A merchant account is a bank account that lets businesses accept payments with credit cards and debit cards. When a customer pays for something with a credit or debit card, the funds are first held by the merchant account before they are transferred to a business bank account. Transfers to a business account are then done weekly or daily.
Obtaining A Merchant Account
Getting a merchant account isn’t a simple process. Merchant accounts are normally approved based on a variety of criteria.
- Type of Business and whether there’s a higher risk or returns or fraud
- Length of time in business
- Business histories like bankruptcy and credit score
- Other merchant account history
- Personal credit history
If you apply for a merchant account with the bank you do your personal banking with you may have an easier time.
Even if your business is a higher risk, that doesn’t automatically mean your application will be rejected. However, you may need to pay higher fees to account for that risk. Once the business is established and has existed over a period of time these fees can be renegotiated.
Internet Accounts
There are a variety of online merchant accounts that are specifically targeted for processing online payments.
If you already have an offline merchant account you may notice a difference in fees between an account focused on online and offline transactions. Internet merchant accounts can have higher fees because of a higher perception of risk with online payments.
If you take payments online you’ll also need a payment gateway. A payment gateway verifies the credit card information the way a credit card machine does in a brick-and-mortar store. The payment gateway submits the request for payment to the credit card company. Many merchant accounts offer a one-stop solution for both a payment gateway and a merchant account.
Online merchant accounts can sometimes be found from your bank. However, it may be simpler to get a merchant account that specializes in online payments.
Fees
All merchant accounts come with fees. These fees can vary widely so it’s important to read the fine print when applying for a merchant account.
Fees can include:
- Setup fees
- Application fees
- Monthly fees
- Transaction fees
- International fees
Be sure to shop and compare prices and examine all of the fees which may be involved.