Compaytence Guide Details Underwriter Requirements for Merchants
Compaytence has released a guide, "What the Underwriters Want," detailing merchant underwriting criteria. It highlights that many major payment processors approve merchants before a thorough risk assessment, leading to potential fund freezes.
Compaytence, a company focused on payment processing solutions, has published a new guide titled "What the Underwriters Want." The document aims to clarify the expectations of underwriters within payment service providers for online merchants.
The prevailing model with major processors like Stripe, Shopify Payments, and PayPal involves rapid signup approval, with underwriting conducted later. This review often occurs when sales volume increases or issues arise, potentially leading to fund holds or rolling reserves being imposed after revenue has begun flowing.
In contrast, the guide explains that direct merchant accounts require a comprehensive underwriting process before any transactions are processed. While more difficult to obtain, these accounts typically offer greater stability and reduce the risk of unexpected financial holds.
The guide identifies five key areas underwriters examine: the business model and assigned Merchant Category Code (MCC), fulfillment and shipping timelines, processing history, entity structure and banking, and the website's appearance and checkout process. Understanding these factors upfront can help merchants prepare their applications and navigate the complexities of payment processing approvals.