Frequently Asked Questions from New Merchants
Q: Why is the social security number of the primary business owner(s) requested on a merchant application?
A: The social security number of the primary business owner(s) is required to (1) meet acquiring bank identity verification compliance, (2) confirm the principal is not listed on the Terminated Merchant File or Member Alert to High-Risk Merchant file lists, and (3) determine the principal's credit worthiness.
Q: The merchant’s principal is stating they've never had to provide a social security number before. Why is that?
A: If the business has a current merchant account, the principal's social security number was provided at some point (typically during the initial application process). Payment Facilitators (PayFacs) like Stripe, PayPal, and Square have added application confusion to the market as they may be aggregating for the merchant and not applying for a merchant of record account. In these scenarios, the PayFac may not ask for a social security number while setting up the account, but owner verification will be required at some point before funds are remitted to the merchant bank account.
Q: The business owner refuses to provide their Social Security number. What options do I have?
A: If the business owner refuses to provide their Social Security number or other data required to process a merchant application, PayEngine can board your merchant account directly with Stripe.
Q: The underwriter is requesting business financials from the merchant, why is that?
A: Depending on the size and type of merchant, financials may be requested for additional diligence. This is to better understand how a business manages its finances, how they have been performing, and how they operate to ensure the risk level of doing business with them is acceptable.
Q: What does it mean when an application has been marked as pending?
A: An application typically gets pended (meaning the application review has paused) when either the business information or owner data cannot be verified and/or if the processing data indicates the business is a higher-risk merchant and financial documentation is needed to complete the underwriting process.
Q: What are common guidelines for understanding application pend probability?
A: Typically, a merchant that processes greater than $80k/month, has a large average ticket (>$2,500), takes a customer deposit, and/or has a forward delivery of services will need additional financial information to complete the underwriting review. Additionally, applications in which owner data is not complete and accurate (such as business address being used in the personal address field, incorrect social security number, or listing non-owners in the owner fields) are areas that can result in high pend probability.