Starting a new business is an exciting adventure, but it’s not without its challenges. One of the most important aspects of running a business is being able to accept credit and debit card payments from customers. This is where a merchant account comes in. In this blog, we’ll explore what a merchant account is, why it’s important for startups, and how to obtain one.
What is a Merchant Account?
A merchant account is a type of bank account that allows businesses to accept credit and debit card payments from customers. When a customer makes a purchase with a credit or debit card, the funds are deposited into the merchant account. From there, the business can transfer the funds to their regular business checking account.
Why is a Merchant Account Important for Startups?
Accepting credit and debit card payments is essential for any business, but it’s especially important for startups. When you’re just starting out, you need to make it as easy as possible for customers to pay you. Accepting credit and debit card payments not only makes it easy for customers to pay, but it also helps to build trust in your brand. Customers are more likely to do business with a company that accepts credit and debit cards because it shows that the business is legitimate and established.
How to Obtain a Merchant Account
Now that we’ve established why a merchant account is important for startups, let’s explore how to obtain one. Here are the steps you’ll need to follow:
Choose a Merchant Account Provider
The first step is to choose a merchant account provider. There are many different providers to choose from, so it’s important to do your research and find one that fits your needs. We here at Durango Merchant Services handle all types of merchant accounts, and we even specialize in high risk or hard to place businesses, or businesses seeking premium services. Some of the things you’ll want to consider when choosing a provider include:
- Fees: Look for a provider with reasonable fees. You’ll typically pay a per-transaction fee as well as a monthly fee.
- Payment Processing Time: How long does it take for the provider to process payments and transfer funds to your account?
- Customer Support: Look for a provider with good customer support in case you run into any issues.
Complete the Application
Once you’ve chosen a provider, you’ll need to complete an application. The application will ask for information about your business, including your business name, contact information, and tax ID number. You’ll also need to provide information about your business checking account where funds will be deposited.
Provide Supporting Documentation
To complete the application, you’ll also need to provide supporting documentation. This may include:
- Business License: Depending on where you live, you may need a business license to operate. Check with your local government to find out.
- Articles of Incorporation: If your business is incorporated, you’ll need to provide articles of incorporation.
- Tax ID Number: You’ll need to provide your business’s tax ID number.
- Bank Statements: You may need to provide recent bank statements to show that you have a business checking account. (However, when these items aren’t present, there are many different documents that can be presented to help with the merchant account approval process.)
Undergo a Credit Check
The merchant account provider will typically run a credit check to determine if you’re a high-risk business. If you have poor credit or a history of chargebacks, the provider may reject your application. Keep in mind this is not the end of the road – higher risk businesses need merchant accounts too, and there are plenty of providers that specialize in these types of accounts.
Set up Payment Processing
Once you’re approved for a merchant account, you’ll need to set up payment processing on your website or in your store. Your provider should give you instructions on how to do this. This is something we take pride in helping our partners with.
Obtaining a merchant account is an important step for any startup business. Accepting credit and debit card payments is essential for building trust with customers and making it easy for them to do business with you. By following the steps outlined in this blog, you can obtain a merchant account and start accepting payments in no time.