Why the Interrogation?

"They want my bank statements?  ...pictures of my business?  ...social security number, and references?"  The fact is, you may be asked for a lot of information, sometimes sensitive information, when establishing a new merchant services account.  Some providers ask for more than others, and some businesses are required to provide more than other businesses, but there's usually a legitimate reason for such requests.

The first reason that comes to mind is fraud.  Let's think about this one from the viewpoint of a consumer.  If anyone can claim to be a business and set up a credit card processing account, then anyone can run a charge through on your card, even if their product or service is not legitimate.

I don't want to sound like I'm bashing other services.  In fact, I sometimes refer people to Square if all they want to do is accept cards on a sporadic basis, perhaps at craft shows, estate sales, or farmers markets.  The fact is, however, Square, PayPal, even Intuit's Go Pay are really accounts known as "money movers" and just about anyone can get one.  Their rates are usually higher, but they're offset by lower, or no monthly fees, which makes a difference if you're only processing a few hundred dollars here and there.  Usually the deposits are delayed, sometimes as long as 30 days, which means the provider has time to be sure they'll get their money, before giving any to you.  The actual transactions and equipment used to complete them are often less secure as well.

The question becomes, "Why would a business clearly processing more than a few hundred dollars monthly, and doing so every month, use a money mover account with higher rates and less security?"  It could be as simple as being convinced by a well-produced TV ad, but the fear could be that the business may not be as legitimate as you think.   

Recently I was contacted by a "business" out of state, who wanted to set up an account with one of my providers as quickly as possible.  As the provider requested information, it became apparent that the merchant's business was actually fraudulent.  Had the account  been approved, that person, could have run your debit card for a product or service that was truly fraudulent, and may be doing so right now with a Square account.

There are reasons beyond fraud prevention for more detailed information, too.  If the merchant is receiving deposits the next day, or even within the next 2 or 3 business days, it's highly likely that the provider is fronting that money.  The more the provider knows that your business is good for it, and that your product won't incur a lot of charge-backs, the more likely you are to receive your deposits promptly.  If you've provided less information, and a questionable transaction comes through - perhaps something considerably higher than usual - the money may be held for a week or so while the transaction is investigated.   

Many factors play into the type of information that may be required.  Does your business process a couple thousand dollars a month, or a couple hundred thousand?  Is the typical purchase ten bucks, or a thousand dollars?  Do you have severe seasonal fluctuations creating the possibility of a high processing fee being deducted from a low cash-flow month?  What's the credit history of the business and the business owners?  Do you sell a product or service with higher return rates?

Different companies look at the factors differently.  Some businesses may be turned down for a merchant account from certain providers, despite having good credit.  Just understand that there are reasons for the "interrogation," and it can affect the type of account a business ends up with.  The bottom line is, real merchants use real merchant accounts.  In the long run, it'll likely be worth it to provide some sensitive information up front.