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:
– 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.