The specific requirements for acquiring a merchant account differ depending on the Merchant Service Provider. However, there are some basic points that are present in most, if not all, MSP applications.
In order to fully understand what you would need in order to get approved for a merchant account, you have to understand first the risks associated with it.
One of the things that banks and Merchant Service Providers take into consideration is your credit risk. This is the risk that the bank or MSP have to undertake with respect to what you may owe them. Though this may not be the most important risk associated with merchant account applications, it does have an effect in the approval or rejection of applications. As such, it would increase your chances of getting approved for a merchant account if you have a good credit rating without bankruptcies, late payments, and the like in your credit history.
This is perhaps a more important consideration for banks and MSPs when it comes to merchant account applications. Fraud usually involves unauthorized use of credit cards due to theft of the card or its numbers. Although all merchants are exposed to this risk, new merchants have a higher degree of risk due to inexperience in detecting and preventing suspicious card transactions. More so, there are certain services and products which involve a higher degree of fraud risk. These are all taken into consideration when applying for a merchant account.
As compared to the two risks mentioned above, contingent liability risk is perhaps the most important of all. This involves risks that may be unforeseeable due to the nature of the business. This includes refunds or charge backs and similar situations. If a business has high risk in this regard, then applying for a merchant account is a bit more difficult.
Aside from the risks involved in your business, you would need to meet some geographic requirements. There are two main geographic classifications for merchant accounts – a United States merchant account and an International (European) merchant account.
Since the U.S. has long been considered by many to be the leader in e-commerce with the infrastructure properly in place, the general unwritten rule is to establish a merchant account within the country. However, this option is not open to everyone. American banks and MSPs actually do not offer their services to businesses outside of the United States. If you are from outside of the country and you want to open a merchant account with an American bank or MSP, you would need:
In effect, your business should be operating within the country. The bare minimum needed to open a merchant account in the U.S.:
As you can see, it is quite difficult for non-Americans to acquire merchant accounts in the United States. Fortunately, the European market has started to join the fray and there are some MSPs offering merchant accounts to international clients with less stringent requirements.
As mentioned above, specific banks and MSPs have their own variations of the basic requirements for opening a merchant account. You would have to deal with them directly in order to find out the details. Yet there are some things you could do in order to increase your chances of getting approved for a merchant account.
One is to ensure that your credit history is in order. We already discussed this above. Another thing that you should do is to be honest about your financial history with regard to other merchant accounts if you have any. You should also be open to the idea of having to pay more if you have special requests or if restrictions apply. Last, but not the least, you should shop around before deciding on anything. There are many choices available – look for the one which has the terms that suit you best.