Questions to Ask When Looking for a Merchant Account

There are some big financial decisions to make when you are trying to help your business succeed. Traditional invoicing paid by check or cash is quickly becoming an outdated means of collection, as data shows nearly 80% of consumers prefer debit or credit card payments over cash or check. If you are looking for answers to the most common questions surrounding merchant accounts, you’ve come to the right place. Here you will find the details covering the process and what to expect when pursuing this new step in processing credit card payments.

Answering Your Merchant Account Questions

The most common questions asked about accepting credit cards deal with the overall chance of business approval and the potential timeline for implementing the system? A lack of understanding could be keeping you from pursuing a path that could grow your business. Take a look through these most frequently asked questions and find out more.

What Exactly Is a Merchant Account?

This account is an alternative business bank account that enables a company to accept or process electronic payments, either through a debit or credit card. A merchant acquiring bank is the key financial partner that facilitates the transactions for electronic payments. The approval process is as follows, though it may only take a matter of minutes for the data to be received and the process completed.

When a consumer purchases an item using some form of card payment, an electronic terminal sends the payer information to the merchant acquiring bank. The bank makes contact with the card processor, who then contacts the institution that issued the card. If the issuer is able to authenticate the transaction, the processor sends an approval to the merchant bank who then finalizes the authorization at the business level. The merchant bank then starts the process of settling funding into the merchant account.

Am I Eligible for a Merchant Account?

Your eligibility depends heavily on the merchant account provider you apply to work with, as requirements and underwriting vary by institution. However, there are some basic things you will need to get started. For starters, you will need to have a business bank account. Using your employer identification number (which could be your social security number or official IRS number) and possibly your business license, a local bank can open a new account in just a few moments. The bank account is where the funds will be deposited or debited when receiving electronic payments.

You will also need to fill out an application with the merchant account provider. Thanks to technology, you may be able to fill out an online application, bypassing the need for faxing or mailing your documentation. You will be asked to provide important business information, such as contact information, the tax ID for the business, the bank account and routing numbers, estimates of processing volumes, authorization information, and potentially information about the start of the business.

How Many Merchant Accounts Do I Need?

In spite of both debit and credit cards being electronic forms of payment, these can require two different types of processors. Your physical card reader and software may not be different for each card type, but the routing and approval process may vary. When filling out your application, select each type of payment that you want to allow. It is possible to accept ACH (automated clearing house) payments, e-checks, and credit cards, but the underwriting procedures may differ. This is why you may end up with more than one merchant account.

How Much Will It Cost Me?

The processing fees will vary according to the types of payment you choose to select. Some providers charge a flat transaction rate with an additional percentage for ACH transactions, while credit card fees may vary based on whether or not the card was physically swiped or the amount of the transaction. Pay close attention to the terms and conditions of the application to see what your merchant account provider is going to charge.

How Long Before I Receive My Funds?

The funding timeline depends upon the transaction type. ACH transactions generally take between three to five days for you to receive your money, while credit card transactions are often deposited in less than 48 hours.

How Soon Can I Get Started?

Filling out an online application makes it possible for you to be up and running possible within one business day of first applying. Part of your approval depends on how quickly you can submit all of the documentation required by the provider. Underwriters for these accounts also have normal banking hours, so your application may be put off until the next business day if you are filling it out at night.

How Do I Start Looking for a Merchant Account?

Low-cost processing, daily settlements, and fast approval are some of the things to look for in a financial partner. Instabill is an online service that offers a quick turnaround time with reliable banking partners. Whether you need a high risk merchant account or you need an e-commerce account, Instabill has options that work with your company’s unique needs.

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