10 Things You Need to Know While Opening a Merchant Account

You, as a merchant, want to make sure that your business stays on top of the payment trends, that is, accepts online payments, has QR codes, and more. 

Before accepting online payments, you need to open a merchant account to access the money transferred into your account.

What is a merchant account?

A merchant account is a bank account that allows businesses to accept payments in multiple ways, typically debit or credit cards. A merchant account gets established under an agreement between an acceptor and a merchant acquiring bank to settle payment card transactions.

It’s best to know what to expect before you begin the process. The ten most important things to know when applying for a merchant account are listed below.

Merchant accounts require underwriting

By offering merchant accounts for businesses, merchant service provider and their partnering banks will be subjected to a certain amount of risk. The bank is liable for every pound transacted through its system.

Suppose a client orders a product online and pays for it instantly. Your company receives a transaction through your merchant account, but you cannot supply the goods or services for any reason. 

The bank usually is responsible for sending a refund to the customer when a customer asks for a refund from you.

We suggest that you work with an experienced partner to ensure a smooth underwriting process.

We even offer a team devoted to assisting new businesses with the account setup.

Set up a business bank account

Partnering up with the business or being the sole owner of the business, you’ll need to create a business bank account before you can open a merchant account. 

You can open one at your local bank in 1 – 4 weeks, and all you need is a company licence and an EIN (employer identification number). You can also obtain an EIN by going to the gov.uk website.

It takes a while to open a business account because the bank will need to carry out several checks to confirm your business identity.

Your business bank account will be the primary account where the funds will get deposited. 

The transaction fees will also get deducted from the same account. 

Ensure to keep a sufficient balance in this account to pay for any processes and monthly software fees.

Merchant accounts require a business license

You must obtain an official business licence from the city/state where you operate. Merchant account providers will go through your licence to ensure that your firm is legitimate or not.

A business licence is a government or responsible organisation permission that permits you to offer products and services. Depending on your area, you can obtain a business licence by submitting the necessary paperwork.

• For example, you must supply the documentation that validates your company, a business bank statement.
• Also, include information about your current business.
• A business underwriting and evaluation must also be provided.
• Following the fulfilment of the requirements, you will be able to obtain your Business License and Business License Number.
• These commercial licences often have an expiry date. To keep the business running, you may need to renew the licence.

Apply for underwriting the merchant account

An application is required to begin the underwriting process for merchant accounts. Many providers employ an online version of the application, eliminating the need for FAX or mail.

The application will require information about the company and the account’s authorised signer. Before you begin, you’ll need your bank account and routing information, tax ID, processing volumes, business start date, contact information, beneficial owner information and authorised signer information.

You may need different merchant accounts for separate payment methods

While one processor may process the many credit cards you provide, your BACS/eCheck transactions are often processed by another.

So, you may need to open different merchant accounts for other types of payment methods.

You will specify the sorts of payments you wish to take on your application. The Terms & Conditions of your application provide information on the many parties engaged with your account.

Provide supporting documents to the underwriter

The more you want to trade, the more paperwork the underwriter will require with your application. 

If your company needs to process a few thousand pounds per month, you may only need to present a voided check and marketing materials to get started.

If you want to handle more significant amounts, be prepared to supply more financial details, such as bank statements for multiple months.

The bank can request to furnish financial statements in profit and loss statements for up to two years in some situations.

Your merchant will set up in 1-2 business days

Depending on how soon you submit the appropriate documentation after completing your merchant account application, the bank might set up your account in one or two days business days.

Keep in mind that underwriters work standard banking hours while submitting your application. 

Late-day applications will most likely get processed the next working day after the submission.

One merchant account for your storefront and online payments

One advantage of merchant accounts is that the funds can be transferred to your online company from your physical store. 

You may use the same account at both sites as far as the platform is the same. Foe example, with OmniPay you can log all transactions and make refunds from one platform irrespective of payments being processed online or face to face.

Processing fees may differ

Processing costs may vary depending on the sort of payments you handle and the methods you use.

Credit card fees can also vary based on the card and mode of payment. Make sure you thoroughly read the Terms and Conditions on your application to comprehend the changes fully.

The transaction fees vary with different payment methods, and funding periods are also affected by the kind of payment. 

BACS transactions might take 3-5 business days to fund; however, credit card payments can get deposited into your account within 48 hours.

Be aware of PCI compliance

The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organisations that handle branded credit cards from the major card schemes.

You need PCI compliance after you set up a merchant account. Most merchant service providers offer PCI compliance, and they set it up for your business.

Conclusion

Ensure that you have all the documents, such as bank account and routing information, tax ID, processing volumes, business start date, contact information, beneficial owner information and authorised signer information.

If all the documents provided are legit and get approved by the bank, then in just 1-2 days, you will be able to access your merchant account.

Now that you own a merchant account, finding a merchant service provider to accept multiple payment methods is necessary.

Merchant service providers help you manage your finances better, get daily transaction insights, increase sales, and deliver a better customer experience.

Integrate your business with high-end tech payment infrastructure to optimise your daily business operations.