How To Set Up A Merchant Account: A Step-by-Step Guide

As a business owner, you might already know that debit and credit card payments can be processed through merchant services. But the process of actually getting a merchant account is not that well known. This is primarily due to the various steps that are involved in setting up payment methods through merchant account providers.

Even if it might seem a little tricky at first, signing up with a conventional or online merchant account services provider is really quite simple. You’ll need to take your time to understand the underlying aspects. Once you have sufficient knowledge about merchant account services, you can move forward with signing up for traditional and mobile payment processing solutions with ease.

The process may sound a bit daunting. But it is simple if you learn more about it with the right guide. With this in mind, here’s a detailed overview of merchant services that will help you learn more about merchant accounts as well as how to sign up for one.

Understand Just How Merchant Accounts Work

Before you start the sign-up process with merchant account providers for your small business, let’s first look at how these services work.

Setting up your merchant account involves a relationship between three parties:

  1. The Merchant. This refers to you and your business.
  2. The Acquiring Bank or Merchant Account Providers. This is the entity you will sign up with to hold your merchant account and receive funds from customer payments.
  3. The Payment Processor. This refers to credit card companies such as Visa, Mastercard, and American Express that you will accept payments from.

The process begins with the need to start accepting card payments from your customers. To do that, you then need to enter a contract with an acquiring bank or a reliable payment solutions provider. These solution providers then let you select which credit card networks, such as Visa or Mastercard, you will accept payments from.

No matter the type of merchant account you want to set up—conventional, mobile, or online merchant account services—the involvement of the acquiring bank/payment provider, as well as the credit card network, remains a constant feature.

Whenever a customer submits their payment via a card reader or enters its details on your checkout page, the information is processed through your acquiring bank or payment solutions provider. From there, it’s handled by the credit card networks such as Visa or Mastercard, which authorize the payment and transfer it to your merchant account.

The payment procedure goes through multiple steps to complete. But even then, the process is completed within a few seconds.

Learn What Kind of Merchant Services You Want

The first step in signing up for a merchant account comes in the form of deciding what kind of services your business needs.

The primary goal of signing up with merchant account services is to accept credit and debit card payments and not depend on cash transactions. However, the right merchant services provider will arm you with the solutions and resources needed to go further than that. It also supports the ability for your business to create a higher quality of service for your customer, while also saving your company money.

If you run a brick-and-mortar store, then going with a conventional point of sale (POS) terminal is a good idea. POS terminals can process payments by syncing with the merchant software on your register. If you require a mobile setup, then you can go with mobile payment processing solutions. These modern card readers are wireless and can attach to your iOS or Android devices to process card payments remotely.

Conversely, if you have an online business, sign up with a merchant account provider that provides you with an online payment gateway. This allows you to accept payments over the web and receive them directly in your bank account via your payment solutions provider. Similarly, if you process payments over the phone, then you can sign up for a virtual terminal that will allow you to enter the customer’s card details manually into your system.

Depending upon the type of merchant services you want to set up, you receive the proper payment processing equipment accordingly. This equipment comes directly from your acquiring bank or payment solutions provider and has different costs associated with it. In the case of online payments, this comes in terms of software and payment gateway support and has a service fee associated with it.

Merchant Account Costs

Regardless of the type of payment solutions you end up choosing, you will have to account for multiple costs to be able to benefit from them. These costs include but are not limited to:

  • Setup Fee
  • Monthly Maintenance Fee
  • Transaction Fee
  • Credit Card Processing Fee
  • Equipment Fee
  • Cross-border Fee

In most cases, transaction fees represent the bulk of fees charged by merchant account providers. Most providers take a cut out of each sale plus a small transaction fee. While this payment structure works well for businesses with low credit card transaction volumes, it can get pretty costly for high-volume merchants.

This is where Stax can give merchants an advantage. Instead of taking a percentage of your sales, you’re simply charged a flat membership fee for access to wholesale interchange rates. Stax’ payment structure is often more cost-effective and can save merchants up to 40% in processing costs.

