You have a great business idea, a plan for how to execute and a target audience in mind. That’s awesome! What’s next?
You have to figure out how you are going to accept payments from customers for your goods and/or services. There are a variety of options on the market and different ones will work better for different businesses. In this article, we will discuss the specifics around how to set up a merchant account to get your business up and running.
- How to Setup a Merchant Account Online
The fastest and easiest way to set up a merchant account is online. While it’s possible to go from bank to bank, asking questions and gathering information, it’s much quicker to do it online. Most of the information you need is already there if you know how to find it.
- Step One: Do Your Research
We recommend first searching for the various merchant account vendors with whom you could do business. There are a number of different service providers for this, so doing the research is the most important step. Doing a search in a search engine and reading the reviews on various payment processors can give you a better idea on what you are looking for.
By understanding what each payment processor offers, you can find exactly what you need without much hassle. It is also important to pay attention to the fee structures, setup costs, equipment costs and other such factors. It’s important to gather this information before making your decision on who to work with. Setting up a dedicated online credit card processing account will generally allow you to process sales with lower costs than popular alternative methods.
- Step Two: Apply for an Account
After you decide which merchant account provider to use, you need to submit an application for an account. This process is typically painless, but requires a lot more information than a simple PayPal or Venmo account. It will likely include a credit check and some other information that the bank will use to determine whether or not they want to offer an account to your business.
For this step, you will need the following information available:
- Legal business entity name (your own name if you’re the sole proprietor)
- Employer Identification Number (EIN)
- Your social security number (for the credit check and to use as the EIN if you’re a sole proprietor)
- Contact information for yourself and your business
- Other pertinent banking info that may be requested
Follow the steps on the merchant account provider’s website and submit your application. It can take several days or even a couple weeks to get your account setup. The bank might call and request more information as they try to make their decision.
- How Much Does It Cost to Setup a Merchant Account?
The cost to set up a merchant account varies between different providers. Some will require an application fee, setup fee, credit check fee and more. Others will charge a flat fee for all administrative costs. Furthermore, some may even require you to deposit a certain amount of cash into the account in order to activate it.
All of this information should have come to the surface while doing your research. If not, you might want to go back and check on these items prior to moving forward with an application. Merchant account providers can sometimes have really unclear policies around their fee structure.
If you’re really unsure about something, do yourself a favor and hire a lawyer to read through it. You’ll have to pay the costs for this service, but it’s a much better deal than getting into a contract with a merchant provider that is going to hurt your business.
- How Long Does It Take to Setup a Merchant Account?
This typically depends on your credit history, how long you’ve lived in the same place and what type of business you are planning to run. Banks will be extremely careful in deciding what merchants will receive accounts. If you have a lot of questionable things on your credit history, it will likely take longer.
On the other hand, you could be up and running in 24 hours if you’re prompt in getting the bank all of the information they request. Having your documents prepared and your finances in order will make the bank feel more comfortable with their decision. If the opposite is true, they will take longer to make their decision because they are assessing the level of risk involved in giving you a merchant account.
Whether you are just starting looking into credit card processing for small business or applying with your local bank, merchant accounts can be very simple to set up. The key factor in completing this process is to make sure you’re organized and forthcoming. Give the bank all of the information they request in a timely manner and you shouldn’t run into too many issues.
Cris Carillo is the co-founder of Allied Payments. Allied Payments provides online payment processing services, specializing in medium to high risk merchant account solutions.