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Merchant Accounts for Credit Card Processing

Posted on 29 November, 2019

If you want your business to have the ability to accept credit card payment from its customers, you’ll need a credit card processing merchant account. Businesses all have to make a decision when it comes to payment solutions for their customers. While some may find success with extending credit to a select few customers, it can severely hinder their ability to boost sales.

Extending credit card payment options to all of your customers is typically the best way to operate a business. However, it’s not without its complications.

What is a Credit Card Merchant?

Having a merchant account allows you to accept credit card payments from any and all of your customers. Many banks offer merchant services; however, many high-risk, small, and eCommerce businesses will need to through specialized merchant account providers that offer payment processing.

If you go through a merchant service provider, you may have more options when it comes to processing.

What is a Merchant Account for Accepting Credit Cards?

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The merchant account is a bank account that allows your business to accept credit or debit card payments. It’s essentially a holding place for your money before the merchant services provider transfers your sales into your business bank account.


For start-ups, home-based businesses, or small businesses, it may be challenging to get yourself a merchant account. When it comes to working with banks, they typically like to see that your business has been around for a few years with a proven track record of success.

Banks have tons of requirements when it comes to obtaining a merchant account. However, one of the most important is credit. If you have bad credit, it is unlikely that a bank will grant you a merchant account.

Independent Credit Card Processing

If you are unable to obtain a merchant account through your bank, there are a few alternatives.

An independent credit card processing company accepts high-risk businesses and those whose credit scores are less than desirable. They believe that your past should not hinder your future when it comes to building a business.

Independent card processing companies may charge higher fees than banks because they are accepting higher risk clients; however, they are often the only or best option for those who need to accept credit cards as soon as possible to grow their business.

Internet Merchant Accounts

Internet merchant accounts are typically for eCommerce businesses. If you’re going to have an online business, then you need a merchant account in order to accept payments through your website.

An Internet merchant account is a quick and easy method for processing online credit or debit card payments. Online payment processing services handle setting up the Internet merchant accounts for you. You may also be able to get your Internet merchant account through your bank or an independent organization.

How It Works

If your business operates online in any capacity, you will need a merchant account to accept all of the available forms of payment.

  1. Your customer adds items to his or her cart and goes to check out where they enter their credit card information into a secure website.
  2. Once the order is submitted, the website sends a transaction request to your acquiring bank’s payment gateway. This payment gateway allows you to accept and process card transactions online.
  3. The payment gateway forwards your customer’s transaction request to their issuing credit issuing bank. The issuing bank then returns the results to both you and your customer.
  4. If approved, the issuing bank notifies you and your customer and transfers the approved funds into your merchant account.
  5. If declined, the issuing bank notifies you and the customer to provide your customer with an explanation. You will not receive any funds.
  6. Once settled, the acquiring bank will send you the approved funds to your business bank account.

Why Won’t My Bank Give Me a Merchant Account?

As we have briefly discussed, banks don’t give merchant accounts to every business. There are banks that don’t offer merchant accounts to those they consider high-risk businesses. Need a Continuity Subscription Merchant provider?

Here are a few of the reasons why you may not be able to obtain a merchant account through your bank:

  • High chargeback rates
  • Online or “card not present” businesses
  • Reputation concerns when it comes to certain industries (e.g. MLM)

Obtaining a Merchant Account

No matter which avenue you choose to start with, here’s how you can start accepting credit card payments in your business:

The Underwriting Process

All payment processors will take on risk by providing merchant accounts. However, through an underwriting process, they can better discern who they shouldn’t work with. When assessing the risk associated with new merchant accounts, underwriters look at chargebacks and the legitimacy of the business.

To make sure your underwriting process goes well, make sure that you work with a company that has experience working within your industry.

Your Business Bank Account

In order to accept credit cards, you need a business bank account. You can open one in just a few short minutes at your local bank as long as you have a business license and Employer Identification Number (EIN).

Your business bank account is the location where all of the funds you transact will end up. It’s also where transaction fees will be debited.

Your Business License

Unless you are a sole proprietorship, you probably already have a business license. This license is necessary for opening a merchant account, and underwriters will review and file your license to validate information about your business.

The Application

In order to be accepted into a merchant account, you’ll have to fill out an application. Most applications can be found online and take only a few minutes to complete.

The application requests information about your business and yourself. You should make sure to have your bank account and routing numbers, tax ID, and processing volumes handy before you begin.

Your application will also be supplemented with supporting documents. You may need to provide everything from a voided check and marketing material to bank statements.

When it comes to looking for a high risk merchant account provider, what’s most important to you? Let us know in the comments!

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High Risk Merchant Account Services

Accept all major credit cards

Regardless of Credit History!