Many financial establishments out there offer a merchant credit card account. However what the newbies to the online business need to know is that it is not necessary to have a bank account in order to have a merchant credit card account. Rather what is important is to have a complete documentation of your business and a stable credit history.
Criteria for Opening a Merchant Credit Card Account
When opting for a merchant credit card account from a bank you would need to provide:
- Credit History
- Previous Bank/Trade references
- Financial Statements
- Tax Returns of at least two years
- Previous Processing History
Merchants always have the option of opting for a merchant credit card account provider rather than going for a bank. Merchant account providers like Instabill will offer you merchant credit card accounts with a competitive fee structure and cost effective e-commerce solutions. Many merchant credit card account providers will also provide you with various other accounts like offshore merchant accounts, third party merchant accounts and high risk merchant accounts etc. Documentation proving your business ownership and other details are generally required and some companies also provide approval for merchant credit card account in less than 5 days at low rates.
Fee structure varies from company to company, but you can expect:
- Merchant Credit Card Account Start up/Set up Fee – from $100 to $500, usually depending on business type
- Statement Fee – $5 to $40
- Transaction Fees – 10 to 75 cents, usually made per sale
- Discount Rate – generally between 1% to 6% depending on volume sales
- Chargeback Fees – Made per refund, between $20 to $50
Most banks tend to have a diverse criterion for merchant credit card accounts. For new businesses, however, providing documents and details might not be such an easy task. Also, businesses with high volume sales potential will end up getting rejected as they would have a higher liability for fraud and most banks do not like taking such risks. That is why most banks are wary of offering services to high risk businesses.