Introduction

A merchant account is a bank account that is specifically used for accepting customer payments, usually by credit card, debit card or other electronic transfer. It’s not a standard business bank account. A merchant account holds on to funds before they’re transferred to the merchant’s primary business bank account.

How to open a merchant account

While the process of setting up a merchant account may feel overwhelming at first, it’s essential to a great business. Here are seven steps on how to get a merchant account.

1. Get a business license

To open a merchant account, you’ll have to prove your business is legitimate. The very first step to setting up a merchant account is to get a valid business license.

2. Open a business bank account

Once you have a business license, you’ll need a business bank account. This bank account is where your merchant account provider will deposit your credit card sales and withdraw any fees. Most businesses prefer to open a business bank account with a local bank, as local banks tend to provide a level of convenience and customer service that can’t be matched by online accounts. To get started with a business bank account, you’ll need to provide your EIN (employer identification number) and your business license.

3. Evaluate your needs

Before you can open a merchant account, think about your business needs. For example, you’ll need to decide which credit cards you want to process. Will you accept American Express, or just Mastercard and Visa? What about ACH or eChecks? Next, you’ll need to consider how you want to accept credit card payments. Do you simply need an in-person solution for processing payments in your brick-and-mortar store? Or do you need a solution that supports mobile payments and online payments? How will your customers pay you—will you provide a customer payment portal where customers can pay off invoices?

Map out exactly what your business will need, including both the short-term and the long-term. If you’re planning on expanding in the next few years and anticipate additional payment needs in the future, be sure to include them in your planning.

4. Compare providers

Now that you have an idea of what your business needs, you can take that information and start assessing merchant account providers for the best fit.

Checkout Transfi for landing to the right medium which will comply with your business needs and provide you best transaction via your merchant account.

5. Complete an application to open your merchant account

Once you’ve compared merchant account providers and made a choice, you’ll need to fill out an application. This application will require detailed information about your business, so be prepared with all necessary documentation. 

6. Submit to underwriting

Taking on a merchant account is a risk for both the account provider and the acquiring bank. The provider will, therefore, underwrite and assess your business before accepting you. They’re looking for red flags like high-risk businesses or industries, warning signs of fraud, or businesses that haven’t been operating for very long. If your business is established and has proven good standing for at least a few months to a year, you should make it through the underwriting process without any problems. However, new businesses may struggle to make it past the underwriting stage, as account providers and banks are less likely to accept the risk of a new business.

7. Get your merchant account approved and start processing

Depending on the provider, opening a merchant account can take anywhere from one business day to about a week. Once your business is approved, you can start accepting credit card payments from your customers right away.

How to choose the right merchant account provider

Here are a few things to keep in mind while choosing a merchant account, find out how Transfi provides a one stop solution for your merchant account needs;

1. PCI compliance and strong security

Merchants have a responsibility to protect their customers’ credit card information, and that responsibility can sometimes feel like a burden. But you can release some of that stress by choosing a PCI compliant merchant account provider that offers strong security features. Knowing your merchant account provider is actively protecting your customers’ vulnerable data will lift off some of the pressure and give you peace of mind.

2. Free in-house support

If something goes wrong with your credit card processing, it’s no joke—that’s your profit at stake. Look to open a merchant account with a provider that supports you with 24/7, in-house customer service free of charge.

3. Next-day funding

Some merchant account providers offer next-day funding options, so you get money in your account faster.

Transfi helps in instant transfers that happen within seconds which saves time and energy involved in running longer transactions.

4. Transparent pricing models

Credit card processing fees are confusing, especially for merchants new to the scene. If your merchant account provider is unclear or anything less than completely transparent, it might be a sign to reconsider. Research credit card pricing models to see which model is right for your business, then choose a provider that offers your preferred method. Two of the most popular and cost-effective pricing models are flat rate and interchange plus.

5. Scalability

Keep the future in mind when opening a merchant account. Your business may be small or based in brick-and-mortar now, but if you have plans to expand or venture online, you’ll need a merchant account provider that can scale with your growing processing volume and changing needs.

