Can a prop firm with no processing history get a merchant account?

It is extremely challenging. Acquirers rely on at least six months of processing statements to evaluate risk, particularly your chargeback and refund rates. For a new prop trading firm, this creates a difficult situation. The best approach is to launch with payment methods that do not require a traditional merchant account, such as crypto payments or bank wires, to build a track record of operations and, crucially, a history of successful payouts to traders. Once you have several months of operational history and can demonstrate consistent payouts, a stronger case can be made to an underwriter, even without a card processing history. Xavion will not place firms that cannot document a payout record.

What MCC will my prop trading firm be assigned?

The Merchant Category Code (MCC) for a prop trading firm is not standardised and depends on the specifics of your business model and the acquirer's classification. Commonly used codes include 6211 (Security Brokers/Dealers), 8299 (Schools and Educational Services Not Elsewhere Classified), or 7372 (Computer Programming, Data Processing, and Integrated Systems Design Services). The acquirer makes the final decision based on their risk assessment of your services. For example, if the emphasis is on the educational component of the evaluation, they might assign 8299. If it's viewed more as a financial service, 6211 is more likely. Our role is to ensure your business model is clearly presented so the assigned MCC is appropriate and sustainable.

Is a US LLC better than a Hong Kong company for a prop trading firm?

Both jurisdictions have their merits, but for prop trading targeting global markets, a US LLC often provides a slight edge in credibility and access to USD processing. A US entity can appear more transparent to partners and customers, and establishing banking and payment services in USD is more direct. However, a Hong Kong entity can also be effective, particularly for accessing Asian markets. The best choice depends on your ownership structure, target customer base, and tax considerations. We recommend discussing your specific situation with legal and tax advisors. For payment processing, we can successfully place well-documented firms from either jurisdiction with suitable international acquirers.

What is a rolling reserve and why is it required for prop trading accounts?

A rolling reserve is a risk management tool used by acquirers, especially for high-risk industries like prop trading. It means the acquirer holds a percentage of your daily or weekly transaction revenue for a set period. For example, a 10% reserve for 180 days means that 10% of the funds from a transaction on Monday will be held by the acquirer and released to you 180 days later. This practice protects the acquirer from potential losses due to chargebacks. Since prop trading can experience spikes in disputes from failed evaluations, the reserve ensures funds are available to cover these chargebacks, making it a standard condition for obtaining a merchant account in this sector.

Do I need a special license for my prop trading firm in the US?

The licensing requirements for a prop trading firm in the US depend heavily on the specifics of its business model. Generally, firms that offer evaluations and are not managing third-party capital may operate without a specific securities license, positioning themselves as educational or trading technology companies. However, this is a complex and evolving area of law. If your model could be interpreted as providing financial advice, managing investments, or pooling client funds, it might fall under the purview of regulators like the SEC or CFTC. It is essential to have your business model and terms of service reviewed by qualified US legal counsel to ensure compliance and avoid regulatory reclassification, which is a major risk checked by underwriters.

Service · US LLC

High-risk merchant account for prop trading firms with a US LLC

Yes, a US LLC can obtain a high-risk merchant account for a prop trading business, but it depends on the firm's payout history and business model clarity. Mainstream processors often decline prop trading due to chargeback risk from evaluation fee disputes and evolving regulations. Xavion works with specialist acquirers that are licensed for securities-related MCCs. We build a comprehensive underwriting file that demonstrates your payout reliability, clear evaluation terms, and robust corporate structure to secure a stable, long-term processing solution.

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Profile at a glance

Service: High-risk merchant account
Industry: Prop trading firm
Typical MCC: Commonly 6211, 8299 or 7372 depending on model
Entity: Limited liability company (commonly Wyoming, Delaware or New Mexico)
Authorities: State registry; FinCEN for money services; IRS for tax reporting
Currencies: USD, with EUR and GBP via EMIs
Prerequisite: Clear terms on evaluation fees and payouts; legal review of the model
Reserves: Reserves are common; indicative
Timeline: Typically 2 to 6 weeks from complete file to live processing

How Xavion secures merchant accounts for US-based prop trading firms

Xavion's placement process for US prop trading firms begins with a detailed review of your business model, focusing on the evaluation process and payout mechanisms. We assess your processing history, paying close attention to chargeback and refund ratios, which are critical risk indicators for this industry. Our team then compiles a complete underwriting file, which includes your articles of organisation, EIN confirmation, and operating agreement for the US LLC.

