The requirements to open a merchant account vary by merchant industry, estimated dollar volume of payment processing and how you’ll accept credit cards. Part 2 of this series examines the retail merchant who will process under $1,500,000 annually.

Retail means that the customer will pay in person and you’ll swipe the credit card for payment.

The merchant SIC code is used to assign risk. The higher the risk, the more documents required to open a merchant account. The level of risk varies over time. For example, when the mortgage crisis hit, flooring and furniture stores were relegated to high risk because they are heavily tied to the housing market. Below are some general guidelines for what you can expect.

LOW RISK MERCHANT ACCOUNTS
These merchants provide the fewest documents. A simple example is:
- application
- schedule A pricing page
- voided check or bank letter
- recent processing statement, if existing business

MID-RISK MERCHANT ACCOUNTS- All of the above, plus:
- 2 recent consecutive months merchant statements

HIGH RISK MERCHANT ACCOUNTS- All of the above plus:
- 3 recent consecutive months merchant statements
- personal guarantee

Note: Some processors will require 2 years business financials for mid and high risk merchants. Additionally, the business and personal credit score may be used in in determining your approval. We highly recommend that you are upfront with your sales agent about your personal credit score. If under 700, additional documentation and a personal guarantee may be required at any level.

Common question- Why do I need to provide my social security on the merchant application?

Part 1 of the series answers What are requirements to open an internet merchant account?

I specialize in consulting and merchant account set up for those processing over $1,000,000 annually.

Is a merchant required to display the Visa logo? Yes. This is clearly outlined in the Visa Card Acceptance Guide. Merchants must display the Visa logo at the merchant location or on catalog, sale materials, or websites.

So, if you do not have the logo on your catalog order form, or your web site, you are not in compliance with card association rules. Refer to page 9 of the Card Acceptance Guide aka Card Acceptance and Chargeback Management Guidelines for Visa Merchants.

- link to Visa to download brand logos

Card issuers have 120 days from the central processing date to charge back transactions in which the cardholder claims to have not participated. Consumers or cardholders should notify their card issuer as soon as they identify a problem.  The clock starts from the central processing date shown on the billing statement.

Merchant Risk for Chargebacks- Visa Rules (page 6) Complete Visa Risk Management Guide for Ecommerce 2008

When a credit card is canceled due to fraud a merchant cannot refund prior transactions back to the same card. What should a merchant do?

Here’s the scenario. A merchant has an online store, auction, or donor site that accepts cards for a digital transaction. No hard goods are delivered. A consumer gets a statement that has a charge they don’t recognize. The consumer doesn’t call the merchant using the information that is on the statement with the transaction. The consumer calls their credit card company, says there is a fraudulent charge and cancels the card.

The merchant gets a chargeback notice with a detailed description of a fraudulent transaction complaint. The merchant didn’t know the charge was fraudulent and wants to refund the charge back to the consumer card. This is not possible because the account is closed.
The merchant should respond to the chargeback with all the relevant information, including whether the transaction passed address verification and or CVV code verification. The merchant should tell the processor their policy is to refund a disputed charge and they would like the consumer account credited. The processor will credit the account opened to replace the closed account; merchant will not be given the credit card information and will get a confirmation the case is closed.

If you don’t have a internet merchant account already, our suppliers have some very specific requirements that you need in addition to traditional merchant account requirements. I hear all the time from people how ‘the other vendors’ don’t require as much paperwork or they don’t ask the same types of questions. Well folks, the ‘other vendors’ may not be helping you build a successful PCI Compliant business with the right price plan either. The items on the list below are so basic, they are essential elements to setting up your business for success.

These are Visa requirements for ecommerce merchant accounts. A document with these questions answered is turned in with the merchant application along with a print of the checkout page to prove the info is there. If the information is not on the site, the application cannot be submitted until it is ready. If the site is under development, screen shots can be submitted that have the required information.
INTERNET REQUIREMENTS CHECKLIST (All answers must be yes.)

1. Website active and URL on application?
2. DBA on site MATCHES name on application?
3. Customer Service number or email listed?
4.  Return/Refund policy present?
5.  Merchant’s Privacy Statement is included?
6.  Website Secure Order Page?
7. Products/Services listed with price?
8. Delivery Method and Timing are clearly stated?
FAQ

Can you give me the code for our web programmer for ecommerce checkout?

What you really want to know is the gateway information. That information is sent directly to the merchant. The merchant can share whatever data with you they like.  If you need help with your web site development, we have seasoned USA professionals available on an hourly fee basis.

What if my web site is not live yet? We cannot submit your merchant application without the information above.  Screenshots from your web developer, or artist renditions that show this information can be used in lieu of a live web site.

Can you set up my gateway account? Yes. We are an authorized reseller for major gateways. We cannot obtain a gateway account for you before there is a merchant account because the merchant account ID and processing platform are needed as part of the set up.

Why do I need a separate merchant account for ecommerce orders?

1. When you are issued a merchant account, it is based on specific information presented. When you use a retail account to process ecommerce orders, you are no longer complying with the original agreement. A card not present or mail order / phone order (MOTO) account is not the same as an ecommerce account. Again, it goes to how you agree to collect and process credit card orders. As shown above, there are additional criteria that must be presented to obtain an ecommerce merchant account. If you don’t comply, your account can be closed any time.
2. Aside from compliance, you’ll always want the right type of account to qualify for the lowest interchange rates. There are specific criteria to be met for every type of account and card presented. If you have a retail swipe account, the expectation is that you swipe a card. When you don’t, you get downgraded to a higher rate. If you make an ecommerce transaction on an ecommerce merchant account, you can qualify for rates lower than what the swiped non-qualified rate would be, but also higher than what a swiped transaction would be. Without getting into more depth, the main point is, you want to QUALIFY for the best rates for any given card presented and that can only happen when you have a merchant account that matches the types of transactions you are presenting to the card associations.
3. You’ll lose virtually any customer dispute for ecommerce transactions on a retail merchant account. Since a retail account expects to receive magnetic stripe data and a signature, when you cannot produce it you will lose disputes.