Online Payments (eCommerce)

How Do I Set Up an Online Merchant Account for My Business?

As the world becomes increasingly digital, businesses are rapidly shifting towards online platforms to cater to their customers’ needs. One crucial aspect of this transition is setting up an online merchant account. In this blog post, we will guide you through the essential considerations and list down the expectations you should have when establishing an online merchant account for your business.

What Is a Merchant Account?

When customers pay for your goods or services online, the funds are processed by your chosen payment platform and then transferred to your merchant account. This account collects and holds the funds until the settlement date. While you may not have immediate access to the funds in this account, they will be deposited into your business account at a predetermined interval, usually once a week.

Only merchant accounts can collect payments using popular debit and credit cards such as Visa, Mastercard, or American Express. Every merchant gets a unique merchant ID (MID) after successfully applying for a merchant account. The payment processors, in partnership with an acquiring bank, provide these MIDs.

How Does a Merchant Account Work?

When a customer pays online, the payment request is sent from the payment page to the merchant’s acquiring bank via an integrated payment system. Then, the acquirer transmits the request to the customer’s issuing bank. If the customer has enough funds in their account, the transaction is authorized, and the funds are transferred to the merchant’s account.

If the customer’s account lacks sufficient funds, or if the issuing bank declines the transaction for any other reason, the payment process parties are informed about the unsuccessful request.

Getting Started

It’s important to conduct comprehensive research when choosing a merchant account provider, as this choice can impact the success of your business. Look for companies with a stable market position and years of experience offering cutting-edge technology and attentive customer service.

Select an online merchant account provider that offers the necessary features and integrations for your specific business model, as not all providers are compatible with every type of business.

When selecting a payment provider, choose one that prioritizes PCI compliance to protect your customers’ payment information. This security measure will prevent you from undergoing a lengthy PCI compliance review.

And lastly, consider providers that specialize in online payment processing and offer competitive rates.

Understanding the Fees and Requirements

Before signing up for an online merchant account, it’s essential to understand the fees and requirements associated with this type of account.

Merchant account providers typically charge a processing fee for each transaction, ranging from 2-5% of the sale amount. They may also charge a setup and monthly fee, while some providers may require a minimum transaction volume or credit score.

Getting an Online Merchant Account

After selecting a provider and collecting the necessary documents, you may proceed with the application process. This process typically requires completing an online application and supplying your business information, such as your website and payment processing requirements. Ensure that you answer all inquiries truthfully and precisely.

You can do this online, which is convenient and takes roughly 10 minutes if you have all the required documents. If you choose the right payment provider, they will help you complete the entire process and set up your account.

Businesses often ask how long it will take to complete their online merchant account application. Unfortunately, there is no definitive answer as it varies depending on the provider’s policies and the complexity of the application. Typically, it will take a few days to a few weeks.

It’s important to note that underwriters often work during standard banking hours, which means the timing of the application is critical. It’s best to plan ahead to ensure a smoother and quicker process.

Preparing for the Underwriting Process

Your website will be pre-approved for compliance requirements. In most cases, you’ll only need to provide a working URL, and in the meantime, you can start collecting all the necessary documents, including:

Proof of incorporation (company name, registration number, address)
Phone number of the primary owner
Certificate of directors or current appointment report (information about the top management of your company)
Shareholder certificate or annual report
Management credentials (i.e., a photo of the director’s passport, a utility bill, etc.)
Proof of business ownership
Current processing history for the last six months, if applicable
Business bank account and bank letter

Also, provide a brief overview of your business model and the products or services you plan to offer. A reliable payment platform can assist you in preparing and securely submitting your application to the relevant acquiring bank.

Waiting For Approval

Once you submit the required documentation, you will proceed to the underwriting process, where the processor or acquirer will assess the level of risk involved. The underwriting procedure may vary depending on the specific guidelines of the bank. Since banks and payment processors take a risk by opening a merchant account, they conduct a thorough investigation of the company you represent.

It would help if you also prepare to supply supporting documentation, typically dependent on processing volume or when you begin accepting payments. The underwriter will need proof that your business is currently operational.

If everything checks out, you will receive your bank and gateway agreements. You must thoroughly read through the terms and conditions of your merchant application before signing any contracts. Be sure to check for hidden costs or potential issues with contract termination. Once you have signed the agreements, your merchant account is active.

Setting Up Payments on Your Website

In the meantime, you can start the integration process. If you’d like to process payments through Shift4, go to the documentation section. If you have any queries, you can check our knowledge base resources or get assistance from technical support.

We recommend testing the system before transitioning to “live mode” to ensure everything works correctly. Therefore, it is better to opt for solutions with a sandbox mode, enabling you to view the entire payment process using testing credentials.

Key Takeaways

Getting an online merchant account is essential for any business that wants to accept online payments. By researching providers, understanding fees and requirements, gathering the necessary documentation, completing the application, and waiting for approval, you can obtain an online merchant account and start accepting payments quickly and easily. Choose a provider that suits your business’s needs and offers competitive rates.

Do your research to ensure you get the best deal, as different providers may have different fees, features, and contract terms.
Find a merchant account provider that takes PCI compliance seriously.
Prepare your website. Make sure it stays in line with website compliance requirements.
Plan. Gather all required documents before submitting your application. This typically includes a copy of your business license, proof of identity, and a voided check or bank statement. Some providers may also require financial statements or tax returns.
Test the payment flow before going live.