10 Things You Should Know About Opening A Merchant Account

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If you've begun to expand your business or are tired of using paper invoices and snail mail to collect payments, you may be ready to open a merchant account to accept credit cards. It's a good idea to know what to expect before you begin. Here are ten things you should know before applying for a merchant account.

1. Underwriting is necessary for opening a merchant account.
By providing merchant accounts for businesses, payment processors, online payment gateway and partnering banks take on risk. Every rupee that passes through their system may be charged back, potentially leaving the bank liable for the funds.
Banks consider both the possibility of chargebacks and the legitimacy of the business when assessing the risk associated with new accounts.
To ensure a smooth underwriting process, you should collaborate with an experienced partner, just as you would with a loan expert. Some merchant service providers have a department that assists new merchants in setting up their accounts.

2. You need a business bank account.
Even if you are a sole proprietorship, you must have a business bank account ...
... before you can open a merchant account. You can open one at your local branch in about 15 minutes if you have a business licence and an EIN (employer identification number, which can be your social security number if you're a sole proprietor with no employees). You can also obtain an EIN from the IRS.
Your business bank account will be the default destination for funds transferred, as well as the account from which transaction fees will be deducted. Credits and debits can sometimes be separated into separate accounts, but you must request it.
It is critical to keep a sufficient balance in this account to cover any processing fees as well as monthly software fees, if applicable.

3. A business license is almost always required for a merchant account.
Unless you operate as a sole proprietorship in certain counties, you most likely already have a business licence of some kind. This can range from a fictitious name declaration to articles of incorporation. You will require the licence for reasons other than opening a merchant account. To validate your business, merchant account underwriters will review and file a copy of your licence.

4. Merchant account underwriting requires an application.
An application is required for the merchant account underwriting process. The application is typically used online by most providers.
The application will request information about the company as well as the account's authorised signer. Before you begin, you'll need your bank account and routing numbers, tax ID (EIN), and processing volumes (or estimates). Other information collected on the application may include (but is not limited to) the following (but is not limited to): business start date, contact information, beneficial owner information, and authorised signer information.

5. Different types of payment acceptance may require separate merchant accounts.
If you want to accept credit cards and ACH payments or best online payment gateway, you may need to go through two separate underwriting procedures with two different processors. While the various credit cards you offer may be processed by one processor, ACH/eCheck transactions are typically processed by another. If you go through a software provider or an independent sales organisation ("ISO"), you usually don't need an extra application.
You will select the types of payments you wish to accept on your application. If you have someone assisting you in submitting your application, they will compile it along with a copy of a voided check and send it to the appropriate processors. The Terms and Conditions of your application contain information about the various parties involved with your account.

6. You will need to supply supporting documents to the underwriter.
The more you intend to transact, the more documentation the underwriter will require with your application. If your company only needs to process a few thousand dollars per month, you may only need to provide a voided check and marketing material (proof that you're actively conducting business) to get started.
Be prepared to provide more financial information if you want/need to apply to process larger amounts. In some cases, you may be asked to provide financial statements in the form of profit and loss statements, as well as balance sheets, for up to two years.
Remember that once you've been approved, the processor will monitor account activity, so be as accurate as possible when listing processing volumes. You don't want to develop a habit of exceeding your processing limits.

7. Your merchant account can be up and running in as little as one business day.
Your merchant account can be activated in as little as one business day after you submit your application (sometimes within hours).
Underwriters work normal banking hours, so applications received in the afternoon will most likely not be reviewed until the following business day.
If you choose to use a software provider to assist you with underwriting, they can sync your merchant account to your software, allowing you to begin processing transactions as soon as you receive underwriting approval.

8. You can use the same merchant account from your storefront as you use online.
One advantage of merchant accounts is that they can be transferred from your physical storefront to your online operation. You can use the same accounts as long as the platform at both locations is the same, such as a TYSYS platform. If you already have a storefront or office merchant account, ask the representative assisting you with your application if it is transferrable.

9. Processing fees and funding times may vary.
Processing fees may vary depending on the type of payments you process and the methods you use. Your ACH/echeck processor may charge a flat rate up to a certain amount, whereas your credit card processor may charge a flat rate plus a percentage fee. Credit card fees can vary depending on the card and method of payment (card present vs. not present, etc). To understand the differences, read the Terms and Conditions on your application.
When you have multiple payment options, it is important to keep the varying fees in mind. You should use ACH for large transactions if your customer is willing to pay via ACH by providing their bank account information. This is due to the fact that you will only be charged a flat transaction rate, rather than a flat rate plus a percentage of the charge.
Payment type also influences funding times. ACH transactions may take 3-5 business days to fund, while credit card payments can land in your account as soon as 48 hours after your transaction.

10. PCI Compliance should be on your radar.
Prior to 2008, PCI DSS compliance was regarded as a "best practise" for merchant account holders. Whether people realise it or not, it is now a requirement. So, what exactly is PCI DSS Compliance? The PCI Data Security Standard (DDS) is a set of rules and regulations established by credit card companies to ensure merchants process their customers' payments securely through online payment gateway India. While you are not required to achieve PCI Compliance before opening a merchant account, you will need to do so soon after, so start thinking about it now.
While your merchant account is being underwritten, take a close look at your business environment and make sure your processes are secure. Simple precautions such as shredding documents containing credit card numbers, installing virus protection and anti-phishing software on all computers, and implementing strong password and user ID policies can all help to prevent a breach.