Before you apply for a merchant account, you should know whether your business is high risk or low risk. High-risk businesses typically have higher fraud risk and chargeback risks, which make it difficult to secure financing. In contrast, low-risk businesses tend to have lower credit risk and fraud risk, which makes it easier to get financing.
The second thing you need to know is the type of merchant account you’ll get with your application. There are two main types of merchant accounts: a general purpose and a specialized merchant account. A general purpose merchant account can be used by any company that runs an ecommerce business. This allows companies to accept payments from customers without having to worry about whether the payment will go through or not because there are no limits on the number of transactions or the amount of revenue each transaction can have. On the other end of the spectrum are specialized merchant accounts that are only available to certain types of businesses. This means that companies will also have limited access when attempting to process payments with these merchants.
What type of merchant account do you need?
The first thing you should ask yourself is whether your business is high-risk or low-risk. If your business is high-risk, you need a specialized merchant account because it will fit your needs more appropriately. If your business is low-risk, you may still want to apply for a general purpose merchant account because it is more flexible and not as restrictive in terms of revenue and the number of transactions that can be processed.
If you don’t know what type of merchant account to get, talk to an expert about which type would work best for your business.
How to determine your risk
The best way to determine your risk level is by asking yourself a few questions:
What type of products and services do you offer?
How many transactions do you make in a week?
How much revenue can each transaction generate?
Is your product or service easily counterfeited or replicated?
The steps in getting a merchant account
The first step is to do a risk assessment. You should be able to tell if your business is low or high risk before you apply for a merchant account. The second step is to find out the type of merchant account you’ll apply for with your application and what kinds of limits your merchant account will have. There are three main types of merchant accounts: general purpose, specialized, and fraud-sensitive.
The third step is to gather all the necessary documentation before you file an application with the bank. This includes legal documents proving that you own the company and validating any personal information with your customers so they can trust in your business’s authenticity. The fourth step is submitting all required information on time by filling out the application online, including references and financial statements sent by a bank or other lender that backs up your creditworthiness. Finally, once everything has been completed and verified, it’s time to wait for approval from the bank as they go through their internal approval process.
Is your business eligible for a merchant account?
Before you apply for a merchant account, ask yourself these questions to determine whether or not your business is eligible:
1. What type of business are you in?
2. How many transactions do you process each month?
3. Do you offer online subscriptions, recurring payments, and/or membership programs?
4. Are you able to accept international customers on your website?
5. Do you have a high volume of transactions processed per week?
6. Do you sell merchandise that requires shipping or fulfillment services from an outsourced provider like Amazon Fulfillment Services or Shopify?
7. Does your business plan to expand internationally in the future?
8. Are there any other requirements on the merchant account provider’s website that might limit where your business can get a merchant account?
Check if you’re approved before you sign up
If you are applying for a merchant account, make sure to check if your application is approved before you sign up. This gives you time to fix any issues that arise before getting started.
The best way to do this is by contacting the company that’s processing your application. They can let you know if there are any problems with your application and what steps they will need you to take in order to fix those problems. Additionally, they can let you know when it’s been approved or tell you if there is any more documentation needed in order to get it approved.
Should you get an armored car service?
A major risk that comes with ecommerce is fraud. With an armored car service, your company will not have to worry about fraud because the company has already taken care of it. When you decide to use this service, you can expect a higher level of trust when dealing with your customers. But these services are also costly and come with hidden fees that are harder to see than a merchant account.
Before you apply for a merchant account, it’s important to understand the type of merchant account you need and the risk of your business. A merchant account is a business account that allows you to accept credit cards as payments. It’s important to decide before applying which type of merchant account your business needs.
What is the difference between a general purpose and a specialized merchant account?
A specialized merchant account is designed for businesses with high credit risk, such as online merchants and e-commerce companies. This type of account is typically required for business that sell high-value goods and services to individual customers. A general purpose merchant account is designed for businesses with low credit risk, such as offline merchants and businesses with low-value goods and services to sell.
What are the benefits of a general purpose merchant account?
A general purpose merchant account is a basic account that provides many of the typical services for a small business, such as card processing and e-commerce. These services are typically provided by a third-party company, but they can also be managed by the firm. With this type of account, you have access to many features but may not have control over them. You can make changes to your processing or order-processing settings, but these won’t be global changes.
What are the benefits of a specialized merchant account?
A specialized merchant account is typically provided by a larger, more established bank that has more resources and experience in handling high-risk transactions. Because of their greater resources and experience, specialized merchant accounts tend to offer better terms and pricing than general purpose accounts. Additionally, they often provide additional services unique to high-risk businesses such as fraud protection and enhanced security measures.