The file highlights your firm's legitimacy and operational soundness. We ensure your website's terms and conditions are transparent, particularly concerning evaluation fees, rules, and the conditions for payouts. We include evidence of your payout history and any liquidity or brokerage agreements to demonstrate financial stability. This proactive approach addresses underwriter concerns about the risk of disputes from traders who fail evaluations. We then match your profile with acquirers, typically EEA-licensed or international specialists, who have an appetite for the specific MCCs used by prop trading firms (like 6211 or 8299) and are comfortable with US LLC structures, even those with non-resident owners.

What underwriters check for prop trading merchant accounts

Underwriters and compliance teams conduct rigorous due diligence on prop trading firms due to the industry's risk profile. Their primary focus is on financial stability, chargeback history, and the legitimacy of the business model. You will be required to provide at least six months of recent processing statements, which they will analyse for chargeback rates, refund rates, and transaction volumes. Any history of excessive chargebacks (typically above 0.9%) is a major red flag.

They will scrutinise your website and checkout process to ensure compliance with card scheme rules. This includes clear and conspicuous disclosure of your company name, address, and the terms of the service. For a prop trading firm, this means the rules of the evaluation, the cost of the fee, and the conditions for receiving a payout must be unambiguous. Underwriters will also request Know Your Business (KYB) documents, including passports and proof of address for all Ultimate Beneficial Owners (UBOs) and directors of the US LLC. Finally, they will want to see evidence of your payout record to active traders and potentially review your agreements with liquidity providers to verify your capacity to fund successful traders.

How we run it

1.Profile review of MCC, processing history, chargeback ratios and ownership
2.Underwriting file built: website compliance, refund policy, descriptor, KYB pack
3.Matched to acquirer types licensed for the MCC and the entity's jurisdiction
4.Warm introduction and underwriting Q&A handled with the acquirer
5.Post-approval: reserve, rolling limits and chargeback monitoring set up

Documents to prepare

Articles of organisation
EIN confirmation letter
Operating agreement
Evaluation terms and rules
Payout history
Liquidity or broker agreements
Passport and proof of address for each UBO and director

How a US LLC structure impacts your payment processing options

Using a US LLC for a prop trading business offers flexibility but presents specific challenges and opportunities for payment processing. While entities in states like Wyoming or Delaware are quick to form, obtaining an Employer Identification Number (EIN) from the IRS can take several weeks for non-resident owners, a crucial step for any US-based financial application. Although no physical US office is required, demonstrating substance, such as a US business address and clear evidence of operations, significantly strengthens an application with underwriters.

For currency settlement, a US LLC is ideal for processing in USD. Accessing EUR and GBP processing is typically achieved by connecting with EEA-licensed electronic money institutions (EMIs) that can provide virtual IBANs. Most US domestic acquirers are hesitant to work with high-risk industries like prop trading, especially with non-resident owners. Therefore, the most viable acquiring options are often international or specialist acquirers who understand the prop trading model and are comfortable with the LLC structure. From a reporting standpoint, foreign-owned single-member LLCs have specific obligations to the IRS, including filing Form 5472, and it is important to have this structure properly advised by legal counsel.

Why prop trading merchant accounts are declined and how we help prevent it

Merchant accounts for prop trading firms are frequently declined or later terminated for several key reasons. The most common is a high chargeback ratio stemming from disputes filed by customers who fail their evaluation and seek to recover the fee. Acquirers view this as a significant financial risk. Another major factor is regulatory uncertainty; underwriters are cautious about models that could be reclassified as regulated financial services, investment schemes, or even gambling depending on the jurisdiction and specific mechanics.

Applications also fail due to incomplete or poorly presented documentation. A failure to provide clear, audited payout records, transparent terms of service, or a complete KYB package on the LLC's owners raises immediate red flags. Xavion mitigates these risks by building a file that directly addresses these concerns from the outset. We work with you to refine your website compliance, ensuring evaluation rules and refund policies are crystal clear to minimise future disputes. We gather and present concrete evidence of your payout history to prove the legitimacy of your operation. By presenting a comprehensive and transparent file to acquirers with a known appetite for this sector, we pre-empt the common reasons for rejection and demonstrate that your firm is a reliable and compliant partner.

Timeline for onboarding and maintaining your merchant account

For a US LLC in the prop trading industry, the timeline to establish a live merchant account typically ranges from two to six weeks once a complete underwriting file is submitted to the acquirer. This timeframe can be influenced by the complexity of your ownership structure and the clarity of your documentation. The initial phase involves Xavion gathering all necessary documents, including your LLC's formation certificate, operating agreement, EIN letter, UBO/director KYC, and six months of processing history.

