What is a merchant account?
Merchant accounts are a type of bank account that give businesses the ability to accept credit and debit card payments by serving as an agreement between a business, a merchant bank and a payment processor. When a customer pays a business using a credit or debit card, the funds go directly to a merchant account before being transferred to the business’ bank account at the end of the day or week.
When and why does a business need a merchant account?
If you plan to accept debit and credit card payments, whether online or in-person, you need a merchant account. Without a merchant account, your business has to rely on cash transactions to receive payment for goods and services.
Related: What is the Definition of Account Management in Business?
How to get a merchant account
To obtain a credit card merchant for your business, follow these steps:
1. Assess your needs
The services you should choose for your business depend on your business’ unique needs. If you run a storefront, a conventional point of sale (POS) system syncs merchant software with your register. There are also mobile setups and attachable card readers that allow you to accept card payments from anywhere. Additionally, if your business operates online, setting up an online payment gateway can be the most beneficial solution.
2. Compare merchant account providers
Once you’re aware of how you plan to accept debit and credit card payments, evaluate banks and merchant account providers that can support your business’ needs. Some providers may specialize in certain types of payments, so keep that in mind when evaluating your options. Aside from considering their services, compare the pricing and fees associated with each vendor.
3. Fill out your merchant account application
Most merchant account providers allow you to complete your application online in a few simple steps. To complete the application, you generally need to:
- Select the services and equipment you require.
- Fill out both your personal and business information.
- Provide additional details if applicable or necessary.
- Wait a few days to hear back.
Merchant account vendors usually approve applications based on details like what type of business it is, how long it has been in business, the business’ financial history and the business owner’s personal credit score.
4. Receive and set up the software and equipment
Once you’re approved, the vendor ships your software and equipment to you for you to install and set up. This process is typically pretty simple if you follow the instructions provided. Most vendors provide a lot of onboarding support as well, so you can contact them if you experience any issues.
