open

Tips for Startups:
The Merchant Account

When you open a new business, there are several aspects you need to consider. Providing online payment solutions is a must-have for any e-commerce. Your customers want to pay fast and they want to pay safe. No one is willing to wait for payment pages to load or for their favorite shop to integrate their preferred payment methods. People are dynamic. They have options and they value time. Accepting card payments on your website is a demand that you just have to meet.

The first step in this process is getting a merchant account. No, you cannot use your personal bank account in order to start processing transactions. Yes, you will have to open a merchant account. Browse through the FAQs below and apply now for a merchant account to start accepting card payments on your website.

Why do I need a merchant account?

The merchant account is mandatory in order to start processing transactions for your business. The money you make from customers’ online payments are then transferred to your personal bank account and you can retrieve them afterwards. This account is used to store the funds collected from the debit or credit card sales.  

What are the conditions to be accepted for a merchant account?

Usually the first thing that banks and acquirers look at is the level of risk that your business presents. Some industries present a higher risk level: gaming, adult entertainment, air travel and ticketing. Risk level is associated with chargeback. Chargebacks represent a client’s refusal to pay the amount they were charged, which leaves the bank in the situation to cover that amount sometimes before the merchant has been able to pay it back. As you may imagine, banks are more than reluctant to start covering up for your loss, so it will qualify you as a high-risk merchant. Along come higher transaction commissions and higher deposits as prerequisites to opening your account. 

How to apply for a merchant account?

Most acquirers and payment gateways provide you with a merchant account application. Applying for a merchant account is free regardless of the response you get. You are usually required to fill in general information regarding the company, such as registration number and country of incorporation. Business model description, processing information and transaction history are as well inquired over. A business license is required. Want to see an example? Check out Dalberry’s Pre-application for a merchant account.

Why do I need to fill in an application?

The information required in the pre-application gives acquirers a clear view on your general business. This helps assess your risk level and your business potential in order to calculate the convenient rates and the type of account suitable for your needs.  

How long does it usually take for the merchant account to be open?

If you have all the required documentation ready to provide it may take as little as one week. However, if you don’t have all the necessary documents ready, the overall timeframe may go up to 1 month because of the back and forth. 

Dedicated and aggregated merchant accounts: what’s the difference?

A dedicated account entails individual handling of your processing account, including customized agreed rates that reflect your monthly transactions volume. As the name suggests, this account type enables you to negotiate rates and benefit from a more personalized service. As opposed to the aggregated merchant account type, the dedicated merchant account gives you more control over the management of funds. The aggregated merchant account type puts together several merchant accounts from different companies. In this scenario, you don’t get as much control over your money and the rates are not customizable according to the details of your business. If your processing volume is low, your acquirer will probably assign you this type of account by default. The highlight, however, is that you’ll be up and running much faster than with a dedicated account as the underwriting process is less comprehensive.

What is PCI DSS? Is it mandatory for my business to have one?

The Payment Card Industry Data Security Standard (PCI DSS) basically outlines the regulations in security that organizations working with the major card schemes must comply with. The standards dictated through PCI DSS are issued by the main card brands in order to prevent card fraud and ensure that the cardholder’s information passed on during a transaction is securely stored. Subsequent annual compliance checks are performed even after the PCI DSS certificate has been granted to an organization. There are processing solutions you may opt for that allow you to process online payments on your website without your business being PCI compliant. But it is mandatory for the gateway you work with to be PCI compliant, so don’t even ask yourself if your provider couldn’t do without.

When you open a new business, there are several aspects you need to consider. Providing online payment solutions is a must-have for any e-commerce. Your customers want to pay fast and they want to pay safe. No one is willing to wait for payment pages to load or for their favorite shop to integrate their preferred payment methods. People are dynamic. They have options and they value time. Accepting card payments on your website is a demand that you just have to meet.

The first step in this process is getting a merchant account. No, you cannot use your personal bank account in order to start processing transactions. Yes, you will have to open a merchant account. Browse through the FAQs below and apply now for a merchant account to start accepting card payments on your website.

Why do I need a merchant account?

The merchant account is mandatory in order to start processing transactions for your business. The money you make from customers’ online payments are then transferred to your personal bank account and you can retrieve them afterwards. This account is used to store the funds collected from the debit or credit card sales.

How to apply for a merchant account?

Most acquirers and payment gateways provide you with a merchant account application. Applying for a merchant account is free regardless of the response you get. You are usually required to fill in general information regarding the company, such as registration number and country of incorporation. Business model description, processing information and transaction history are as well inquired over. A business license is required. Want to see an example? Check out Dalberry’s Pre-application for a merchant account.

Why do I need to fill in an application?

The information required in the pre-application gives acquirers a clear view on your general business. This helps assess your risk level and your business potential in order to calculate the convenient rates and the type of account suitable for your needs.  

What are the conditions to be accepted for a merchant account?

Usually the first thing that banks and acquirers look at is the level of risk that your business presents. Some industries present a higher risk level: gaming, adult entertainment, air travel and ticketing. Risk level is associated with chargeback. Chargebacks represent a client’s refusal to pay the amount they were charged, which leaves the bank in the situation to cover that amount sometimes before the merchant has been able to pay it back. As you may imagine, banks are more than reluctant to start covering up for your loss, so it will qualify you as a high-risk merchant. Along come higher transaction commissions and higher deposits as prerequisites to opening your account. 

How long does it usually take for the merchant account to be open?

If you have all the required documentation ready to provide it may take as little as one week. However, if you don’t have all the necessary documents ready, the overall timeframe may go up to 1 month because of the back and forth.

Dedicated and aggregated merchant accounts: what’s the difference?

A dedicated account entails individual handling of your processing account, including customized agreed rates that reflect your monthly transactions volume. As the name suggests, this account type enables you to negotiate rates and benefit from a more personalized service. As opposed to the aggregated merchant account type, the dedicated merchant account gives you more control over the management of funds. The aggregated merchant account type puts together several merchant accounts from different companies. In this scenario, you don’t get as much control over your money and the rates are not customizable according to the details of your business. If your processing volume is low, your acquirer will probably assign you this type of account by default. The highlight, however, is that you’ll be up and running much faster than with a dedicated account as the underwriting process is less comprehensive.

What is PCI DSS? Is it mandatory for my business to have one?

The Payment Card Industry Data Security Standard (PCI DSS) basically outlines the regulations in security that organizations working with the major card schemes must comply with. The standards dictated through PCI DSS are issued by the main card brands in order to prevent card fraud and ensure that the cardholder’s information passed on during a transaction is securely stored. Subsequent annual compliance checks are performed even after the PCI DSS certificate has been granted to an organization. There are processing solutions you may opt for that allow you to process online payments on your website without your business being PCI compliant. But it is mandatory for the gateway you work with to be PCI compliant, so don’t even ask yourself if your provider couldn’t do without.