(Accepting USD from a company incorporated in the USA)
Definition of “Merchant Account”
This is a contract between the merchant and the financial institution “acquirer”. The application can be submitted to several different organizations:
- Independent Providers (Independent Sales Organizations) are the most knowledgeable in their field. They often have the best rates and have a high level of customer service.
- Banks are generally less knowledgeable than ISOs as credit card processing is not their primary function.
- Processors sometimes deal with very large accounts directly (> $ 50M).
The bank account can be opened at any bank. The merchant is not obligated to process credit cards with their bank – they can obtain their merchant account through any ISO.
A merchant can easily change merchant account providers without changing their bank account, the two are not related.
Conditions for obtaining a “Merchant Account”
Applications are not always automatically approved by underwriting. Approval is closely linked to the risk assessed on the account based on the merchant’s profile:
- If merchant is in a “card-present” environment (cards physically swiped in a terminal) and the average ticket under $100, the application could be easily approved.
- If the merchant is in a “card-not-present” environment (eg E-Commerce or wholesalers), and / or if the average ticket is high and / or if the company is a “start-up” (no processing history), then getting an approval will be more difficult. Often additional information is requested such as tax returns, financials, personal guarantees, acceptance of delayed funding etc…
In all cases, merchants will have to provide:
- Bank account in the United States
- Federal Tax ID number (except for sole proprietorships)
- Signature by a majority shareholder or an official representative of the company
- Signer with a U.S. social security number or ITIN (Individual Tax Identification Number), but if not possible there are alternative solutions.
Disclaimer: This item Publishes Information provided as general information only and is not Intended to replace box by box Appropriate advice from advisors. Definitions used are not intended to supersede any Regulatory or legal definition.