How To Apply For A Merchant Account

A merchant account enables you, the business owner to accept debit and credit cards, thus expanding your pool of potential customers.

Whether your business operates from a brick-and-mortar location or online, your business will benefit by having a merchant account.

How Do You Set Up A Merchant Account?

Setting up a merchant account is a fairly simple process.

Once you’ve decided on the credit card processor that you want to use, you’ll be asked to complete an application. With Canada First – we make it easy for you. Your account representative will help you with your application and guide you through the process.

Like most merchants, even before you get started, you want to know what to expect when applying for a merchant account. How long will it take? What type of paperwork is involved? What kind of information do payment processors want to see?

Why Does The Payment Processor Want Your Business Information?

Payment processors and their partnering banks (the credit card issuers) take on a certain level of risk by providing your business with a merchant account. Every dollar transacted through their system could potentially be charged back, leaving either the processor or the bank responsible for the funds.

For example: Let’s say that a roofing business processes a transaction for a service, like a deposit for a new roof installation through their merchant account, but they can’t deliver the product or service because they went out of business. Their customer would request that a chargeback be issued. That’s the deal that Visa offers to consumers. The processor assumes that responsibility. By agreeing to permit the business to accept payment by Visa cards, they become responsible for issuing a refund to the customer, whether or not they recoup those funds from the merchant roofing business.

Some businesses take deposits for services or products that may not be delivered for several months. In effect a merchant account is much like a line of credit.

When assessing the risk associated with new accounts, processors look at the legitimacy of the business applying for the merchant account as well as the possibility of chargebacks.

Typically a soft credit check is all that is required when applying for a merchant account. However, you may be asked to provide additional information to your payment processor: a copy of your business license or incorporation documents; profit and loss statements; or copies of previous years’ tax returns.

You Need A Business Bank Account

You’ll need a business bank account before opening a merchant account. If you’re a sole proprietor, your personal chequing account is usually sufficient.

Your business bank account will be the default destination for the all the funds you transact, as well as typically the account from which monthly transaction fees will be debited. All payment processing companies will require two-way access to your bank account if you are accepted. This allows them to deposit funds into your account and also allows them to withdraw them in the event that there are charge backs.

You will need to provide a void cheque on the bank account(s) associated with your merchant account. A starter cheque is not acceptable, you must either provide a pre-printed cheque or else a PAD/PAC form provided by your bank.

In some cases, such as law firms’ trust accounts or when funds are deposited to US$ accounts, fees may be withdrawn from another account (a law firm’s General Account or a business’s C$ account). In such cases, a second void cheque for that second bank account will be required.

Completing the Application

The application will request information about your business as well as information about the authorized signer on the account.

Such information will include your:

  • Business name, address and phone numbers;
  • Personal name, address, date of birth and Social Insurance Number (SIN optional – but will suffice as the second ID)
  • Two pieces of ID, one of which must be government issued and have a picture (Health Cards from many provinces may not be used)
  • Your title or function within the business (eg. owner)
  • Business bank account and routing numbers
  • Business start date and processing volumes (or estimates)
  • Your industry sector and a description of the type of products and services you provide. This will help give the provider an idea of the average sale amount.
  • An estimate how much you plan to receive in payments on a monthly or annual basis. As well as information concerning any large irregular payments that you may process from time to time.

Supporting Documents May Be Required

The supporting documents that might be required will depend on your industry sector, and your estimated processing volume. The greater the amount you intend to transact, the more documentation the payment processor will want to see with your application. If your business is only looking to process a couple of thousand dollars a month, you may only need to provide a voided cheque from your business bank account and material proving that you’re actively conducting business to get started.

If you want or need to process larger amounts, be prepared to provide more comprehensive financial information, such as several months of bank statements. In some cases you may be asked to provide up to two years of financial statements in the form of profit and loss statements along with balance sheets.

Ongoing Monitoring

After you’re approved, the processor will monitor account activity, so it’s important to be as accurate as possible when listing processing volumes. You do not want to get in the habit of exceeding your processing estimates, especially early on in the life of your account.

You can be up and running in as little as three to five business days:

After completing your merchant account application, depending on how quickly you submit the required supporting documents, your account can be set up and processing terminal delivered in as little as three business days.

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Get in touch and ask us for a quote or ask a question about what solution is best for your business. Call us at 888-616-6967 or click to send an email. We’re here to help.