A merchant account is basically a kind of bank account that provides the facility to consumers making payments through payment card, credit card or debit visa card. It is the mutual agreement between merchant and acquirer bank that merchant accept the credit cards of consumers and acquirer bank makes settlement of the same. There are also many independent service provider who work as acquirer like independent sales organization known as (ISO) and merchant service provider referred as (MSP), these all are the independent service providers and act as an acquirer. Usually a merchant enters in this agreement to accept the credit cards of consumer and claim the same payment from acquirer bank. Merchant is liable to follow all rules & regulations set by the acquirer bank.
Actually three parties are involved in this operation that take place for smooth setup of payments;
c) Acquirer bank
As the merchant has low sales portfolio on cash transaction, but while giving the facility of credit sales, merchant’s sales portfolio increases. In this context, merchant charge the access amount on each retail transaction because he or she has to pay some portion to acquirer bank and acquirer bank earns from both end, from merchant as well as from consumer. Sometimes there involve four parties and fourth one is issuing bank. Issuing bank is that which provides the credit facility to their customers like master card or visa credit card. All these parties are bind among each other for providing the facility to customers.
Step By Step
1: There are many companies which are involved in high risk due to their huge size and expansion of business e.g telecommunication and e-commerce businesses. These businesses are usually at high risk and you have to work hard in order to get approval for merchant account, but if you have been working for the long period of time, then it will be easy to get approval for the same.
2: In order to get approval for merchant account, your previous credit history should be clear as the merchant account issuing authority always check the credit worthiness and the repay back history of the applicant. They also check out the lien and insolvency (if any). If you have better history, more will be the chances for approval of merchant account.
3: Before applying for merchant account, you should conduct a research just to find out provider which can provide you the facility of the same. The main purpose of research is to save time from applying in different companies and also reduce down the chances of refusal of application. For this purpose, you can contact with many service providers and can ask problematic questions regarding their fee and service operations. You can select out best one provider and can submit your all essential documents for further processing.
4: sometime, it happens that many service providers sanction the merchant account knowing that a particular applicant is at high risk, for consequent these providers charge high cost of fee. It is suggested in this regard that do not make bargaining on high cost. It is the better chance you that you have come in the list of merchant account. After passing some, you can make good credit history and then you can negotiate for the reduction of fee.
It is obvious that to get the approval for merchant account is a big deal, but if you have good credit history and goodwill in existing business then your application can be preceded for approval of the same. Some people think that they can open this account on reference basis, but now the trend has changed since the risk and bankruptcy have involved in the smooth operations of business. If your application has been declined by competent authority, you may contact with chargeback unit for reconciliation and for removal of any imposed discrepancy.
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