What is underwriting and why is it done?

Underwriting is the process where acquirers (merchant account providers) verify the identity of individuals, entities, and financial accounts and assess the risk associated with each merchant business.

Merchant accounts are regulated like bank accounts, so your acquirer must perform these checks according to their regulatory requirements.

Your acquirer will carefully assess the risk factors that may pose a financial or regulatory risk to your business, which is also a risk to the acquirer.

Acquirers are financially responsible for the transactions processed through any merchant account they issue.

Your acquirer must also confirm that your business and website comply with Visa and Mastercard rules and best practices.

Don't be surprised if they ask you to make some changes to your website before your account is approved - the card scheme rules are comprehensive, and the requirements are not always obvious!

Recommended Reading:

• Check out this article on merchant account eligibility.
• This article lists the documents that you will generally need to open a merchant account
• This article discusses the requirements for high-risk business models.

Want to read more? Check out our full collection of articles.

What's Next?
Sign up on our website for a free assessment of risk factors that may be in scope for your business.