Having a merchant account allows you to accept credit and debit card payments. Because you’ll be handling credit cards – a very powerful payment instrument – getting approved for a merchant account is a serious process that can take several days or even a few weeks.

Merchant services providers need to protect the credit card payment system from potential abuse, so several steps are necessary to approve businesses who apply for a merchant account.

Applying for a Merchant Account

A merchant account is a type of credit account.

Payment processors take on risk by allowing businesses to accept credit card payments. Your business is paid for purchases before your bank (and the credit card issuing bank) receives payment from the customer.

After you’ve been paid, customers have a certain amount of time to request a refund, either directly from you or from their bank or credit card issuer. This increased risk is why applying for a merchant account requires more information from you.

Here’s what you’ll need to qualify for a merchant account.

1. A Business

To apply for a merchant account and accept credit cards, you need to have a legitimate business.

You’ll need to provide your:

• Legal business name as filed with the IRS
• DBA name
• Tax ID Number
• Physical address (no P.O. Box)
• Business telephone number
• Functional email address
• The URL of your website if you’re accepting payments online.

In addition to your business information, at least one employee from your company must provide personal information as the signor on the account. This individual will need to provide their social security number, copy of driver’s license, in some cases to make it easier to verify the signor. The merchant services provider will verify that the person hasn’t been blacklisted due to previous merchant services accounts.

If you’re applying for a merchant account as a sole proprietor, you must provide your social security number, home address, and phone number.

2. Good Credit

In some cases, a credit check may be conducted for sole proprietor or LLC.

An initial soft credit pull be will done to check your credit history. Depending on the results of the soft pull, the merchant services provider may need to do a hard pull to review your complete credit history to determine whether to approve your application.

Applicants with poor credit – e.g. recent bankruptcies or other serious delinquencies – may be denied for a merchant services account. Generally, if you have trouble getting approved for a credit card, you might also have trouble getting approved for a merchant.

3. A Valid Checking Account

You’ll need an open and active checking account so your credit card revenue can be deposited into your account.

The merchant services provider will need to deduct rates and fees directly from the account, so you can’t use a savings account. While you’re able to use a personal or business checking account, a business account is typically better for accounting purposes.

Typically, the merchant services provider only needs your checking account and routing number to process your application. However, if for some reason, your account can’t be verified, you’ll be asked to provide a voided check from the account you want to use.

4. Financial Statements

Depending on the merchant services provider and the level of risk of your business, you may have to provide certain financial statements to show the financial viability and profitability of your business.

For example, you may be asked to provide up to three months of bank statements, credit card processing statements from previous processors, and profit and loss statements or balance sheets.

5. Your Website

If you plan to accept credit cards online, you’ll need to provide the URL or a mock draft of your website for review.

The merchant services provider will use the website to verify the nature of your business and the products and pricing. The information on your website should match the description provided in your application. Your website should also contain:

• Customer service contact information. This should match the information provided on the merchant services application
• Viewable refund policy
• Delivery and shipping policy
• Terms and conditions
• Privacy policy
• Statement disclosing how the transactions are secured.

To qualify you for a merchant account, your merchant services provider ultimately wants to be sure that you’re operating a financially sound business and acting in good faith. Proper vetting protects you, your customers, and the companies involved in the credit card process.

Ready to apply for a merchant account? Connect with an EBS consultant to get started.

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