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How to get a Merchant Account/Requirements

Nov 5th, 2011

To get a Merchant Account, you must have and/or be able to provide at least the following:

  • A business checking account
  • A valid US ID (proof of legal immigration status for non-US citizens)
  • A US business address
  • Articles of Incorporation (if applicable; required for LLCs, INCs, LLPs, etc)
  • A Tax ID/EIN for your business
  • All required business licenses * (State, County, City, Municipality, State Contractors License, etc)
  • A website (if applying for an Internet Merchant Account)

*Depending on regional legislation and requirements, you might need more than one business license. Please check your local requirements, as they vary greatly.

Good to have:

  • Reseller Permit/Resale Certificate
  • Fictitious Name Certificates/DBAs
  • Business Cards (matching the business address on your business license)
  • Certificate of Good Standing (if applicable)
  • Certifications & Credentials

The above list outlines the typical documents required. Your local bank’s requirements might be different – please check with them.

Please be advised that the above list is a guideline.
Your application might still get declined, based on a variety of additional factors.

Some of most common factors (and reasons for denial) are:

** In a personal conversation, Bank of America Merchant Services outlined the reason for a personal credit check as follows:

The best way to describe why the credit check is needed is that we give ‘gross deposits’ when a transaction is done, meaning we don’t keep any of the money for the sale. We take our rates & fees on the 2nd day of the following month.
So, let’s say you are a car dealership. The average transaction amount is about $10,000 per sale. If we are charging you 2.05% per transaction , then that’s $205 per transaction that we don’t collect until the following month.
If you sell 20 cars that month using a credit card, then you have over $4,000 of the banks money in your account. If for some reason you decide to close the account and take that money, we can’t go after a corporation to get our money back. We have to go after an individual.
It’s basically a 30 day loan every month. For any loan, you know a credit check is done as part of the loan process… No matter how big or small… Even if you are just trying to buy a cell phone.

Bank of America Merchant Services Rep

*** Your business might be a so-called High-Risk Business or Merchant or you might even find your business on the list of Unacceptable Merchants.

**** The MATCH/TMF File is used by MasterCard and Visa processing banks (acquiring banks) to identify merchants and principals who had their merchant account privileges terminated in the past.

About the author:

Nina Khoury is a computer scientist, software engineer, data and information junkie and online marketer. She taught at various universities for more than six years and worked on projects for Fortune 500 companies including cisco, Intel and HP.