products.
• Bidding fee auctions.
• Cash advances.
• Chain letters.
• Charities without evidence or proof of 501(C) (3) status.
• Check cashing establishments.
• Collection agencies or firms involved in recovering / collecting past due receivables.
• Credit card protection or identity theft service.
• Credit repair or restoration.
• Cruise lines.
• Currency exchanges.
• Debt consolidation or reduction services.
• Drug paraphernalia of any form.
• Essay mills and paper mills.
• Extended warranty companies.
• Foreclosure protection and guarantees.
• Government grants
• How-to books, newsletter, subscription or on line access for any industry shown in the unqualified list.

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