How To Buy a Card Payment solution – By the Experts
It’s not a bank account! A merchant account is a credit account arranged by the merchant [that’s you] and a “Credit Card Acquiring Bank”. When you apply for a merchant account, the Merchant Account provider or Acquiring Bank will conduct a thorough credit risk assessment to ascertain your suitability for an account in much the same way as they would if you were applying for a credit card. Applying for a Merchant Account with an Acquiring Bank is beneficial to your company because the longer you trade the better terms you’ll receive and you’ll build up your own credit rating. If you are planning to build an e-commerce website, make sure you approach the Merchant Account provider at least one month before the site goes live to allow sufficient time for integration.
Get the right merchant account
There are three basic merchant accounts with the differentiation being who is present at the point of transaction.
Cardholder Present [CP]
A traditional retail transaction where both the Merchant and the cardholder are present at the point of sale, for example you are paying for your meal in a restaurant.
Mail Order/ Telephone Order [MOTO]
MOTO accounts are used when the customer is not present and the Merchant takes orders from customers over the phone or by mail order. MOTO accounts are also referred to as Cardholder Not Present [CNP]. For example, an individual telephones to place an order for goods or services and you enter their card details into a virtual terminal on your computer, tablet or smartphone.
Internet Merchant Account [IMA]
An IMA is used by Merchants operating from a physical premises, a virtual online store or transacting when neither the Merchant nor the customer is present at the point of sale. For example, an individual may sign up for an online subscription and once they have entered their credit card details, subsequent payments are taken automatically. If automated transactions are a feature of your business you should discuss this with your Merchant Account provider as they may recommend a continual authority account or a separate merchant account. Internet Merchant Accounts are the most expensive of the three accounts because they carry a greater risk. MOTO accounts represent the best value.
What is the procedure?
Get the right provider
You do not need to approach the bank that holds your business bank account. We can put you in touch with a panel of trusted merchant account providers who can offer a full range of merchant services to suit your business. Make sure you obtain quotes from several merchant account providers and use these quotes to get the best rates and achieve savings on every single sale you transact.
How long does it take?
There is a direct correlation between the time it takes to obtain a Merchant Account and the quality of your application. It is vital that you have the following in place before applying for a Merchant Account.
UK registered company
You can apply for a Merchant account as a sole trader, but when your business takes off you may want to become a limited company for tax purposes. When you switch to Limited status from sole trader your time trading goes back to zero – it is best to establish a Limited company from the outset.
UK business bank account
This account must be in the name of the company with a Director of the company named as the authorised signatory.
If you are a start-up or a new business, you will need to present your business plan. This reflects your ability to plan, organise and run a business and your application will fail if you cannot demonstrate this. You can ask a business mentor or your bank manager to review your business plan which should include your predicted turnover, your client base and their location eg UK, Europe or worldwide.
In no more than one page describe what your business will be producing, how it will be doing this and how it is doing now. A well-written, concise overview that the Merchant Account provider can review.
Management Accounts [P&L]
Even if you are not currently trading, you should have management accounts and a profit and loss projection for at least the next six months.
If you are going to be trading from a website it must be in at least beta format for the provider to review.
Terms and Conditions
You will need to present a photo driving license or passport as the provider is required to carry “Know Your Customer” checks and ensure you are who you say you are.
You may be asked to produce suppliers’ contracts to demonstrate best practice. To expedite the applications process, here is a useful example of the website checklist that a provider might use to ensure that your website is Payment Card Industry compliant.
- The transaction currency appears on the website and during the checkout process. It is not permitted for the website to redirect to another website and you must supply the URL
- An explanation of how the customer will be supported before, during and after the purchase should be clearly displayed
- Customer Service Telephone Number and email address should appear on as many pages as possible
- Clear website branding is as expected and must fit the type of business you operate
- The registered address and trading address must be listed on the website, usually the ‘Contact Us’ page
- The Cardholder is diverted to a secure, encrypted page [HTTPS://] for the checkout process to enter sensitive information
- Card scheme rules state that at any location, including websites, must display the logos of any cards that can be used to make a purchase eg VISA
- To help prevent fraud, it is mandatory for the Cardholder to be asked for their address, home and mobile telephone numbers
- To avoid confusion the website must display prices in full and indicate exactly what the customer will be paying for an item
- The transaction currency appears on the website according to ISO4217 currency codes, for example £10.00 GBP
- The cardholder must be able to read the terms and conditions for their purchase
- The website should state when the cardholder’s account will be debited
- The procedure for returning goods or cancelling a service must be available on the website as well as the opportunity to opt out of the purchase and return goods and services
- The shipping policy and associated costs must be accessible and form part of the checkout process
- The delivery time should be stated on the website – how long the customer can expect to wait for their goods must be available on the website. This should form part of the checkout process
- The refund policy must be clearly stated and easily accessible to the customer on the website and in the terms and conditions
- The descriptor must appear on the website – this appears on the merchant statement and should be a name that the cardholder will associate with their purchase. It is advisable to have this name in your terms and conditions, at checkout and on the customer’s receipt “this purchase will appear as … on your statement”
- The Cardholder’s responsibilities regarding jurisdiction laws is stated on the website
- All links on the website are fully functioning