Owning a high-risk business doesn’t necessarily stop you from holding a merchant account. It is, however, more challenging than getting one for a low-risk business. Providers such as banks and independent companies deliberate how long you’ve been in business, your credit history, and if you have held any other similar accounts.
Account providers consider the time you have been in business to assess risks and determine your experience in the business world.
Also, these providers want to know you understand bookkeeping and other financial matters before approving a merchant account.
Here are some tips before you can start accepting credit card payments for your business.
A business bank account is a must for opening a merchant account
All kinds of businesses, including partnerships or sole proprietorships, must have a business bank account before they can start accepting payments via credit cards. Only business licenses and EINs are needed to open a business bank account at most banks throughout the country. It will act as a default destination for all your payments and the deduction of fees and other charges associated with the services. Ensure that the account always has enough balance to cover the transaction costs and additional costs of maintaining a merchant account.
Filling the application
Before underwriting the merchant services, you must fill out an application. Fortunately, you have the option to do this online. In about 10 -15 minutes, you will complete the application process along with an online signature, saving you the burden of faxing, printing, and scanning. You will have to provide your business information, bank accounts, and other routing numbers like tax IDs, etc. this is an essential step in the whole process. Your aim must be to provide accurate information as any discrepancies can harm you later on.
Different payment acceptance may need a separate merchant account
If you’re considering accepting credit cards and other payments, you may essentially have to undergo separate underwriting procedures with a different processor. While several credit cards you offer may transact through one processor, the other transactions may have to go through a separate processor. It typically doesn’t need an additional request if you use a software provider or an independent sales organization.
The application that you filed earlier for your merchant account asks you about the type of payments that you want to accept. This information would include the other parties who can have access to the account available in your application’s terms and conditions. You must read them in detail if more than one party is involved.
Supporting documents
The number of supporting documents required for the opening of an account depends on the amount that you want to transact through it. For a small amount of $3000 – $4000, you may get away by only showing a voided check and your marketing material to ensure that it is a business.
Processing fees and funding time
Just like supporting documents, processing fees also vary depending on the amount and type of payments you want to process through the account. A credit card processor usually charges at a flat rate and an additional percentage fee. However, credit card fees vary depending on the type of card and payment method.
Funding times are also reliant on payment type. Automated clearing house (ACH) transactions may take 3-5 business days. At the same time, credit card payments would only require 48 hours to go through and show in your account.
A thorough study of terms and conditions will equip you with the right information to make the right decision about choosing your merchant account.
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