Once the file is with the acquirer, their underwriting team will conduct their review, which may involve a series of questions to clarify aspects of your business model or financials. Our team manages this communication to ensure your answers are precise and satisfy their requirements. Upon approval, the acquirer will issue an agreement and begin the technical integration. Post-approval, it is common for acquirers to implement risk controls such as a rolling reserve (e.g., 10% for 180 days) and initial processing volume limits. Staying live requires diligent management of your chargeback ratio and maintaining open communication with the acquirer. We provide ongoing support to help you monitor your performance and address any issues before they escalate.

US LLC compared for prop trading firms

Jurisdiction	Entity	Currencies	Banking reality
US LLC	Limited liability company (commonly Wyoming, Delaware or New Mexico)	USD, with EUR and GBP via EMIs	Fintech accounts open readily for clean profiles; high-risk MCCs usually need a specialist US or international acquirer
Singapore	Private limited company (Pte Ltd)	SGD, USD, multi-currency	Banks are rigorous and slow for non-resident founders; licensed payment institutions onboard faster
Hong Kong	Private company limited by shares	HKD, USD, CNH	Traditional banks are selective; virtual banks and licensed stored-value providers are common first accounts
BVI	BVI business company	USD, EUR via international institutions	Accepted by international banks and EMIs when the operating story and substance elsewhere are documented

General information, not legal or tax advice. Requirements change; confirm with your counsel.

What we will not do

Place firms without a documented payout record
Open accounts for unlicensed activity where a licence is required
Help conceal beneficial ownership or source of funds
Work with sanctioned persons, countries or goods
Promise approval: every institution makes its own decision

Xavion Capital is not a bank, acquirer or payment institution. We prepare files and introduce lawful, properly licensed businesses to regulated institutions.

Frequently asked

Can a prop firm with no processing history get a merchant account?: It is extremely challenging. Acquirers rely on at least six months of processing statements to evaluate risk, particularly your chargeback and refund rates. For a new prop trading firm, this creates a difficult situation. The best approach is to launch with payment methods that do not require a traditional merchant account, such as crypto payments or bank wires, to build a track record of operations and, crucially, a history of successful payouts to traders. Once you have several months of operational history and can demonstrate consistent payouts, a stronger case can be made to an underwriter, even without a card processing history. Xavion will not place firms that cannot document a payout record.
What MCC will my prop trading firm be assigned?: The Merchant Category Code (MCC) for a prop trading firm is not standardised and depends on the specifics of your business model and the acquirer's classification. Commonly used codes include 6211 (Security Brokers/Dealers), 8299 (Schools and Educational Services Not Elsewhere Classified), or 7372 (Computer Programming, Data Processing, and Integrated Systems Design Services). The acquirer makes the final decision based on their risk assessment of your services. For example, if the emphasis is on the educational component of the evaluation, they might assign 8299. If it's viewed more as a financial service, 6211 is more likely. Our role is to ensure your business model is clearly presented so the assigned MCC is appropriate and sustainable.
Is a US LLC better than a Hong Kong company for a prop trading firm?: Both jurisdictions have their merits, but for prop trading targeting global markets, a US LLC often provides a slight edge in credibility and access to USD processing. A US entity can appear more transparent to partners and customers, and establishing banking and payment services in USD is more direct. However, a Hong Kong entity can also be effective, particularly for accessing Asian markets. The best choice depends on your ownership structure, target customer base, and tax considerations. We recommend discussing your specific situation with legal and tax advisors. For payment processing, we can successfully place well-documented firms from either jurisdiction with suitable international acquirers.
What is a rolling reserve and why is it required for prop trading accounts?: A rolling reserve is a risk management tool used by acquirers, especially for high-risk industries like prop trading. It means the acquirer holds a percentage of your daily or weekly transaction revenue for a set period. For example, a 10% reserve for 180 days means that 10% of the funds from a transaction on Monday will be held by the acquirer and released to you 180 days later. This practice protects the acquirer from potential losses due to chargebacks. Since prop trading can experience spikes in disputes from failed evaluations, the reserve ensures funds are available to cover these chargebacks, making it a standard condition for obtaining a merchant account in this sector.
Do I need a special license for my prop trading firm in the US?: The licensing requirements for a prop trading firm in the US depend heavily on the specifics of its business model. Generally, firms that offer evaluations and are not managing third-party capital may operate without a specific securities license, positioning themselves as educational or trading technology companies. However, this is a complex and evolving area of law. If your model could be interpreted as providing financial advice, managing investments, or pooling client funds, it might fall under the purview of regulators like the SEC or CFTC. It is essential to have your business model and terms of service reviewed by qualified US legal counsel to ensure compliance and avoid regulatory reclassification, which is a major risk checked by underwriters.

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