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Education
ChapterTitle
StreetSmarts SM

Merchant underwriting in

unprecedented times

By Nick Cucci brands that are not reputable, it can cause them repu-
Fluid Pay LLC tational damage and lead to disputes, chargebacks and
other customer service problems.
Payment companies play an essential role in allowing
businesses to interact and maintain transactions with Although it is easy to see how merchant underwriting
customers, but this model of business does not come helps payment companies, it is important to note that it
without risk. All payment processing companies need to also helps merchants. When a merchant is able to show
be aware of potential concerns or risks associated with that a payment company supports them, it is a positive
taking on new merchants and supporting them in trans- reflection upon the merchant. These agreements are built
actional relationships with customers. upon mutual trust, and merchants often showcase this on
their websites.
In this article, I'll explore what merchants need to know
about merchant underwriting in these unprecedented Unprecedented times in business
times.
In earlier times, small business owners were a tiny per-
What is merchant underwriting? centage of the business market—at least in terms of over-
all sales. In today’s world, however, times are changing
Merchant underwriting is a process that payment com- very quickly. New businesses are being opened at an as-
panies undergo when determining whether or not they tonishing rate, and these businesses need payment com-
should work with a specific merchant. For an expanded panies to complete their sales. In the United States alone,
explanation, see https://tinyurl.com/c4krhpmd. Every time a there are more than 30 million small businesses operat-
payment company agrees to work with a merchant, they ing (see https://tinyurl.com/2s3pn46x).
are taking on a certain level of risk.
It is a great thing that more businesses are opening, but
These risks are not random. They can be determined it does open payment companies up to more risks. We
based on certain relevant factors. This is where merchant live in an age where anyone can start a business. Unfortu-
underwriting comes in. With this process, payment com- nately, not everyone is reputable. Some people who open
panies will decide whether or not a merchant can be businesses do not have good intentions, and they can end
trusted with their payment processes. up as a black mark on payment companies that choose to
Why does merchant underwriting matter? partner with them. Relationships with disreputable par-
ties may even lead to financial loss for payment compa-
Merchant underwriting is an important consideration for nies.
any payment gateway (see https://tinyurl.com/mr443exs).
In fact, any merchant that is accepted should be consid- To preserve the integrity of the bond between payment
ered a reflection of the payment company itself in the companies and merchants, payment companies must do
long run. When payment companies agree to work with their due diligence. There are several ways they navigate

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