6. No contracts

Ensure your merchant account provider doesn’t require a contract or choose one that offers month-to-month contracts. The last thing you want is to get locked into a long contract with a provider that turns out to be a bad fit.

7. No unnecessary fees

Finally, research any fees that will be included in your merchant account service. Some fees are unnecessary and only hurt the merchant. Ask for a detailed list of all included fees, and look out for customer service fees, batch fees, annual fees, and monthly minimum fees.

Transfi provides solutions like Bizpay, collections and payouts to look into international transactions with minimal cost of setting up and no following charges, make operations easier by choosing transfi for all your business needs when it comes to any scale of transactions. 

Benefits of a merchant account

1. Accept Credit Cards

One of the most important benefits a merchant account can bring is the ability to accept credit and debit cards. Credit cards and debit cards continue to grow in preference among customers, gaining ground as the new ‘norm.’ Businesses who prioritize their customer experience often find that by eliminating any friction in the buying or payment acceptance processes can help get new customers and improve cash flow.

2. Increase Sales

A variety of studies and research over the years have found that customers spend more when given the option to use credit cards over cash.This increase could directly impact sales and overall growth of your business.

3. Better Money Management

Accepting credit cards and moving to online payments streamlines the way your business handles transactions. Instead of counting cash, electronic payments will help keep you organized and allow for better cash flow management and forecasting.

4. Avoid Bad Cheques

By using merchant account services and accepting electronic payments, your business can avoid the hassle and costs associated with bounced cheques. Additionally, paired with a complete payment system your merchant account can give you the ability to accept recurring payments for services that you provide on a repeat basis (classes, landscaping, cleaning, etc).

5. Customer Convenience

A merchant account can lead to happy (and returning) customers simply because it gives them the flexibility to make purchases in different ways. Whether it’s with credit or debit cards, online payments through a shopping cart for your services, mobile payments, or recurring billing, your customer will enjoy their experience with your business when they can shop how and when they want—with ease.

Checkout Transfi’s Bizpay for easier transactions, faster and automated payouts, collections and simplified transfers.

Conclusion

In today's digital age, businesses must offer various payment options to accommodate customers' preferences. While cash, paper checks, and debit cards were once the standard, credit cards have become increasingly popular in recent years. However, even credit card payments are starting to fall behind with the advent of ACH (Automated Clearing House) and bank-to-bank transfers, which offer a more seamless and efficient payment processing experience. Accepting ACH and bank-to-bank transfers can be a significant advantage for small or big business owners. These payment methods are typically faster and less expensive than credit card payments and can also be more secure. However, a business owner must invest in a merchant account to accept ACH and bank-to-bank transfers.

Frequently asked questions (FAQs)

1. What is a merchant Account?

A merchant account is a bank account that is specifically used for accepting customer payments, usually by credit card, debit card or other electronic transfer. It’s not a standard business bank account. A merchant account holds on to funds before they’re transferred to the merchant’s primary business bank account.

2. What are the benefits of a merchant account?

• Accept Credit Cards
• Increase sales
• Better money management
• Avoid bad cheques
• Customer convenience 

3. What are the steps to make a merchant account?

• Get a business license
• Open a business bank account
• Evaluate your needs
• Compare providers
• Complete an application to open your merchant account
• Submit to underwriting
• Get your merchant account approved and start processing

4. Why is Transfi considered one of the best solutions for making a merchant account?

Transfi provides solutions like Bizpay, collections and payouts to look into international transactions with minimal cost of setting up and no following charges, 

It provides easy setting up of merchant accounts and accountability by provisioning 24/7 customer service making operations easier for all your business needs when it comes to any scale of transactions.

5. How to choose the right merchant account?

When choosing a merchant account, look for the following,

• PCI compliance and strong security
• Free inhouse support 
• Next day funding
• Transparent pricing models
• Scalability
• No contracts 
• No unnecessary fee