Setting up a merchant account is a little bit harder than setting up some other types of accounts, such as checking or savings. However, it's not too hard if you know what to do. Here we will show you how to go about setting up a merchant account and the actions that need to be taken in order for this to happen.
- Decide what type of merchant account you need.
There are three types of merchant accounts: a basic merchant account, a high-volume merchant account, and a third-party processor account. Basic merchant accounts are best for businesses that process less than $3,000 per month in credit card transactions. High-volume merchant accounts are best for businesses that process more than $3,000 per month in credit card transactions. Third-party processor accounts are best for businesses that want to use a third-party company, such as PayPal, to process their credit card transactions.
- Gather your business information.
In order to set up a merchant account, you will need to provide your business's contact information, such as the business name, address, and phone number. You will also need to provide your business's Tax ID number and, if you are a sole proprietor, your Social Security number.
- Research merchant account providers.
There are many different merchant account providers out there, such as Wells Fargo and Chase Paymentech. As a result, you will need to do some research in order to find the best provider for your business. It is recommended that you ask friends and family members if they have a favorite merchant account provider or if they know anyone who has a merchant account. You should also look online for reviews of different providers, and compare the fees of different providers, which you will find on each provider's website.
- Apply for a merchant account.
Once you have found the best merchant account provider for your business, it is time to apply for a merchant account with that company. In order to do this, you will need to fill out a merchant account application. This will require that you provide your business's contact information, such as the business name, address, and phone number. You will also need to provide your business's Tax ID number and, if you are a sole proprietor, your Social Security number.
- Receive approval from the merchant account provider.
After you have submitted your merchant account application, the provider will review it and decide if they want to approve your business for a merchant account. If they do, they will notify you and provide you with more information about how to set up your merchant account. If they do not approve your business, they will let you know why and provide you with information about what you can do to get your business approved.
- Set up your merchant account.
If the provider does approve your business, it is time to set up your merchant account with them. The majority of providers will require that you sign a contract, which outlines the terms and conditions of their agreement with you. You will also need to provide your business's bank account information, such as the account number and routing number. Once you have done this, the provider will deposit a small amount of money into your bank account as a test transaction. This is called a "test deposit" and it is used to verify that your bank account information is correct.
- Receive approval from the card associations.
Once you have set up your merchant account, it is time to receive approval from the three major credit card processing companies: Visa, MasterCard, and American Express. In order to do this, you will need to sign a contract with each company that outlines their terms and conditions of doing business with them.
- Check your merchant account activity regularly.
Once you have your merchant account set up, it is important that you check your monthly statement to ensure that everything looks accurate. If there are any errors on the statement, contact the provider immediately so they can correct them for you. It is also important to understand how refunds and chargebacks affect your business before you sign up for a merchant account, which I will talk about in the next section.
Merchant accounts are set up so that money is deposited directly into your business bank account every day. This means that if someone makes a purchase using one of your credit cards on any given day, some of those sales may not show up in your bank account until the following day. This is because the credit card companies take a few days to process all of the transactions that happened on a given day. As a result, you may see slightly different totals in your bank account and in your merchant account statement.
- Understand how refunds and chargebacks work.
One of the most important things to understand about merchant accounts is how refunds and chargebacks work. A refund is when a customer requests their money back for a purchase that they made using their credit card. A chargeback, on the other hand, is when a customer disputes a purchase that they made with their credit card. In order to protect themselves, the credit card companies may side with the customer and refund money back into their account. If this happens, your business will not receive that money. As previously mentioned, chargebacks happen when a customer disputes a purchase using their credit card.