Opening a Merchant Account in 7 Simple Steps

A retailer looking to set up shop online and begin taking card payments must worry about a merchant account and how to create one.

 Even physical store retailers want a credit card processing solution because the contemporary shopper does not always carry cash with them.

But how can an entrepreneur build a functional merchant account and begin accepting cards in their premises? This write-up will breakdown everything from scratch to the end, to help you understand the account opening process.

Merchant Account: What is it?

It is more or less a contract between a merchant, or retailer, and an acquiring bank. The arrangement enables the retailer to process and take payments made through credit cards. 

Entering this contract means agreeing to comply with all regulations stipulated by card brands such as Visa, MasterCard, American Express, etc. 

The ability to transact credit card payments exposes a business to a whole new group of customers because many of them prefer to pay through plastic cards.

Opening a Merchant Account

Account providers vary in terms, rates, and services. And though the best pricing and terms may depend on other factors—such as the size, type, revenue, and processing past of your business—here are some things every merchant should consider;

1. Pick the credit card brands. Analyze and compare card brands keeping your target market in mind. Pick a card brand that is well-liked by your audience. Studies show Visa is the favorite card in more than 100 nations, MasterCard is number two. 

2. Choose a payment collection model. Payments can be collected either as one-off transactions or recurring billing. Choose based on your business's and client's needs. Provide both options if possible and applicable. Lastly, check and compare rates for an affordable offer.

3. Evaluate your revenue. Banks set rates based on a business's revenue. Prepare a year, or six months of your company’s card revenue and financial standing to give your would-be acquiring bank a clearer picture.

4. Look for a bank. Local banks are the best for native businesses because they operate within the same rules under which the company is registered. Plus, they offer better rates than a global bank would. For brands looking to take payments globally, a payment gateway is a better option than trying to open native banks in each nation you trade in.

5. Organize your retail website. Build your site in a unique domain to conform to card brand requirements. Always makes sure the checkout stage is safe, and shipment options and terms are clear. 

6. Prepare Documents. Gather all documents that matter. The credentials vary from one bank to another. Make sure to find out and prepare all the important documents your acquirer mayneed beforehand.

7. Apply for a merchant account. Complete the application form and submit these with your pre-gathered credentials. The acquiring bank will check your application form and accept or reject your application. Be ready to pay related fees such as account-opening fees. Also, watch out for charges like per-month and decline fees, not counting chargeback and refund charges. Go through your account provider's terms and conditions to avoid unexpected expenses.

Wrapping Up

Follow these steps to create a fully functional merchant account in the shortest time possible. Always compare options wisely to avoid expensive solutions that will compromise your business rather than give it an edge.

Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who’s assisted hundreds of retailers get the best merchant account offers. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie in his backyard porch, as should all right-thinking people.