Having a merchant account is one of the essential steps if you run an online business and have a demand to receive payment via debit/credit cards from international clients. Opening a merchant account is complex, required for a range of business documents and must undergo a strict due diligence process. Despite these challenges, owning a merchant account still offers substantial advantages, such as boosting sales, enhancing security, reaching and improving customer experience globally. Let’s explore how to open a merchant account with LNT Consulting.
Merchant account – what should you know?
Merchant account is a bank account that accepts electronic payment from debit, credit cards or other electronic methods. It acts as an intermediary, holding transacted funds from the customers temporarily until they are transferred to a regular business bank account. The processing time to get the payment done faster than normal bank transfer.
Below is the key benefits of a merchant account:
– Seamless online transaction: Easy to collect online payment via payment gateway that is integrated on your business website in different currencies.
– Boosting revenue: Customers tend to spend more for shopping, if they use card payment, especially credit cards.
– Cash flow improvement: Payment made through a merchant account is quick and hassle-free, reduces the risk of entering wrong information and the bank must refund money back, unlike traditional bank transfer.
– Increase customer experiences: Provide several payment options enhances customer satisfaction, give them the flexibility and control on how to spend their money.
– Analytics and reporting: Some merchant account providers offer tools and reports that help you track sales, monitor transaction volumes and know customer behavior.
Which industries should open a merchant account?
Does your business model need a merchant account? Let’s find out the key industries where a merchant account is highly advantageous:
- E-commerce: Online businesses need a payment gateway to proceed payment from customers worldwide who purchase products online via the business website.
- Retail: Online retail stores benefit from merchant accounts, because they enable seamless payment via credit and debit cards.
- Service businesses: Consulting firms, online courses or subscription businesses can improve payment processing and ensure timely payment to deliver services effectively by using a merchant account.
- Travel agencies: Hotels, restaurants and flight booking providers often deal with a high volume of transactions and it’s so essential to have a payment processor to handle online payment and reduce administrative overhead.
Detailed instructions to open a merchant account
Here’s an overview on key steps that you need to pay attention to before considering opening a merchant account.
Step 1: Open an online business
Merchant providers prefer companies that meet the below requirements:
- Incorporate the company in high reputation countries
- Have requirements for accounting reports and tax filing
- Have a business bank account in local country and it accepts to link with the merchant account
Hong Kong, Singapore, USA or the UK will be the best choice for company formation. The requirements from each jurisdiction can be varied, but it commonly requests the below documents:
- Scanned copy of passports
- Scanned copy of address proofs
- Short description on business activity (products/services, sector)
- Company structure confirmation (director, shareholder, UBO, the authorized share capital)
Upon submitting the above documents, the registered agent will prepare an application form, guide you to sign it. Then, do a due diligence check and place an order with the Public Registry.
Step 2: Open a business bank account
Do research or seek advice from experts to consider which banking options are best-suited for your business. Considering numerous factors including the bank’s fee, currency supported, card issuance, online banking service or customer support.
Once you’ve selected the appropriate banks, go through the document checklist for further preparation, including but not limited to:
- Online presence (website, LinkedIn profile, or any other platforms that you use to describe your products/services and attract potential customers)
- Business activity (financial plan, marketing methods, target clients, human resources,…etc)
- Proof of business (any invoice, contract, service agreement between your company and suppliers/customers)
- Personal documents (passport, address proof, Resume and bank statement)
- Corporate documents (Certificate of Incorporation, Article of Association, Company structure confirmation, Certificate of Good Standing)
If your business is newly established, you can provide supporting documents from an existing company where you are director or shareholder with the same business line to increase the high chance of approval.
Next step, submit the application via online banking portal. And then, the bank will assign a dedicated support to review, guide you to provide more documents for verification purpose, schedule an online meeting or scan QR code to verify the business owner’s identity. If everything is clear, the bank will send you a welcome letter and guidelines on how to use their banking services, and explore different financial products.
If you want to know step by step guide to open an offshore bank account, read this guide for more information: https://lntincorp.com/how-to-open-an-offshore-bank-account/
Step 3: Open a merchant account
There are many merchant account providers in the market, but they are not all alike. It’s crucial to carefully select the most suitable one, taking into account important factors such as the fee, processing time of each transaction, security features, reputation, customer support and ability to integrate with your company website.
Merchant account providers typically request the same documents as those required when you open a regular business bank account. Providing accurate and thorough information is so important to avoid the delay in approval process or compliance rejection. Don’t forget to link the regular business bank account to a merchant one.
Once the account is approved, you’ll need to set up and integrate payment processing with your company website. Test the system carefully to ensure that all functions work properly before starting using it to accept payment from credit or debit cards.
Conclusion: Opening a merchant account may seem complex, but by following these 3 simple steps above, you can streamline the process and ensure a smooth setup for your online business. From choosing the right service provider to preparing the necessary documentation and integrating the account with your website, each step plays a crucial role in securing your ability to accept payments efficiently and securely. By carefully navigating these steps from LNT Consulting, you’ll be well on your way to enhancing your business’s payment processing capabilities, focus on growth and customer satisfaction.
Disclaimer: LNT Consulting aims to provide up-to-date and accurate information on this website. However, this information is intended for reference only and should not replace professional legal advice. For guidance on your specific case, please contact LNT’s customer service.