It’s also important to note that all merchant account providers work upon the same underlying process, but not all of them have equal services. Some excel in terms of supporting mobile payments. Whereas, others take pride in delivering additional support with their services. Depending upon their services, these vendors also charge different fees for the same services.

For example, some acquiring banks will charge you their service fee as well as the credit card network’s processing fee on each transaction. On the other hand, modern payment solution providers often offer reduced costs that are included within their service fees. It is factors like this that help you differentiate between overall expenses.

This is why you must pay close attention while comparing the costs of acquiring banks or payment solution providers.

Compare Different Merchant Services

Since you can accept debit and credit card payments through multiple avenues, it is essential to choose an acquiring bank or payment solutions provider that supports all your needs.

For instance, if you need all avenues of credit card processing at hand in the form of conventional, mobile, and online merchant account services, then your selected payment processor must support all of these methods of payment.

Doing so helps you manage all your finances in one location. In most cases, it also saves you from paying additional setup costs or higher equipment fees.

Submit Your Merchant Application

Up until a few years ago, getting a merchant account was a very complicated and grueling process. Submitting your business license, physically verifying your business location, and providing your credit score information was all part of obtaining a merchant account.

But thanks to the advancements in financial technology, the process is now super easy and can be completed in minutes. You just need to contact the right provider that uses modern solutions to process all applications.

Visit the Solution Provider’s Website

When you have done your research in terms of payment services, costs, and overall reliability, simply visit the website of the acquiring bank or payment solutions provider to apply for a merchant account.

Select the Required Services

Opt for what kind of services you will require, such as specifying your needs for conventional or mobile payment processing solutions. You will also need to move forward with selecting the necessary equipment for your solutions.

Submit the Required Details and Documents

Follow the process of filling out all the required details about your business. This will often require your personal information, the business’ information, as well as any additional data that applies to your case.

This is one of the most time-consuming steps in the application process. You’ll need to put together the necessary information and documents, which the financial institution will then use to verify and underwrite your application.

Here are the most common documents and details required by merchant services providers during the application process:

  • General info and business documentation, including your contact information, employer identification number (EIN). articles of incorporation, business license, credit history, etc.
  • Your business’ financial statements. This includes your business bank account statements, balance sheets, cash flow, income statements, records of credit card transactions, etc.
  • Other supporting documents, which may include a business plan, voided checks, forecasts, marketing materials, etc.

Provide Additional Information If Necessary

Depending upon the efficiency of your chosen acquiring bank or payment solutions provider, you will receive an update on your application status in just a few days. Your application may get approved, or the provider might require some additional information to put it through. Submit the details and move on.

Go Through the Underwriting Process

Once your information is submitted, the provider will review and analyze your application to ensure accuracy and evaluate risk. Known as the underwriting process, this step is necessary to determine your eligibility for a merchant account.

This step can take a few minutes to several business days depending on your provider, your industry, and the type of business you have. High-risk merchants may take longer to underwrite.

Setup the Merchant Equipment and Software

The next part of the process is receiving your equipment and setting up your software until you can start using the required merchant services. Upon approval, you may also need to make payments for equipment costs and service fees.

Most merchant account providers make this process easier by providing extensive onboarding support. By following the provided instructions and seeking help when you need it, setting up your merchant account is simple.

Enjoy a World of Efficiency and Superior Business Processes

By turning to physical or online merchant account services, you do not just welcome additional payment methods. You also improve and scale your business operations effectively.

Using traditional, conventional, or mobile payment processing solutions allows you to:

  • Increase your sales.
  • Improve your financial management.
  • Become more efficient in processing payments.
  • Expand your business operations to include more avenues of delivery.
  • Deliver a better customer experience through multiple payment methods.

If you are on the fence about signing up for merchant services, then this will be the time to make a decision. Move forward with easily integrating modern payment solutions in your day-to-day business operations.

At Stax, we take pride in offering easy-to-use yet highly efficient payment solutions to our clients. From conventional POS support to online merchant account services, we can fulfill all your merchant account needs and help you scale your operations to the next level.

To understand how our Stax payment solutions can improve your business operations, feel free to contact us for a consultation.

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