Merchant Account Application Requirements

Applying for a merchant account is not exactly a straightforward process. In order to understand why this is so, you will have to first understand this type of service is.

Merchant account is seen by processing banks as a form of line of credit they extend to a card acceptor. The reason is that, when you accept credit cards for payment, your processor pays you before it gets paid. So there is a certain risk involved that they have to account for.

To achieve that, the application process is set up to establish the credit worthiness of both the business n and its owners. Listed below are the documents that you will have to provide to your processor:

• Merchant processing agreement. It collects details about your business and its owner, including the addresses (business and personal), SSN, tax ID (if applicable), telephone number, email address, etc.
• Personal guarantee. Unless you are running a publicly listed corporations or a non-profit, the personal guarantee is a must.
• Articles of Organization. LLCs and all types of corporations must provide their legal papers, as well as their DBA names. You cannot open a merchant account under your personal name.
• Business permit or license. If required by your state or municipality, you will have to provide one of these documents.
• Financial statements. Most existing businesses are required to provide financials for the latest two years. The same requirement applies to their principal owners.
• Monthly statements with the current processor. If the business is presently accepting electronic payments and is looking for a new service provider, it will be asked to provide the three latest statements.
• Voided business check. A copy of a voided permanent business check is needed, so that the processor knows where to make deposits. If the permanent checks are not yet available, a bank letter can substitute.

So the list of requirements for merchant account applicants is quite long, as you can see and it has to be said that this is its short version. The person reviewing the documents may request additional paperwork if what they have is not sufficient to make a decision.

When they have all the information they need, the processors try to establish first of all whether or not the business is a legitimate entity and that its principals have a good credit history, without major issues. Additionally, however, processors try to precisely pinpoint the industry where the business operates. Certain industries are considered higher risk than others and require deeper examination, while other industries are banned from merchant account services altogether.

It is always a good idea to check your prospective processor's credit policies before applying to avoid potential unpleasant surprises.