Merchant Account

An acquirer provides a merchant account so a business can accept and process payment card transactions. The merchant account is where the acquirer deposits funds received from issuers.

Obtaining a Merchant Account

Merchants must apply for a merchant account. The application process can be facilitated by either the acquiring bank or an independent sales organization (ISO).

There are various things that will be taken into consideration as part of the application process:

  • The type of products or services the merchant offers
  • The sales method (such as in-person, online, phone order, etc.)
  • The payment method (such as recurring billing, free trial offers, single sale, etc.)
  • Past processing history (or personal credit history if there is a lack of processing history)
  • Perceived risk (usually determined by analyzing chargeback activity)
  • Number of processing applications the merchant has previously submitted or are pending

Not all merchant accounts are the same, and not all banks provide merchant accounts. Some merchants will need a high-risk merchant account.

Merchant accounts come with pre-determined limitations, such as sales volume and transaction volume. As a business grows, more merchant accounts will be needed to accommodate the increase in sales and volume.

Maintaining a Merchant Account

Merchant accounts are valuable assets and should be treated as such. Merchant accounts can be revoked if terms of the merchant agreement aren’t upheld.

The most common reason for losing a merchant account is excessive chargebacks.

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