Opening a Merchant Account: A few Things to Consider

Feb 08, 2017

A merchant account is one of the essentials to the success of your business. Cash sales, snail mail, and paper invoices are no longer an effective way to collect payment. If you want your enterprise to grow, you should be able to accept credit cards. And for that, a merchant account is what you need.

Thanks to straightforward companies like eMerchantBroker, acquiring a merchant account is now fairly easy. However, you still have to know what to expect when applying for one.

  1. The application process

Your journey to credit card processing will naturally start with an application. Many account providers provide online applications which take only a few minutes. The data you’ll be required to submit may include information about the business as well as its authorized owners, bank account and routing numbers, tax ID (EIN) and previous payment processing volumes (estimates if it’s a new business).

  1. Underwriting

Providing payment services is risky business. Not only can every dollar processed through the firm’s system be charged back, but in case the client’s business goes under, due to financial hiccups, legal problems or what-not, the account provider can incur losses as well.

Therefore, a system has to be in place that allows payment processing firms to vet potential customers. Consequently, when opening a new merchant account, expect the company to assess the level of risk of your business, by looking at things like the possibility of chargebacks, and the legitimacy of your operation.

And if your business is the high-risk type, we recommend working with a provider that is experienced with high-risk payment processing and can thus make the necessary considerations while underwriting.

  1. You will need a business bank account

This might seem obvious, but a business bank account is one of the things you should have before you approach the provider for a merchant account. This bank account will be the destination of funds for the card payments your customers make, as well as where your transaction fees will be debited. While not necessarily a requirement, it is advisable to keep a bank balance that is sufficient enough to cover your monthly processing fees.

  1. PCI compliance

The PCI Data Security Standard (DDS) is a set of rules that ensures merchants securely process their customers’ card payments with merchant providers. Achieving PCI compliance before you open an account is not a requirement, but because you will need to soon after, you should probably start thinking about It now.

And how do you achieve compliance? By making sure your business is operating in a secure manner, through steps such as shredding confidential documents, installing anti-virus and firewall systems, implementing stringent policies regarding password and user ID authorization, etc. Thankfully, many competent processing companies will guide you through PCI DDS compliance.

With a firm that works on its toes, your business can start accepting card payments as early as the next day, after submitting your application. However, do not be in a rush. Be prepared to provide all the necessary information, and even more importantly, study the Terms and Conditions on your application carefully, including all the transaction fees.

Having the relevant knowledge at your fingertips will significantly smoothen the process of opening a merchant account.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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