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So you just started your business, and you’re ready to start selling to all of your potential customers. First off, congratulations! This is the first step in becoming a successful entrepreneur. However, before you start accepting payments, you want to make sure that you have a proper foundation to do so. Here is everything you will need when you open a new Merchant Account to make the process as easy as possible!
1. Business bank account
Separating personal and business expenses should be one of the first steps you take when legitimizing your venture. Ultimately this will reduce your personal liability and protect personal assets should your business run into financial issues.
One merchant account requirement is having proof of a business bank account, as well as bank statements.
In terms of your merchant account requirements, make sure you have sufficient funds in your business accounts. Overdraws and low balances indicate more risk. For example, if you are looking to get approved for $100,000 in monthly volume yet only have $2,000 in your bank account, the underwriter will assume that you would be unable to take on chargebacks in the event of an occurrence.
2. Financial statements
As stated above, you’ll also need to provide bank statements to showcase your business’s financial competence. Typically, they’ll ask you for the most recent three months of bank statements. In addition to your business bank statements, if you have prior processing experience you will need to provide credit card processing statements as well. This will show the potential sponsoring bank how much you typically process, as well as other pertinent information about those transactions. For example chargeback ratios, reversals, average transactions, etc.
Not only will you need to provide business bank statements, but you may be asked to provide personal statements as well. Merchant account providers want to make sure your business and the person running it are dependable.
Merchant account providers check to make sure you and your business have good credit. A credit check will show underwriters if you are dependable, and also will show history of fraud.
3. Business license
While this may not apply to all businesses, you may be required to have a business license(s). This may include a general business license, sales tax registration, professional/occupational license, or worker’s compensation, among others. To determine what your specific business license requirements are, check with your merchant account provider and local regulations.
4. Physical address
Your merchant account application will require a physical address where forms can be mailed. If you have a brick-and-mortar business, this is the address of where your shop is located. P.O. Boxes are typically not acceptable.
5. Completed Application
The application is a requirement in its own right. This is going to have everything from terms, contractual obligations, and pricing structure. Just be sure to double check everything before submitting to verify correct information is listed for the business.
6. Employer Identification Number (EIN)
When you file for an EIN, this is what you use instead of your social security number when you file business taxes. Think of it like the SSN for your business. It’s a unique identifier that you use on financial, tax, and other legal forms. Obviously, if you are a DBA the SSN will be just fine.
7. Articles of incorporation
The article of incorporation also referred to as articles of organization, is proof from your local jurisdiction that your business is, in fact, a business — as well as in good legal standing.
8. PCI compliance
The Payment Card Industry (PCI) has Data Security Standards (DSS) that merchants and payment processors must abide by. This is intended to protect customer information, requiring businesses to use specific security procedures when handling data. While this isn’t a federal regulation, many states have laws around this, and merchant account providers also have their own requirements. Check with your merchant account provider during the application process to hear more about their specific requirements.
9. Other Supporting documents
Different merchant account providers require different documentation from different businesses. Some potential documents you may also be asked to provide include:
- Marketing materials
- Business plan
- Voided check
- Business policies, including your return, shipping, and other customer policies
- Inventory reports
It’s always best to check with them directly for your unique situation, as you might have different requirements for opening a merchant account. For example many in high risk verticals will be asked for these while those in restaurant or retail may be exempt.