10 Things You Need to Know About Opening a Merchant Account (6-10)

In part one we discussed:

  • The importance of underwriting
  • Need for business bank account
  • Need for a business license
  • The application process
  • Different requirements for different payment acceptance methods

In part two we’ll cover what documents are needed, how long it takes to be approved, and what fees may be associated with your account:

6. Supporting documents are required, and they depend on processing volume

The greater the amount you intend to transact, the more documentation the underwriter will want to see with your application. If your business is only looking to process a couple thousand dollars a month, you may only need to provide a voided check and marketing material (proving that you’re actively conducting business) to get started.

If you want/need to apply to process larger amounts, be prepared to provide more financial information, such as several months’ bank statements. In some cases you may be asked to provide up to two years’ financial statements in the form of profit and loss statements along with balance sheets.

Keep in mind: After you’re approved, the processor will monitor account activity, so it’s important to be as accurate as possible when listing processing volumes. You do not want to get in the habit of exceeding your processing limits, especially early on in the life of your account.

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7. You can be up and running in as little as one business day:

After completing your merchant account application, depending on how quickly you submit the required documents, your account can be set up in as little as one business day (sometimes within hours).

Underwriters operate under normal banking hours, so keep that in mind when submitting your application. Applications submitted later in the day will probably not be reviewed until the following business day.

If you choose to use a software provider like PaySimple to help guide you through underwriting, they can sync your merchant account to your software, and you can start processing transactions immediately following the approval from underwriting.

8. You can use the same merchant account from your storefront as you use online:

One cool thing about merchant accounts is that they are transferrable between your physical storefront and your online operation. As long as the platform at the two locations is the same, such as a TYSYS platform, you can use the same accounts. If you already have a merchant account for storefront or office, ask the representative assisting you with your application if it’s transferrable.

This is beneficial for two reasons:

  • You may not have to go through another round of underwriting
  • Your electronic payment processing will be consolidated

9. Processing fees and funding times may vary:

Depending on the type of payments you’re processing and through which methods, processing fees may vary. Your ACH/echeck processor may charge a flat transaction rate up to a certain amount, while your credit card processor may charge a flat rate plus an additional percentage fee. Credit card fees can also vary, depending on the card and payment method (card present vs. not present, etc). Be sure to study the Terms and Conditions on your application to fully understand the differences.

The varying fees are important to keep in mind when you have multiple payment options. If your customer is willing to pay via ACH by providing their bank account information, you’re better off using this payment type for large transactions because you will just be charged a flat transaction rate, as opposed to a flat rate plus a percentage of the charge.

Funding times are also dependent on payment type. ACH transactions may take 3-5 business days to fund, while credit card payments can land in your account as soon as 48 hours after your transaction.

10. PCI Compliance should be on your radar:

Prior to 2008, PCI DSS Compliance was considered a “best practice” for businesses with merchant accounts. Today, whether people realize it or not, it’s a requirement. So what is it? The PCI Data Security Standard (DDS) is a set of rules and regulations established by the credit card companies to ensure merchants are securely processing their customers’ payments. While you are not required to achieve PCI Compliance prior to opening a merchant account, you will need to soon after, so it’s a good idea to start thinking about it now.

While going through the underwriting process for your merchant account, take a hard look at your business environment, and make certain you are operating in a secure manner. Simple steps like shredding all documents containing credit card numbers, installing virus protection and anti-phishing software on all computers, and implementing strong policies regarding passwords and user IDs can go a long way towards protecting against a security breach.

Like the underwriting process itself, many software providers will walk you through PCI DSS compliance.

Takeaways to Keep in Mind:

  • Underwriting assistance is out there, and it’s sometimes free with 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.
  • 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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PaySimple is the leading provider of Service Commerce solutions, supporting the success of thousands of SMBs across the country. Its solutions change the lives of business owners by bringing simplicity and flow to their businesses. Service-based businesses can expand marketing, accept payments, and improve customer retention using one SaaS platform. Products include: ecommerce, appointment scheduling, credit card processing, recurring billing, mobile payments, secure customer management, e-invoicing, cash flow reporting, e-check processing, and more. PaySimple is headquartered in the heart of downtown Denver, CO.

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