Opening A Merchant Account

Opening A Merchant Account

The first step to accepting credit and debit card payments is to open a merchant account - these are not bank accounts as such, but accounts that allow card payments and Card Chargebacks to be made to a merchant-nominated bank account.

Banks known as acquiring banks - offer merchant accounts.  Most are divisions of high street banks.  Ask your existing bank whether they offer merchant accounts, though you do not have to use the same bank to process card payments, so shop around.

Before setting up a merchant account for you, your acquiring bank will request a wide range of information.  This is used to assess your business and to determine the level of charges you'll have to pay for each transaction.  You may be asked to provide information relating to:

• Your business history and performance
• Business accounts
• Your forecast turnover
• Expected average transaction values and volumes on credit and debit cards
• Transaction frequencies
• The type of goods you sell
• The proportion of transactions you expect to receive face to face, by phone, mail order, or online
• Your suppliers' details
• How you deliver your goods or services

You may need to open a number of merchant accounts if you want to accept card payments for different sales channels.  For instance, if you sell goods from a retail shop and through an e-commerce website you'll need separate accounts for your online and face-to-face sales.  You should talk to your bank about your requirements.

It takes between one and four weeks to open a merchant account.  The process may take slightly longer for start-up businesses and banks may want to see additional information such as a business plan and cashflow forecasts.