To start accepting payments on your web site the underwriting process is necessary, but if you have some guidance, it will be much easier.
Let’s list the required documents to apply for Merchant account:
1. Scan copy of valid ID of company’s shareholders/directors. It can be their passports, driving licenses or ID cards.
2. Original utility bill to confirm home address of directors and shareholders no older than 3 months. It can be electricity or phone bill.
3. Voided cheque or a copy of a recent Bank Statement (no older than 3 months) or original letter confirming business bank account details of the company.
4. Merchant’s personal bank statements no older than 3 months.
5. Certificate of Incorporation (and related documents).
6. 3- 6 months of previous processing history (if applicable to business).
7. Copy of Business/Operating License(s) (if applicable to business).
Also, Merchant has to make sure the following points on the website are met:
1. The Company’s name is clearly identifiable to the customers.
2. The address of the company is present on the web site and is clearly displayed.
3. The transaction currency and price of all products are clearly displayed.
4. Shipping and Handling charges are clearly displayed.
5. A statement of estimated fulfillment time of contract is displayed.
6. A statement regarding the security of the transaction is displayed.
8. Company contact details for customer Support are clearly displayed.
Once all forms and supporting documents have been received, your application will be assessed, then you will be informed about the decision. You will also be contacted if any questions arise regarding your application.
Now let’s talk about fees and charges.
Merchant account can have a variety of fees: some periodic, others charged on a per-item or percentage basis. Some fees are set by the merchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank and are called interchange fees, which are set by Visa, Discover and MasterCard.
The rate changed to a merchant by a bank and payment service provider for providing debit and credit card services. The rate is determined based on factors such as volume, average ticket price, risk and industry. The merchant should set up this service, and agree to the rate prior to accepting debit and credit cards as payment.
Setup fee – a one-time fee charged upon the creation of a new account. The Setup fee is intended to compensate the company for the expenses associated with setting up the account.
The Transaction fee is charged when you accept your authorization for each transaction. Usually this kind of fees starts from $0, 20 per transaction.
The statement fee is a monthly commission, associated with the monthly statement that is sent to the merchant at the end of each monthly processing cycle. This statement shows how much processing was done by the merchant during the month and what fees were incurred as a result.
The chargeback is the largest risk that is presented to banks and providers. It mustn’t be confused with a refund, which is simply a merchant refunding a transaction. In the Visa, Discover, and MasterCard rules, the merchant’s processing bank is 100% responsible for all the transactions that the merchant performs. This can leave the provider open to millions of dollars of potential losses, if the merchant operates in an illegal or risky manner and generates many chargebacks. The providers pass this cost on to the merchant, but if the merchant is fraudulent or simply does not have the money, the provider must pay all the costs. The chargeback risk is the largest part taken into consideration during the contract application and underwriting process. Some banks are much more stringent than others when assessing a merchant’s chargeback risk. In all cases, a chargeback will cost the merchant the chargeback fee, typically $15–$30, plus the cost of the transaction and the amount processed.
The rolling reserve is a portion (usually 5- 10%) from every transaction that is held for 3- 6 months, then settled to the merchant. This reserve account is held as an insurance against an account being brought into a negative balance due to chargebacks and reversals. This measure is a standard practice in the payment processing industry.