Whenever we are starting up a business, an ordinary bank account cannot meet our needs, therefore, we need a Merchant Account. A merchant account is known as that account which helps to accept and process electronic payment card transaction. Merchant accounts are also called one type of business account. Merchant accounts need a business partner with a merchant occupying bank that will facilitate all the communication required in electronic payment transaction. Merchant account allows a business to accept credit cards or other form of electronic payment. Merchant accounts are marketed to the merchants with the help of two methods: either directly with the help of sponsoring bank or with the help of an authorised agent of the bank and directly registered with both Visa and MasterCard as an ISO/MSP which is called Independent Selling Organisation or Member Service. Marketing details are applied by various rules and fines.

Merchant accounts are considered as the main key of all business operations for most of the merchants. Merchants are offered a number of options when they choose a merchant account service provider. But if a business owner does not want to take electronic payment, they do not need to avail a merchant account, they can carry on their business with depositing the money to normal savings account. Like many sole traders do not choose merchant account. But online business must have to establish a merchant account in order to accept the electronic payment because this option is the only option for them for making a purchase.

MERCHANT ACQUIRING BANK SERVICE: In order to avail the benefits of merchant account, a merchant needs to set up a merchant account with a merchant acquiring bank if they wish to make payments through electronic card payment options for their goods or services. Merchant acquiring banks and business set up a merchant account through a detailed agreement of merchant account that covers all the terms and policies that are involved in the relationship.

Bank will charge a cost per transaction, the bank’s credit card processing network and any monthly fees or annual fees that the bank charges for the services will be included in that list.

TRANSACTION PROCESSING: whenever we are making an electronic payment, card communications are sent through an electronic terminal to the merchant acquiring bank. After that the merchant acquiring bank contacts the card processor that contacts the card issuer. Then the card issuer checks if the account has sufficient balance to make the transaction possible and also checks the security checks. After the authentication process the approval is sent to the merchant acquiring bank through the network processor. If this is approved then the merchant acquiring bank validates the transaction and starts the settlement of funds. In this way a transaction is completed and it involves a number of process within it. But all these processes are designed to be happened within a minute and a fee is deducted from the merchant account. The merchant is charged a fee per transaction from the merchant acquiring bank. Besides that, the network provider also charges the merchant a fee per transaction. All these fees go vary from 0.5% to 5.0% of the transaction amount with an additional amount of near about 0.20 Dollar to 0.30 Dollar. A merchant acquiring bank also charges the merchant a monthly fee and besides that the bank also charges a fee for special situation fees. But the monthly fee is deducted from the merchant account for covering the electronic payment card risks by the merchant acquiring bank.

Now a question may rise in our mind about how to create a merchant account. Let us discuss briefly

1.CHOOSE CREDIT CARD BANK TO WORK WITH: This the first step of creating a merchant account. We might need a visa or master card but if the client is from different country, they may have different cards. Hence, we should keep in our mind that the bank should give us the opportunity of doing so.

2.FIGURE OUT THE PAYMENT MODEL: For being a merchant, we should offer our clients for various types of payment models. So, we should know if the bank supports the various payment models.

3.ANALYZE THE TURNOVER: The rates that banks offer, it is fully depending upon the turnover of the business. So, we have to show all the documents regarding the annual turnover of the business.

4.START LOOKING FOR A LOCAL BANK: We often recommend our clients to open a merchant account with a local bank that means the bank should be under the same jurisdiction where the merchant’s business is registered as the local banks offer the best rates. Besides all that we should always open a merchant account where our real account is opened. Due to gain the bank’s trust, the merchant stores a certain amount of money on his account.

5.PREPARE THE WEBSITE: To avail a merchant account we should prepare our website. If we use any Payment Service Provider (PSP), they can help us out at this step. One thing about having a website is very important is the domain information of the website. For getting a merchant account one must have a website with a unique domain and websites’ own hosting.

6.GATHER ALL DOCUMENTS: The next step is very important because in this step we have to gather all the required documents to submit them to the bank. The documents must include the detailed activities that will be conducted for the business and a valid check for the checking account and tax returns by the merchant.

7.SUBMIT AN APPLICATION FORM: This step is very crucial because we have to be very sincere for submitting the application form. After the final submission of the application form along with all previously gathered information, the bank will look into it and make a final decision. After all the process the merchant need to pay for setting up a merchant account. The merchant account provider will charge the merchant not only the establishment of the account but also the monthly fee, decline fee, as well as the chargeback and refund fees.