How To Use Merchant Account Providers
If your business needs to accept credit card orders over the phone, you need a virtual terminal
A virtual terminal is a secure, online form that your employee uses to enter a customer’s credit card information taken over the phone. Once entered, the credit card information is secured using powerful encryption technology and tokenization to prevent interception of the information while it’s being processed. Once the customer’s order is entered, customer funds are verified and then debited from the customer’s account and then transferred to the merchant service provider, who then deposits the money, minus fees, into your business checking account.
In order to accept credit cards over the phone, you will need to first open a merchant account with a merchant payment processing services provider like Charge.com. The application process is often hassle free and can take a few days to complete. You will need to submit a few things and take the following steps as outlined below before applying with a merchant account provider.
Corporations and LLCs:
- Setup a legal entity – You will need to have a legal entity set up for your business. This can be an LLC, C-Corp and so on.
- Obtain an EIN number – An EIN number stands for Employer Identification Number and is what the IRS uses to identify your company with.
- Get a business checking account – This will allow the merchant service company to deposit transactions directly into your business checking account.
Once you have these three things, you can then start the application process your chosen merchant services provider requires. Sole proprietors do not need these things, and can sign up using their personal name, Social Security Number, and personal bank account. The next sections will talk about the underwriting process.
Sole proprietors do not need the three items listed above for Corporations and LLC’s and can open a merchant account under their personal name, can use a Social Security Number as their tax ID number, and can also use a personal checking account to receive deposits.
There is a high level of risk merchant providers and their partner banks take on when approving a new merchant. Chargebacks occur when customers dispute activity on their credit or debit cards and request that their credit card provider issue a refund to them. These refunds are debited against the merchant services provider and their partner banks creating a lot of potential liability.
As such, merchant service providers and their partner banks go through an underwriting process to determine the level of risk each merchant poses to their company. Depending on the underwriting process, the merchant service provider or bank may ask for a lot of documentation like tax returns, credit checks, background checks and so on. Be prepared to answer a lot of questions and be honest and upfront about anything that could potentially classify you as “high risk”. The more upfront you are in the underwriting process, the more trust you will build with the merchant service provider.
After the underwriting process, you will either be approved for a merchant account or not approved. If approved, you will be accepting credit cards by phone, online, or in-person, in no time! Start the application process now by filling out the form to the right, today.