Enrollment Learning & Guidance
Enrollment has been open since June 1, 2023. During the first couple of weeks, it was open to around 20 businesses so that we could monitor the process. Around mid-June, we opened it up to everybody else. For those who have gone through the process, it's been very simple and quick for some of you, but it has been extremely frustrating for others.
I apologize to those of you who have not had a simple, straightforward enrollment.
This is, obviously, a new relationship and a much more detailed registration than any of us are used to. Our current processor, Braintree, did little to no vetting at all. Since Usio is extremely diligent with it, none of us were prepared or expected so many challenges. But we can learn from adversity and, hopefully, create a smoother path for those that follow. With that, I'd like to reiterate the learnings from the last several weeks, and I hope that this shared knowledge will significantly improve the speed and efficiency of the enrollment for the rest of you.
I am going to cut to the chase and share learnings and advice on how to ensure you have a quick and simple enrollment experience. I will also spend some time discussing WHY the enrollment requirements are fairly stringent vs. what you may have experienced in the past (especially with Braintree).
BUSINESS - The business legal structure is extremely important.
- If your business is an LLC or Corporation, please ensure the following are correct within Fitli and on the forms submitted to Usio.
- The Business Legal Name is found on your IRS EIN Letter.
- You would have had to get an Employer Identification Number (EIN) from the IRS to form an LLC or Corporation. Whatever name is on that letter is the official legal name of the business.
Example: If you enter your business legal entity as a Sole Proprietor and provide an EIN, your enrollment will be flagged for review.
Example: If you are an LLC, but your bank account has your personal name on it (differing from your Legal Business Name of the LLC), your enrollment will be flagged.
Example: If the Business Legal Name you entered in Fitli and Usio is different in any way from the legal name on your IRS EIN Letter, your enrollment will be flagged.
- If your business structure is Sole Proprietor, please ensure the following is true and correctly entered within Fitli and on the forms submitted to Usio.
- If your business structure is Sole Proprietor, you would most likely have an EIN and would be using your Social Security Number (SSN) for legal purposes.
- The Business Legal Name is essentially your name and should match the name tied to your SSN.
- Please ensure your Business Legal Name matches your SSN.
- The name on your bank account must match your Business Legal Name, which, in this scenario, is your name, the same name associated with your SSN.
Example: If your legal entity is a Sole Proprietor and you enter a DBA name instead of your Legal Name (which would be your name), your enrollment will be flagged.
Example: If your legal entity is a Sole Proprietor and you enter your Business Legal Name as Joe Smith, but your full name associated with your SSN is actually Joseph Smith, your enrollment will be flagged.
Example: if your legal entity is Sole Proprietor and the Business Legal Name on your bank account is Pat Martin, but your full name associated with your SSN is actually Patrick Martin, your enrollment will be flagged.
PERSONAL - Your personal information is also important
- When entering your personal information, please ensure you use your full legal name, which matches exactly with your valid ID when entering information in Fitli and on Usio forms.
- The most important thing to keep in mind for your personal information is that you must be able to produce valid identification which matches your legal name provided.
- Please ensure you enter your Legal Name and it matches your valid government-issued ID.
Example: If you enter your Legal Name as Jules Santiago, but your valid government-issued ID indicates your full name is Julia Santiago, your enrollment will be flagged.
I understand that for some of you, this may be one of the first times you are opening a merchant account for payment processing. If you've only ever used PayPal, Square, Venmo, or similar services, you know it's fairly easy to open an account and start receiving money from other people. You did not have to provide as much documentation or financial details as is being asked of you to open this account. The main reason is that those companies have unique ways to reduce the loss risk.
For example, PayPal, limits sending and receiving volume, they may put hold on an account if the volume increases quicker than normal. They hold funds in limbo for periods of time until settlement or delivery of products have happened. They, may even ask the merchant to leave a balance on deposit with them. Full disclosure, I worked at PayPal for ~ 10 years so I have a pretty good idea of how this works.
Square, on the other hand, facilitates mostly in-person payments where a card is present, which reduces risk of fraud. They also use some of the same tactics as PayPal... as do many others in that space.
Usio, like almost all other payment companies, is a bit more traditional. They are a public company governed by the SEC. They are licensed and work with most other big companies that enable the payment system.
The reason why they (and other payment companies) are so diligent about validating your business and personal information to open a merchant account is because they are essentially extending credit. For every single payment transaction, there is an ongoing liability for several weeks, if not months. That liability exists because card issuers have more power than payment processors.
If a customer wants to dispute a charge on their card or in their bank account, they are automatically given the benefit of the doubt. They automatically debit the funds back from the processor. The processor then pulls those funds back from you. At this point, the onus is on the merchant via the processor to prove to the card issuer that the charge on that customer's card is legitimate. This is the chargeback process and those of you who have experienced it understand how painful it can be. If the merchant/processor cannot satisfy the card issuer that the charge is legitimate and that products or services have been delivered or a contract was in place, they will not fund the transaction in the end. For you, the merchant, that can mean a significant loss if you have delivered services or products to the customer.
Now, imagine if the merchant has canceled their account, closed their bank account, and disappeared. When that chargeback comes in, the end result will be that the processor loses those funds. That is a loss to them. Now imagine if a business is doing $20,000, $50,000, or even $100,000 per month. Let's say that business goes bankrupt and they leave their customers high and dry with unusable packages or memberships. If all those customers dispute the original charge, it could ultimately mean huge losses for the payment processor. That is the risk they (and their underwriter) are attempting to minimize.
That is the reason they want to understand some basic information about your business and ensure that you are who you say you are and your business entity is legitimate. They also have reporting requirements with governmental agencies such as the IRS for things like 1099-K.
I hope this has been helpful. Always feel free to reach out to our customer service team via chat or email at email@example.com with questions.
John Cline - Founder @ Fitli