How Do I Get a Merchant Account?
Getting a merchant account doesn’t have to be complicated. You need to find the right acquiring bank that accepts your business model or, even easier, search for a reliable payment platform that will handle the merchant account opening process on your behalf.
Before you choose a merchant account provider, do thorough research, as the choice will define your business success. Look for companies with a stable market position and years of experience, and ones that offer the latest technology and responsive support. Pick a merchant account provider that delivers the tools and integrations you need, but keep in mind that not all merchant service providers work with all businesses.
Also, find a provider that takes PCI compliance seriously to ensure your customer payment data is safely stored. This will help you avoid a full PCI compliance review.
What is a merchant account?
A merchant account is an account where your funds are transferred after they are processed by the payment platform of your choice. Funds from your online sales are collected in this account and deposited until the settlement date. Most likely, you won’t have direct access to the funds in this account, but the funds will be automatically deposited into your business account at an agreed interval (usually once a week).
Only merchant accounts are allowed to collect payments made using popular debit and credit cards such as Visa, Mastercard, or American Express. Every merchant gets a unique merchant ID after successfully applying for a merchant account. Merchant IDs (also known as MIDs) are provided by the payment processors in partnership with or by an acquiring bank.
If you’d like to know the difference between low-risk and high-risk merchant accounts, check out the following article: High-Risk Merchant Account — What it is and How it Works.
If you think about accepting different types of payments, you may need separate merchant accounts provided by separate processors. You may also face varying processing fees, depending on the payment method.
How a merchant account works
When a customer makes a payment online, a payment system integrated into the payment page transfers the payment request to the merchant’s acquiring bank. Then, the acquirer transmits the request to the customer’s issuing bank. If there are sufficient funds in the customer’s account, the transaction is authorized and funds are deposited into the merchant account.
If there are insufficient funds in the customer’s account or the issuing bank doesn’t approve the transaction for another reason (find out more by reading about decline codes), the parties involved in the payment process will be notified about a failed request.
How do I get a merchant account?
To get a merchant account, you need to fill out an application. Usually, you can do this online, which is convenient and takes roughly 10 minutes if you have all the required documents in place. If you choose the right payment provider, they will help you go through the entire process and set up your account.
Speaking of time, the main question for many merchants is: How long will it take? And the best possible answer is: It depends. After completing your merchant account application, your account can be set up in a maximum of 5 working days or within hours, depending on how quickly you provide all required documents. But keep in mind that underwriters operate under standard banking hours, so a lot depends on when you submit your application. To make the process quick and seamless, plan.
Preparing for the underwriting process
Your website (check website compliance requirements) will be pre-approved. In most cases, you’ll be asked for a working URL, and that means you can start collecting all the necessary documents, such as:
Also, prepare a short description of your business model and the services or products you want to sell. If you use a decent payment platform, they will help you compile your application and securely send it to the applicable acquiring bank.
After sending the documents, you will enter the underwriting process, so the processor or acquirer can calculate the risk. This may vary according to the bank’s underwriting guidelines. Both banks and payment processors take a risk by providing a merchant account, so they need to thoroughly check your business.
You should also prepare to send supporting documents, which usually depends on processing volume or when you start accepting payments. The underwriter will want you to prove you actively conduct your business.
If everything looks good, you’ll get your bank and gateway agreements. Sign them and wait for your merchant account. Just a friendly reminder: always read the terms and conditions on your merchant application carefully before signing any contract. Make sure there aren’t any extra fees or contract termination pitfalls.
Setting up payments on your website
We recommend testing the system before you switch to “live mode” to make sure everything works the way you want. That’s why it’s better to choose solutions that provide a sandbox mode, which allows you to view the entire payment process using testing credentials.
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