How to set up a merchant account?

To set up a merchant account, start by obtaining a license, opening a business bank account, evaluating your needs, comparing service providers, applying, undergoing underwriting, getting approved, and initiating payment processing.

What do I need to open a merchant account?

When you apply for a merchant account there is a decent amount of information and documents you must provide. You need to provide detailed information about your business . This includes your legal business name, business structure (such as an LLC or corporation), and contact information like your business address. You will also need to submit important business registration documents such as a business license, articles of incorporation or organization, and your Tax Identification Numbers. This includes details like your Employer Identification Number (EIN), Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN). You will also need to provide banking details , such as your business bank account information and either a voided check or bank letter. If applicable, you may also need to provide details about your processing history, such as chargeback rates and transaction volume. If you plan to accept payments online, you will need to provide information about your website , including its URL and security measures. Some payment processors or financial institutions may ask for a brief business description or plan . You will also need to comply with industry regulations , such as PCI DSS, for handling cardholder data. Depending on the payment processor or financial institution, you may need to provide additional underwriting information such as financial statements or credit history. It's important to check the specific requirements of your chosen payment processor or financial institution to ensure a smooth application process.

How to get a merchant ID?

To receive a Merchant ID (Merchant Identification Number or MID), you need to open a merchant account with a payment processor or acquiring bank. Your MID will automatically be issued after being accepted for a merchant account. The Merchant ID is a unique identifier associated with your business within the payment processing system, and it allows transactions to be tracked and managed.

How to get a merchant account with bad credit?

To receive a Merchant ID (Merchant Identification Number or MID), you need to open a merchant account with a payment processor or acquiring bank. Your MID will automatically be issued after being accepted for a merchant account. The Merchant ID is a unique identifier associated with your business within the payment processing system, and it allows transactions to be tracked and managed. How to get a merchant account with bad credit? In situations where businesses have a higher risk profile or bad credit, there are specialized companies that focus on offering merchant accounts. These high-risk merchant account providers tend to be more open to working with businesses that might face challenges securing approval from traditional banks.

What are the types of merchant accounts?

The main types of merchant accounts are retail, e-commerce, mobile, telephone, and mail-order. Each is tailored to suit specific business models.

Blog > How to Open a Merchant Account: 7 Steps to Start Accepting Credit Card Payments

How to Open a Merchant Account: 7 Steps to Start Accepting Credit Card Payments

By Niki Blois|Last Updated: November 18th, 2024|

The #1 customer-rated merchant account

If you’re looking to start accepting credit card payments from your customers, then you’ll need 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.

How to open a merchant account

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

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.

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.

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.

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.

The video below will explain what to look for when finding a merchant services provider.

Here are a few more key features to look for when opening a merchant account:

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.

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.

Next-day funding

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

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.

The podcast episode below goes into each pricing model in detail: