10 things you should know about opening a merchant account

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How you got here: Your business is growing, and you’re looking for ways to

streamline and automate your billing process Your customers want more payment options, outside of

cash and paper checks You use your computer for other aspects of your

business, why not payments? You’re simply tired of dealing with paper invoices, manual

tracking, and snail mail

You’re ready for a merchant account

? How do I start the process of opening a merchant

account? Is there help out there, or do I have to deal with the

underwriters directly? Wait, underwriters? Well what type of documentation do they want to see? How long will this process take? What other payment options are there, in addition to

credit cards? I have an account for my storefront; can I use it online?

But you have questions:

We’ve got answers:

Underwriting What you need prior to starting the process The merchant account application How long it takes to be approved Security (PCI Compliance) And more…

In 10 things you should know about opening a merchant account, we’ll discuss:

1. Why underwriting is necessary Processors review the likelihood of chargebacks:

Why? Because they can be left responsible for any funds transacted through their system. Simple example of a transaction gone wrong:

Processors are also concerned with the legitimacy of the business, as fraudulent merchants are major contributors to chargebacks.

Help is out there: Seek underwriting assistance from your software provider or Independent Sales Organization (ISO).

Transaction is run

Good or service not delivered

Customer issues

chargeback

Merchant cannot

reimburse charge

Processor left

responsible for the

funds

Funds delivered

to customer

at processor’s expense

2. You need a business bank account Funds processed through your merchant account will land in your business

bank account:

Processing fees are typically withdrawn from the business bank account once per month, so always have funds available in the account.

A tax ID (or EIN) is required to open a business bank account and can be acquired at the IRS website in minutes.

Merchant

•Payment information is entered

•Card swipe, Bank info keyed, etc.

•Information transferred to processor

Processor

•Processor checks availability of funds

•Transaction completes

Banks

•Bank withdraws funds from issuer or bank account

•Funds are delivered to merchant’s business bank account

3. A business license is usually required, too. Underwriters may accept anything from fictitious name

statements to articles of incorporation, depending on the business type.

Visit your Secretary of State website to file your license. Why?

Underwriters file a copy of the license to validate your business’s standing

Business licenses are good for tax purposes, as well

4. It all starts with an application Some merchant account applications can be completed

and signed online, so you don’t have to hassle with printing, scanning, or faxing.

Make sure that the previously mentioned bank account information and EIN are on hand prior to starting the application.

Other information you should be prepared to provide includes (but is not limited to):

Contact information Business Start Date Authorized signer information

5. Credit Card and ACH may use separate accounts In addition to a credit card merchant account, an ACH account may be

a good fit for your business as well: ACH merchant accounts (also called “eCheck”) transfer funds from your

customer’s bank account to your business bank account Oftentimes, the rates associated with ACH accounts are lower, depending on

the size of the transaction. While credit card transactions and ACH transactions may use separate

processors, you can sometimes use the same application, if you have a third party, such as a software provider, assisting you:

Merchant Account

Application

Credit Card underwriting

ACH/eCheck underwriting

At the very least, the processor will want to see a copy of a voided check to verify your business bank account.

Other documents that may be required, depending on the amount you’re looking to transact, include: Marketing material (to prove you’re actively conducting business) Business license Bank statements Financial statements (for high volumes) Others may be requested…

6. Supporting documents are required

7. It may only take a couple of hours! Processors work under normal banking hours, so

depending on when you submit your application, you can sometimes be up-and-running in a few hours.

It’s important to submit the required documents to the processor, or third party assistant, as soon as possible for fast turnaround.

Once your account is approved, you can sync it to your software or in-store system immediately and start processing payments electronically.

8. Merchant accounts are transferrable Do you want to use the account online and in your store?

As long as the systems you use are compatible with the same platforms, such as TSYS, this is possible

Benefits of using the same account over multiple systems include: No additional round of underwriting Your electronic payments are consolidated

Merchant Account

Online payments

In-store payments

with swiperPayments

accepted via Telephone

There are multiple methods through which to transact through your merchant account: Card present Card not present Over the telephone On your website etc.

Different transaction types may have different fees associated with them, so be sure to check the Terms and Conditions on your application for specifics.

Funding times between different credit cards, as well as ACH payments, may vary as well.

9. Fees and funding times may vary

Since 2008, PCI DSS Compliance has been a requirement. What is PCI DSS?

A set of rules and regulations established by the credit card companies to ensure merchants are securely processing their customers' payments.

What can you do to be prepared for PCI Compliance? Shred all documents containing credit card numbers Install virus and anti-phishing software on all computers Implement policies regarding passwords and user IDs

Ask the processor you choose what steps need to be taken to comply with the PCI DSS – most are willing to help!

10. PCI Compliance is mandatory

Key Takeaways: Underwriting assistance is out there, and it’s

sometimes free through software companies, so seek help if you need it!

Make sure you have any necessary business licenses, tax IDs (EINs), or bank accounts set up prior to starting the process.

Be prepared to provide a good chunk of information about your business, including estimated sales volumes.

Study the Terms and Conditions on your merchant account application, including processing fees.

Key Takeaways (cont.):

The underwriting process is fairly quick, but plan ahead so you’re not scrambling right before you need to transact electronically.

If you have a merchant account for your storefront, see if its platform is compatible with the online software you choose, or vice versa.

Start thinking about the PCI Data Security Standard (DSS) so you are prepared to comply upon approval of your account.

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