We at PaySimple get a lot of questions about merchant accounts, and we’d like to take a few minutes to let you know you’re not the only merchant wondering how this whole thing works.
Here are some frequently asked questions we receive about merchant accounts:
What is a Merchant Account?
Put simply, a merchant account is the bank account that allows a business to accept credit cards or ACH (e-check) payments.
How do I set up a Merchant Account?
To set up a merchant account, you’ll need to apply to a bank using your existing business checking account that’s associated with your business’s federal tax ID. The merchant account and your business account will be remain separate; your merchant account will collect the credit card or ACH transactions, then link to deposit into your business checking account.
What do I need in order to apply?
- A Signer (person who accepts responsibility for the account) with a driver’s license or other government issued ID, such as a passport.
- A Copy of a voided business account check OR a bank letter with your company’s name, account number, ABA bank number and signature from a bank officer.
- Proof of marketing material, such as a website, advertisement or sales sheet.
- Depending on the processing volumes requested, you may be required to provide additional information, such as bank statements and financial records. See more detailed merchant account underwriting information in a previous post.
What else do I need to start using my merchant account?
If you have a brick and mortar establishment, a credit card terminal will swipe your customers’ cards and process them through your merchant account. If not all of your business in is face-to-face, or the majority is done online, you’ll need to get a payment gateway, which is an online system for processing MOTO (technically “Mail Order/Telephone Order,” but this term applies to any transaction where the physical card is not present) transactions. Keep in mind that Swipe rates and MOTO rates will differ. A more comprehensive explanation of PaySimple’s credit card rates can be found here.
What is the difference between a merchant account and a payment gateway, and do I need a payment gateway?
In short, the merchant account is simply the bank account that provisions credit card transactions, and the payment gateway is the technology to relay credit card information from your business to the bank in a safe and secure manner. Because of this encryption aspect, you do indeed need a payment gateway in order to safeguard credit card numbers and other sensitive information.
When will I see the money in my checking account?
Different banks, transaction batches, and card providers make it difficult to say for sure when you’ll see your transactions deposit, but if you ask the right questions during the application process, you’ll be able to estimate the time it takes to see your money. First, your merchant account may have cut-off times for processing transactions and, much like depositing money in an ATM after hours, transactions processed after this time will be processed on the next business day. Your deposits may also be affected when you deposit your transaction batches – whether your software automatically processes those transactions or you’ll need to process the batches manually. Finally, you could also see variants in deposit schedules depending on the credit cards used. It is possible to see Visa/Master Card/Discover transactions process at different times than American Express. On average, it can take a payment one to three days to finally hit your merchant account.
If you have any other questions about merchant accounts, feel free to give PaySimple a call. We can not only answer any questions you may have, but also walk you through the underwriting process so you don’t have to deal with the bank directly.