How to Get a Merchant Account?
Wanna know to get a merchant account? It is one of the top search queries for low and high risk merchants. The term is interchangeably used by banks and payment service providers to highlight different aspects of their products. It stands for two different products in the same industry. Let’s explore the topic and widen our knowledge base. A shopping culture in one part of the world become a trend in the shopping culture of the world. Isn’t it a captivating story? What transforms it?
You could say convenience. Some argue about technology. A mix of technology and old-world charm transpires everything. Who would you credit the success of digital payments? Retailers? Or breakthrough technologies. How about taking inspiration from existing practices and using it as a driving force? We’re talking about merchant accounts (Traditional) and how PSPs (Payment Service Providers) built their success upon them. We’ll talk about both options and reflect upon the intersecting behaviors to get the most out of resources.
Merchant Account: Conventional vs. Modern
Merchants need a robust system to manage payments. A merchant account maintains a systematic flow of information from payments to data. It is a must-have option for merchants of all sizes, online or offline. Merchants find paperwork a bit too tedious. They don’t feel encouraged to fill out the application form and carry on with the same level of enthusiasm, especially new merchants. There was a scope to tweak things and simplify the process, but it didn’t happen.
Payment Service Providers (PSPs) pioneered a system to bring all payment-related aspects under one roof. Merchants like the idea of having a merchant account (with PSPs) for a hassle-free experience.
Consider your business requirements when selecting a merchant account, whether with a bank or PSP. Ask if you need a full-blown merchant account to start operations with. There is no denying that a traditional merchant account offers far more control and serves business goals. A payment service provider puts your merchant account up and running sooner than expected.
A) What is a merchant account?
How do you think the money paid by customers reaches your bank account? There are several entities involved. All you need to know is you need a merchant account to process digital payments. It accepts credit and debit cards and all other types of electronic payments. Traditionally, businesses relied upon financial institutions. They benefitted from having merchant services and merchant accounts in one. They had limited options, and there was no need to change things. Why change a winning strategy? Why risk stability?
Merchants selected a single service provider and relied upon it to run daily operations. It did meet their requirements but left them wondering for more. Online shopping paved the way for the next revolution in the payment industry.
B) Who needs a merchant account?
Any storefront, offline or online, accepting digital payments requires a merchant account. You could be in any field, stature, or business aspirations. Having a merchant account enables different types of payment methods. Can you run a business without a merchant account? The question does not exist. Business owners and professionals need a merchant account to streamline operations. The probability of accepting cash-only payments doesn’t bode well with customers.
Rephrase your question, fine-tune your expectations, and have an interest-based query: How can I use a merchant account to improve overall operations?
Let’s give it a second try: Who needs a full-blown merchant account? Who needs a merchant account with PSPs? The definition of things lends clarity and redefines our purposes. Now, you have a choice.
C) How to get a merchant account: Sign-up Process
Have you started your online venture? Are you planning to open a brick-and-mortar store? You need to register your business first. Check state-specific guidelines to register your business with local governing bodies. Be it PSPs or banks, merchants must have a registered business to operate in local and international markets.
- Business Registration
- Employer Identification Number
- Business Bank Account
D) Is a business bank account different from a merchant account?
Opening a merchant account clears several doubts. A business bank account is separate from a merchant account. A business bank account serves the purpose of banking and finance-related activities. Merchant account receives business-specific payments before transferring them to your business account. Set things in chronological order- Have a business bank account to apply for a merchant account.
E) How to find the best merchant account providers?
Business owners should select merchant account providers putting business requirements first. The perplexing part is all service providers look the same. Merchants setting up their business for the first time feel the pressure of the right decision. We have listed a few points to help you.
How much fees do I need to pay?
The fee structure is a decisive factor. Often, businesses overlook different fees or miss reading the document and find themselves in shock later. Remember, you pay account maintenance (Monthly and other charges) and processing fees. You are staring at two different sets of costs incurred.
Calculate the fees (Processing and other) and know how much the service will cost. Have a ballpark figure. Compare it to make the final decision.
