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Tips to Securing a Merchant Account

Sarah Brooks

October 28, 2013

If your small business has only accepted cash payments up to this point, what exactly are you waiting for?

Merchant accounts allow small businesses to take electronic forms of payment - including credit cards, debit cards and gift cards. Financial institutions and independent brokers offer merchant accounts to your business.

Typically, banks are a bit harder to get a merchant account, simply because they require your businesses to already be established. Independent brokers are a little more lenient when it comes to offering new businesses merchant accounts.

With that in mind, are you ready to go after a merchant account for your small business?

Pros of merchant accounts for your small business

There are many advantages to setting up a merchant account for your small business.

These include:

• Quick turnaround of payment - Once the customer makes a payment; funds are deposited into your account within one or two days. Other methods of payment, including PayPal, can take up to a week for you to see your money.
• Increase in sales - The most common form of payment from customers is by debit or credit card. By allowing these transactions, you're making it easier on your customers and therefore increasing your sales.
• Transactions are done electronically - It's never a good idea to carry around large sums of cash. Setting up a merchant account allows your payments to be handled electronically, which is a much more secure way of handling money.

• Increase in efficiency - Credit and debit cards are fast, no questions asked. Whether you own a small restaurant or an online at-home business, accepting credit card payments will increase your efficiency.

• Cost effective - For established small businesses, having a merchant account will save you money. Merchant accounts charge either monthly, per transaction or per service. Merchant accounts are the most cost effective form of payment for businesses with high sales volumes.

• High customer service - If you're paying for a service, you can expect good customer service in return. Most companies that offer merchant accounts pride themselves on customer satisfaction and want to be available to help whenever possible.

Tips to getting a merchant account

Getting approved for a merchant account is not as easy as walking into a bank and opening a checking account.

Banks and financial institutions will do an extensive background check on your business to make sure risk is minimized.

To improve your chances of securing one, there are a few things you can do. For one, apply to a few different banks and brokers. The more places you apply, the greater your chances are at having someone approve the account.

You should also apply as early as possible. The process can take a while (up to six months, on occasion), so the earlier you apply, the better.

Finally, be professional and know what you want. Understand everything there is to know about merchant accounts and why your business should be approved.

Why merchant accounts are declined

The most common reasons merchant accounts are denied are providing misleading or inaccurate information (banks are always on the lookout for fraud), being on the MATCH list (a list of businesses that have had accounts terminated in the past), having any tax liens or having poor personal credit.

It's advised to get all these items cleaned up before applying for a merchant account.

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