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Everything you ever wanted to know about merchant accounts but never asked

Having a merchant account is obligatorily for every entrepreneur who wants to accept credit or debit card payments on his website.

Before opening a merchant account there are many things you should be aware of. 

Everyone who is somehow related to e-business, heard the term “Merchant Account”. But it still leaves a misconception especially for those who is new to online payment industry. 

Some people may mistake a merchant account for a business account, which is technically the same, but slightly different. 

Merchant account is one of the elements of a business account, which comprises a range of banking products with different aims, like: merchant accounts, investment accounts, checking accounts, loan services. Each of these accounts perform different tasks, ensuring the vitality of the company. 

For example, Checking account (also called transaction account) is an account company need to have access to the funds kept on bank account, pay expenses, make deposits and withdrawals, etc. 

In turn, merchant account is the one that allows companies to accept credit or debit card (as well as alternative methods) payments on their website. Another important issue to know is that you cannot have direct access to the funds received to your merchant account. They will be available after the automated transfer to your business banking account, which usually takes around two business days. 

Merchant account serves as an agreement between retailer (entrepreneur), merchant acquiring bank and payment processor. 

Read more about payments processing institutions.

It doesn’t matter if a merchant will open its account directly through an acquiring bank or third party service providers, he is a part of the merchant agreement and agrees to obey the regulations established by the card associations. 

Online merchant account is the one that meant to process online payments. The most noticeable difference between a traditional and an online merchant account is a fee. Fees for using an online account tend to be higher, as they have more risks of chargebacks, and more vulnerable to fraud. 

To accept online transactions, merchant needs to have not only online merchant account but also a payment gateway, which substitutes the POS terminals used in face-to-face payments. 

While opening a merchant account, banks consider a bunch of criteria before  actually approving the application sent by a merchant. These aims to prevent and minimize the risks of fraud activity. 

These criteria include: 

1. A type of business a merchant operates in. It can be a low-risk or high-risk vertical. Banks and merchant account providers consider a business as high risk because of a high level of chargebacks, a merchant receives credit card payments, but customers cancel transactions; refunds and returns; and credit card fraud, according to High Risk Expert. 

2. How old is the business, for how many years it is operating. 

3. The history of the business—defaults, bankruptcies, etc.

4. If the applicant had a merchant account prior.

5. Credit history of the business owner.

Note: If the merchant has a high-risk business type, it doesn’t imply that his application will be rejected because of it. Though, the bank (or a third-party provider) may set higher fees. 

How to open a merchant account: 

1. Determine the payment methods and payment models you will use to accept the payments. Make sure to open your account in the bank that supports all of it.

2. Start looking for a bank. And there are a lot of things to consider.

You might want to open a merchant account in the same bank where you have your personal account. And it will be the right way, if you have a local business. But if you have plans to expand your business overseas or you already did that, imagine what would it take, to open account in a local bank in every country you will work with. Not the easiest way. And at this point one of the best options will be to find a Payment Service Provider that has acquiring partners globally. 

3. Make sure your website is safe and meet technical requirements to process the transactions. When you want to accept payments, your website has to comply with Visa and Mastercard requirements. Most of the PSPs can cover for you the questions of security by providing the payment gateways that meet the safety requirements mentioned earlier and compliant with PCI DSS, GDPR, etc. Also, your website needs to have his own hosting and a unique domain.

Note: If your company operates locally and you open a merchant account directly in an acquiring bank, you will have to find a payment gateway by yourself. Without the payment gateway you won’t be able to accept online payments. 

4. Prepare all the documents require for application process:

– Documentation about the company: documents of incorporation, non-profit, sole trader documentation, etc.

– Business financial documentation: income statement, cashflow statement, balance sheet. 

– Also, you might be asked to provide processing statement for at least 3 months prior, which include number and volume: of transactions, chargebacks and refunds. 

– Proof of identity of the company’s director.

– Personal banking statements of the owner of the company.

5. Last but not least; fill out the application form of the bank/PSP you’re opening your merchant account with. Add all the documents you’ve gathered to your application form and send it to the institution. Then, your application will be under consideration, as all the documents and information you provided will be thoroughly checked. After your application will be approved, you’ll need to pay a setup fee for the account. Make sure you read all the information about the fees mentioned in the contract before signing it. 

After all the settings are done, you can happily start accepting payments on your website.


The process of opening a merchant account is an important stage for every entrepreneur, consisting steps of preparation, analytics, gathering of all required documents, signing papers, preparing the technical aspects and much more. 

Genome is a new all-in-one payment ecosystem, which allows to open international merchant accounts completely online in 72 hours. Application process to receive a business IBAN takes 4 easy steps and 48 hours to complete. 

The platform is established by fintech experts, aiming to simplify and upgrade the payment processing, and implement a new generation standards of the financial management. 

Merchants can open their merchant and personal accounts within Genome’s ecosystem, to manage all their funds at one dashboard. All the payments are secured by built-in anti-fraud solution, and PCI DSS, GDPR, PSD2, 3DS compliant platform.

Check out our Guide on how to open a merchant account with Genome