How to open a merchant account

Opening your business to the world is an exciting time. It’s also the time you need to make important decisions about fundamental infrastructure. Accepting card-based payments and alternative payment methods like digital wallets is essential for most businesses.

This article outlines the necessities of what you’ll need to know to get your business started with a new merchant account to accept card payments.

What’s a merchant account?

Merchant accounts are different than your business bank account that you use for day-to-day expenditures. A merchant account is a special type of account that allows business to accept credit cards, debit cards and other electronic forms of payment. Merchant accounts are governed by agreements between your business and your payment processor or merchant services provider. Merchant accounts make it easier for businesses to receive funds from customer purchases in a timely manner.

Does every new business need a merchant account?

If you plan on accepting credit card and debit card payments, your business needs a merchant account.

The historical norm is for new merchant accounts to be obtained directly. But merchant accounts aren’t suited for every business. Today, there are also many third parties that facilitate payments for smaller businesses as part of a broader offering of services. Many payment facilitator service providers offer a full range of payment features that are ideal for many new businesses looking for easy and simple onboarding.

Payment facilitators may offer underwriting, compliance, reporting and customer service in addition to core payment processing. A payment facilitator functions as an aggregator, providing payment services as part of broader offerings for small businesses such as gateway services or e-commerce platforms.

Where do I open a new merchant account?

New merchant accounts can be opened with a payment processing company or via a third-party merchant services provider. The financial institution that holds your business bank account can often help obtain new merchant account on your behalf.

Can I open a merchant account online?

Yes. An online merchant account enables your e-commerce business, allowing you to accept payments via the internet. With options like PayPal and Google Checkout (among many others), account setup is quick, usually a matter of days, and often flexible to your needs. Options range from free with transaction fees to monthly membership fees to a one-time licensing fee.

What will I need to do to open a new merchant account?

New merchant accounts require underwriting and approvals. That approval process begins with an application to a payment processor or merchant service provider. The process is easier than it sounds and is faster than ever before.

What you’ll need to get started depends on several factors like the number of transactions and total purchase volume you expect. Like a loan, the underwriting process may require additional documentation to account for your business history, especially if your account requires a high line of credit. At minimum you’ll want to be prepared to provide a few essential items:

• Company number, charity number or VAT number
• Personal identification documents or proof of address
• Direct debit-enabled bank account
• An estimate of the transaction volume (sales) you expect from card payments

What are the next steps?

Establishing a new merchant account either directly or indirectly is a necessary first step to accept card payments from your customers. You’ll want to have a good idea about how you want accept payments.

For in-person (“card-present”) transactions you’ll want to choose between a simple credit card terminal, a smart terminal and a fully integrated POS system.

Will your business accept payments over the internet?

When doing business online, it’s useful to consider the answers to these questions:

• Do you need gateway services or an e-commerce platform provider?
• Do you plan on offering subscription services that require monthly recurring payments?
• Do you have a security plan to protect your business from payment fraud and data breaches?

Getting your payments in order is an important checklist item to start your business off right. A great way to begin is to connect with a payments expert who can help you navigate the options and find a solution that’s customized to your business needs.

Worldpay makes card transactions as secure and seamless as possible online, in-person or wherever commerce takes place. Simply and flexibly connect your business to the future of commerce and open a new merchant account with Worldpay today.