When to avoid the big brand name PayFacs

As a business owner, there is nothing worse than all your hard work and momentum suddenly stopping because you can no longer accept payments from your customers. Between scrambling to find a new processor to dealing with getting held funds released, this can be a huge blow to your business.?

I see this commonly happen with the large PayFacs like Stripe and PayPal. Because PayFacs allow you to sign up and begin processing immediately without a formal review first, many businesses do not even realize their industry could be on the PayFacs prohibited list.?

Every payment processor has a different appetite for the industries they want to serve, as well as, their own underwriting and risk management policies. Some are comfortable with the burgeoning CBD industry, while others want nothing to do with it. There are processors that only accept established merchants with clean processing history, and there are others who will welcome start-ups with open arms.?

If your business offers anything age-restricted or is associated with a regulated industry and you are considering a PayFac, it is essential that you check their prohibited list before signing up and processing payments.

How do I find my processor's prohibited list??

Not all companies have a public prohibited list that you can access on their website. However, you can always start by doing a quick Google search and see what you find like I did here with the processors I am about to share. Or, just ask before you apply and begin accepting payments (it is always good to get important things in writing).

If you are using a traditional payment processor such as your bank or an ISO like mine, Maverick Payments, we conduct our underwriting upfront so we do not approve merchants we cannot take on for whatever reason.

Below is a list of some of the most common PayFacs. I am providing you with their prohibited lists to make sure your business does not fall into that category. If your business is listed on their prohibited list, switch payment processors immediately before they find out. If you are on their restricted list and you did not get their approval in writing yet, it is probably best to have a backup payment processor in place just in case they decide they cannot support you after their review or the terms are unfavorable to keep you on (e.g. high reserves, delayed funding, etc.).?Many times these reviews come out of the blue or without notice.

Stripe

Restricted/prohibited list - click HERE

Shopify Payments

Shopify Payments is powered by Stripe. Their prohibited list is essentially the same as the one provided above. However, Shopify’s prohibited list can still be found HERE.

Note - even if you get kicked off Shopify Payments, you can still use Shopify as your website host and shopping cart. You would just use a 3rd party gateway, however, it is probably best to migrate off Shopify entirely to avoid extra transaction fees. My recommendation for the most payments flexibility, especially with high-risk merchants, is WooCommerce.

Square

Restricted/prohibited list - click HERE

PayPal

Restricted/prohibited list - click HERE

QuickBooks Payments/Intuit

Restricted/prohibited list - click HERE

Note - you can still use QuickBooks accounting software even if you are prohibited from using QuickBooks Payments. There are actually some really great invoicing tools and Accounts Receivable software that allows merchants to use various “high risk” processors while automatically syncing sales with QuickBooks when paid.?

Some final words of advice: do not try to fly under the radar with any processor or try to outsmart them. They will find out. This means you should never falsify anything on your merchant account application, attempt to process payments through unapproved websites, add prohibited items after you are approved, etc.?

Up next, I will be getting into pricing and fees so make sure you are subscribed as this is my favorite topic!