Why they need Social Security Number during the signup process?

It is optional at paypal, 2checkout doesnt ask for it, than why CDG???

Truly, i am bit scared to give out my SSN just over the net, hence not sure to go with CDGCommerce or not!

I would imagine for the same reason a bank needs it or your credit card company.
Don't want to do it online, perhaps you can them to setup an account and do it over the phone.

It is OK to give them your social security number. They need it to run a credit report. When you apply for a merchant account, you are somewhat asking for a loan. For example, if you are aksing for $10K a month, they are responsible for that as well as you. if you skip town, they will have to pay that back if there are any chargebacks.

HenryJ - Corey is correct in saying that providing your SSN is neccessary to complete the required credit checks. The reason that PayPal and 2Checkout do not require this, is because they are a 3rd Party Processor. You are not actually getting a merchant account - you are agreeing to make use of theirs in accordance with their Terms of Service.

That's correct. The reason why any merchant processor - including CDGcommerce - asks for the principal's SSN is actually two-fold.

First and foremost - it allows us to ascertain whether the information on the application actually matches with the credit report data and whether there are any fraud / identify theft alerts present. This is vital in protecting against approving fraudulent merchants.

The number of identity theft cases and fraudulent merchant apps is increasing every month and merchant processors nationwide need to prevent these accounts from being approved and then running stolen cards through and creating subsequent losses.

In fact, just recently we helped to stop a major fraud ring that had been submitting false apps through numerous processors.

Secondly - the credit score of the owner is a way to see whether they hold their responsibilities seriously, pay their bills on time, etc.

This is important because if a chargeback is incurred or a debit comes through unpaid, we want to have some level of assurance that the merchant won't shirk their responsibilities and not honor their agreement.

The goal is not to penalize anyone with bad credit but rather just to get a picture of their historic track record. The main reason is the one stated first and that is to validate and cross-match data.

It is actually in everyone's best interests that underwriting be done carefully by merchant processors. Careful underwriting results in fewer losses and more available capital for merchant processors to re-invest into customer service, merchant support and new enhancements for any processor's respective clients.

Hopefully that info clarifies everything a little bit more! :)