When Applying For Merchant Accounts

For most businesses, a merchant account is essential to economic growth. Merchant accounts provide business owners with a way to accept credit and/or debit cards, gift cards and other forms of electronic payments and are commonly referred to simply as payment or credit card processing. As a general rule, any merchant who accepts payment in exchange for goods or services must apply for a merchant account if they wish to accept electronic payments. Surprisingly, however, not everyone is approved for merchant accounts. One example of a potential problem could be a business owner who has little or no credit or even a poor credit history may find it difficult to obtain a merchant account.

For a lot of online entrepreneurs, the way people do business has been revolutionized by PayPal. Allowing you to instantly send or receive payments using a credit card or checking account is an online payment system but for PayPal, users are not required to have a merchant account and they do need to perform a credit check before they issue an account. In a nutshell, anyone with any type of credit history can sign up for a PayPal account and begin accepting electronic payments within minutes.

For those who need merchant accounts for in-store payment processing but do not use the Internet, what you will find is that there are fees that accompany each credit card payment. The actual cost will vary among providers, but the fees are always present. Transaction, authorization, statement, monthly minimum and chargeback fees are among the common fees that are charged. Automatically charged to the business owner if they process a credit card payment that is ultimately denied for any reason is a chargeback fee. In this scenario, in order to compensate the business for its cost, the business owner would then be responsible for having their customer pay the chargeback fee.

When applying for these types of accounts, business owners are required to be able to provide a valid business license, business location, description of the company, and other verifiable information used to perform a credit check on the owner. The bank will issue a credit card terminal and/or other equipment upon approval that will be used to process payments. The equipment may or may not remain the property of the issuing bank but it would depend on the terms of the agreement.

When deciding where to apply for merchant accounts, business owners should consider starting at the bank where they already have a personal account. This will enable them to do business with a bank that they are already familiar with and they may find that their past responsibility in handling their own account may carry substantial weight when applying for merchant accounts from the same institution.

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