Merchant Account is a form of line of credit that a processing bank extends to the merchant, in other words, a merchant account is a settlement between a retailer/business man, a merchant bank and payment processor who tries to settle online money transactions through credit/debit card. First the funds are deposited in a merchant account when a online card transaction in done by a customer and later the business bank account receives the funds on daily or weekly basis. Even if it’s a small scale business, to accept a online card payment you need at least one internet merchant account.
Requirements For Applying Merchant Account :
Even after a high competition of issuing merchant accounts, the process for the same is not a hectic one only a variety of criteria are verified before approval of merchant account application. The criteria include the following:
- Business type – to determine the level of risk involved in online transaction frauds and returns. This does not tell us that business with higher risk wont be approved but in the initial stage the vendor may ask for higher fees as a compensation for the risk so that if you have gone out of business or cannot cover any chargeback amount, your processor is the one who will take the hit.
- Business Time Length – to determine the length of time in business.
- History of Business – The history of business is verified to check any faults in it, if there has been any Bankruptcies or and complaints against the business.
- It also verifies if the applicant has had a merchant account or has he/she applied for one earlier.
- The personal information of the business owner is also verified, especially his/her personal credit history.
For newbies in business, there are a lot of chances of having a favorable review for application of Merchant Account from the bank that holds the owner’s business/personal account.