How much attention shall I pay to security features?
Online and offline retailers must deploy the latest security features. More than the fear of a lurking threat, your brand’s reputation is at stake. You don’t want any incidents where data was compromised due to a security lapse at your end. Look for a merchant account service provider with essential and advanced security features. Take chargeback protection and fraud prevention tools, for example.
What kind of customer support network to look for?
How swift was the response? Were you able to reach the support team on your preferred mode of communication (Phone, chat, and email)? Merchants should also check reviews. How you tackle a technical issue depends on the kind of response you get from the merchant account provider.
How brand reputation puts the pieces of a riddle together?
Read reviews on every aspect. Look what clients say about the chosen service. Analyze what worked for them and what didn’t. The brand reputation says a lot about work philosophy and work culture. You should work with a service provider to bring a similar culture to your company. Rest, everything is secondary.
Everything remains the same whether you apply with a merchant account or payment service provider. The business-specific IDs are the same. The application process changes from here. Merchants should stay prepared to submit additional documents. Merchants should decide if they want a traditional merchant account or work with a payment service provider.
F) What business information do I need for the application form?
Merchants have all the details available such as brand name, tax certificates, and contact information. There is additional information to share if the service provider asks. It could be about your business type, processing volume, and history. Sometimes, about the kind of products and services you offer. Get one thing right- They want to check the industry type and assess the credit profile. Be proactive and share details about how you want to process payments- offline, online, or both.
Stay informative. In some cases, the applicants get disqualified. What are the common examples? High-risk merchant accounts face severe challenges. How to get a merchant account with bad credit? Business owners facing rejection dilemma should shop for a merchant account in a high-risk market. Traditional financial institutions and PSPs prefer working with low-risk businesses.
Bank & Business Documents and Underwriting Process
Merchants should submit personal and business, bank documents, and tax papers. Merchants should provide clear and accurate information to avoid any mistakes. The underwriting process begins once you submit the application form and relevant paperwork. At this stage, the concerned authorities evaluate your business proposal. They want as much information as possible to cancel out the slightest of the risk probabilities.
How to get a merchant account?
The search patterns take opposite directions. Merchants with bad credit should look for high-risk merchant services. Pay attention. There is another diversion ahead. Low-risk business owners also prefer teaming up with PSPs like Stripe and Square to ease off the pressure.
Business owners in a low-risk domain have two options: Traditional merchant accounts and aggregated merchant accounts with payment service providers. There is another category: High-risk merchant accounts. It supports businesses in sensitive and risk-prone industries, such as travel merchant accounts.
G) Application Approval Time
The application approval time consists of a couple of days to weeks. It depends on your business type and credit profile. Some service providers qualify merchants with impeccable credit history and low-risk business types in the first couple of days.
Business owners may have to wait longer if the merchant account provider decides to run a credit check, considering the chargeback ratio and vulnerability to fraudulent activities. As mentioned, your business type is a decisive factor.
Also Read: E commerce payment gateway
G) How to enable digital payments on your website or physical store
The application was approved, and you’re assigned a merchant account. Merchants should begin installing the necessary software and setting up the device to accept in-store payments. It is a hassle-free experience with no technical know-how required. Merchants should conduct dummy tests. Check the functionality aspect to offer a smooth transaction experience. The stage is set, and the world is your playground. Build quality products and services and sell them to audiences worldwide.
How to get a merchant account? Ask if you want to get a full-blown merchant account or with a payment service provider. It would set you in the right direction. Answer the following two questions to narrow down the search pattern. Are you looking for high-risk merchant accounts? Are you looking for high-risk merchant account instant approval? A low-risk and high-risk merchant account has different directions to set their search.
Also Read: Electronic Merchant Services
Conclusion:
How to get a merchant account? Merchants should refine their search by asking the right questions. Do I want a dedicated merchant account? Shall I opt for an account with PSPs? Merchants running ventures in low-risk and high-risk businesses have different challenges to encounter. Look for a top merchant account service provider in your industry to build your brand reputation.