Opening a merchant bank account should be simple. After all, merchant account providers will cash money every time you process a transaction. They should be happy to work with you, right? If only it were. The payments industry is very competitive, and merchant account providers obviously want to work with you – but they need to know your business well before accepting your request. In this article, we will tell you exactly how to get your merchant account application approved, and what to do if it is denied. Since the payments industry and the jargon used are quite complicated, we will also define some of the most commonly used expressions, such as merchant account, payment gateway, and high risk payment processor. If you already know the basics, feel free to skip the definitions.
What Is A Merchant Bank Account?
A merchant bank account is a special bank account that allows you to hold funds captured from sales made by credit or debit cards. If you’ve used your card before and wondered where the funds went, they’ve just been transferred to a merchant account. Then they are transferred to a normal corporate bank account, usually on a weekly or daily basis.
If you want to accept credit card payments online, you will need a merchant account provider (example: Merchant-Accounts) that issues merchant accounts to businesses. Or, you can use the services of an aggregator (example: PayPal), which is a company that processes transactions through its own merchant account, on behalf of other companies. It is also important to note that a merchant account is a legal agreement between you and the supplier. You will receive general conditions of sale and use and a contract to sign. Here are some things to look for before signing a merchant account contract.
What Is A Payment Gateway?
When processing a credit card transaction, information should be sent somewhere to verify that the card holder has enough funds to pay for their purchase. When it is a transaction carried out in a traditional physical company, it is the POS system (point of sale) which collects the data of the card holder, which formats them, and which sends them to Visa or MasterCard to see if the client has sufficient funds.
In the case of an e-commerce transaction, this service is carried out online via a payment gateway. The payment gateway receives transaction requests (which are sent online by software such as Shopify), and then connects to Visa or MasterCard, and finally to the customer’s card to verify that they have sufficient funds. If he has enough money, the transaction is authorized and the card holder’s funds are transferred to the merchant account. Often, a merchant account and a payment gateway are set up in a single process by the same online banking payment solution provider.
What Is A Payment Processor?
When discussing payments, the term “payment processor” tends to be used arbitrarily and more often than not incorrectly. It is often used by business owners interchangeably to refer to the merchant account provider, gateway, or both (especially because the merchant account and gateway are often provided together). In technical terms, this is an incorrect use of the term. However, it is used in this way so commonly and freely, that there is in fact a “street definition” used by people who are not from the area, and a technical definition of industry which is very different.