You might be ready to create a merchant account to accept credit cards if you’ve started to build your business or if you’re tired of using paper invoices and snail mail to collect payments. However, knowing what to expect before you commence is a good idea. When applying for a canada high risk merchant account in Canada, there are eight things to remember.
A merchant account must be underwritten before it can be opened.
By providing merchant accounts for businesses, payment processors and collaborating banks take on risk. Every dollar that passes through their system might be charged back, making the bank liable for the funds.
Assume a company makes a transaction through their merchant account but cannot supply the goods or service (due to a closure, inability to pay wages, etc.). If a consumer files a chargeback, the bank is usually responsible for sending a refund to the client, even if the money has not yet been recovered from the merchant.
Banks consider both the probability of chargebacks and the authenticity of the business when assessing the risk connected with new accounts.
Working with an experienced partner, similar to using a loan specialist to aid with a mortgage, will ensure a smooth underwriting process. In addition, some merchant service providers have a team to assist new businesses with account setup.
A business bank account is required.
Before creating a merchant account, you’ll need a business bank account, even if you’re a sole proprietorship. You can open one at your local bank in about 15 minutes, and all you need is a company license and an EIN. The IRS can also help you obtain an EIN.
Your company bank account will be the default recipient of the money and the account from which transaction fees will be deducted. Credit and debits can occasionally be separated into separate accounts, but you must request it.
It’s critical to maintain a sufficient balance in this account to pay any processing costs and monthly software fees, if necessary.
A merchant account nearly generally necessitates the acquisition of a company license.
Unless you’re a single proprietorship operating in a particular county, you likely already possess a business license. If you haven’t previously registered with your Secretary of State, you’ll need the license for purposes other than creating a merchant account. It may be anything from a fabricated name declaration to articles of incorporation. To authenticate your business, merchant account underwriters evaluate and file a copy of your license.
A merchant account application is required for underwriting.
An application is required for the merchant account underwriting procedure. The majority of providers use the online version of the application.
The application will ask for information about the company and the account’s authorized signer. Therefore, before you begin, you’ll need your bank account and routing details, your tax ID (EIN), and processing volumes (projections). Other data gathered on the application may include (but is not limited to) the following: company start date, contact information, beneficial owner information, and authorized signer information.
Depending on the method of payment accepted, several merchant accounts may be required.
If you want to take credit card and ACH payments, you’ll have to go through two different underwriting procedures with two other processors. While one processor may process the numerous credit cards you provide, your ACH/eCheck transactions are usually processed by a different one. You won’t need to download any other software if you buy from a software supplier or an independent sales organization (“ISO”).
You must provide the underwriter with supporting paperwork.
When opening accounts, you should know that there is always tons of paperwork involved. For example, suppose your company needs to process a few thousand dollars monthly. In that case, you may only need to send a voided check and marketing materials (providing that you’re currently in operation) to get started.
Prepare to offer more financial details if you want/need to apply to handle higher sums. For example, in some situations, you may be required to furnish financial statements in the form of profit and loss statements and balance sheets for up to two years.
Remember that the processor will keep track of your account activity after you’ve been accepted, so be as exact as possible when specifying processing quantities. You don’t want to fall into the habit of overworking your processor.
Getting your account up and running can take as little as one day.
Your merchant account may be set up in as little as one business day after submitting your application (sometimes within hours).
Because underwriters work during regular business hours, applications submitted in the afternoon are unlikely to be reviewed until the next business day.
Suppose you utilize a software provider to assist you with underwriting. In that case, they can sync your merchant account with your software, allowing you to begin processing transactions as soon as underwriting approves you.
Your shop can utilize the same merchant account as your online store.
A significant aspect of merchant accounts is that they can be used for both – your offline or physical store and your online platform. You can use the duplicate accounts at both places as long as the platform is the same. If you have an account under your merchant name for your physical storefront or office, check out if there’s a possibility of transferring this account itself.
There you have it. The 8 top things to remember when opening a merchant account in Canada. You can always ask for help!
Underwriting aid is available, and it’s sometimes free through software firms, so ask! Before you begin the procedure:
- Ensure you have all the necessary documentation (company licenses, tax IDs, and bank account).
- Prepare to present factual information about your company, including projected sales quantities.
- Examine your merchant account’s hidden charges, terms and conditions, and policies – leave no stone unturned.
It is lengthy and slightly tiresome, but it is always worthwhile for you and your business.