How To Get a Merchant Account and Accept Credit Cards

Featured Image

One of the first critical steps in establishing a system to manage your business’ money is knowing how and why a merchant account is necessary for facilitating your ability to properly accept credit cards.

While you may know that getting a merchant account is the first step in any business being able to accept credit cards, the details as to how to make that possible are a bit more complex. What’s important for you to understand is the step-by-step process to expect when determining what processor solution fits the mold of how you want to conduct business.

This may seem overwhelming, but don’t worry — we’re here to guide you through each step of the decision process. From shopping the right processor to establishing the right relationships to finding the right pricing plan/solution to make your credit card payment integration as seamless as possible, getting your business’ merchant account up and running doesn’t have to be so complicated.

Once a processor partner is chosen, merchants can kick off the application process, which — depending on your level of risk — the merchant account application can be processed through a sponsor bank. At least that’s the abridged version you’re probably already familiar with. Initiating the process, and knowing if you’re on the right path, might feel a little overwhelming.

That’s why we’re here — to ease you through the merchant account process so your business can accept credit cards with ease, and without unnecessary risk.


How to Accept Credit Cards: The First Step

What every merchant needs to understand about the merchant account process is the core piece of the payment puzzle: Credit card processors. This is what makes a transaction between consumers, merchants, processors, and banks possible. A payment processor allows transaction data to move across a business’ payment terminal or software to enable the transaction to happen. A processor is also the key piece in helping the transaction pass through the card network to the issuing bank.

The issuing bank is then in charge of authorizing the transaction through the card network and through the payment processor. This process takes a matter of seconds and enables a seamless experience between your business and your customers. Within the process that allows merchants to accept credit cards, there is also another important component that makes merchants able to manage the transactions. This is where merchant accounts come into play.

In its most basic sense, merchant accounts are what allows the business to accept credit cards. Merchant accounts allow for the reconciliation of funds between their account, the customer, and the issuer. When payments are approved, that’s when funds flow into your account. A merchant account serves as the final backstop before a business receives funds into their own bank account.

A merchant account allows for you to accept credit cards, but when it comes to managing risk, your credit card processors are in charge of the sensitive details connected to your customer’s data. Choosing the right payment processor is vital to both accepting credit cards, but also protecting your business and your customers from outside threats. This is also an important step in ensuring transactions are properly authorized and approved for settlement.


How to Accept Credit Cards: The Stages Involved

Knowing how to accept credit cards is also understanding what you need to start the process of completing an application for a merchant account. The documents you’ll need to have ready to initiate this process are:


  • Banking Information: Your merchant account needs to be associated with a chosen acquiring bank that can manage the flow of your credit card payments that flow through your systems. Your bank will also be determined by your level of risk as some financial institutions are better equipped to work with certain businesses based on their own credentials. When establishing these relationships, your acquiring bank and payment processing partner will help you determine your risk level based on the types of transactions your conducting.


  • Verification of Business: The banks, issuers and payment processors you’ll work with will all need to know that you’re a legitimate business. No matter how big or small your business is, to accept credit cards, and have a merchant account, you’ll need to have those details ready to provide.


  • Security Details: For an online business, you’ll need an SSL certification. This involves the data files that are connected to your businesses security details. When using a web server, an SSL certification allows for secure connections (https protocol, etc) to ensure activity from your server to your browser if protected. This protects credit card numbers, usernames, passwords and any other sensitive customer data that may be shared on your site.


How to Accept Credit Cards: The Key Relationships

To understand how merchant accounts and credit card acceptance truly works, you must consider all the relationships it takes to make the transaction possible. This involves five key parties that are equally important in delivering a solid payment relationship. While highly interconnected, each plays their own unique role in getting your business paid.

What brings each of these parties together is the payment industry partners that make a transaction possible. For example, Payline provides credit card processing to businesses of all sizes and is designed to enable better credit card processing relationships between each of these key players.

Here is the flow of how a transaction happens, and how a merchant gets paid once they’ve set up their system to accept credit cards.


  • Relationship No 1: The customer kicks off of the payment process. Cardholder errors can occur when they are using an outdated card or card with inaccurate information. The cardholder has no control over the logistics of the payment process but is the most critical for a business to care about.


  • Relationship No. 2: The merchant facilitates the transaction relationship with the payment processor to ensure a transaction is completed in a timely and secure manner. This stage makes or breaks your ability to seamlessly conduct business and accept credit card payments.


  • Relationship No. 3: The acquiring bank is the next stage in the process. This is the financial institution that acts on behalf of the merchant to process credit card payments. The acquiring bank is the key piece in the merchant relationship that enables them to accept credit card payments from the credit card networks.


  • Relationship No. 4: The issuing bank relates most of the credit card itself. This is the bank or financial institution that offers a specific branded payment card to the consumer. These are the card association brands that dominate the payment world: Visa, MasterCard, Discover and American Express.


  • Relationship No. 5: The card networks are the credit card companies that issue their branded cards to financial institutions, or directly to consumers, in order to allow for credit card relationships to exist. These networks facilitate how transactions occur between merchants and the card issuers. Having solid relationships with banks and cards networks are vital for you to establish a merchant account that allows you to properly accept credit card payments.


You may ask yourself: What are so many details needed? Properly conducting transactions — whether it be in-person or online — are all about being able to authenticate details are legitimate. Especially when dealing with financial details passed between the consumer and a business, there are many industry-wide regulations in place to protect the credit card companies, banks, and payment processing companies. Those same regulations, particularly as it relates to the sharing of data and financial transaction details, are also established to protect businesses and their customers.

Not providing these details can slow down the approval process to get a merchant account. This, in turn, makes it more difficult to accept credit cards, which hinders your business’ ability to attract and retain customers. With each merchant account application, which is similar to establishing any type of financial account (think mortgage, car loan or credit card application). Each triggers an underwriting process that can only be completed when details can be verified. With fraud running rampant in the credit card ecosystem, providing details to the necessary partners is a way to safeguard your business from unnecessary outside threats.

Providing those details is the first step in creating positive relationships in the financial ecosystem, which are critical in helping you establish the type of connections that make accepting credit cards seamless and secure. Securing a relationship with your acquiring bank and getting a merchant account quickly is the fastest way to get your merchant ID (MID) and start accepting credit card payments.


How to Accept Credit Cards: Risks to Consider

When thinking about how the above relationships work together, there is also risks that you must be aware of. Much of this risk can be avoided, of course, by ensuring you have a trusted payment processing partner that following industry-leading security and compliance protocols. The risks that can exist occur within the authorization, settlement and funding stages.

The reason the payment processing relationship is so crucial in this process is having an error during any of these stages can strain relationships with your customers. This can be costly and cut deep into your bottom line.

For businesses determining how to accept credit cards in person, securing payments starts by having an EMV-compliant card reader. For online payment portals, however, determining how to accept credit cards is a bit more complicated since the same security measures aren’t in place for card-not-present purchases.
You should rely on a payments partner that has the right fraud protection tools (Verifi, for example) in order to safeguard their payments from fraud. This also helps prevent your business from unnecessary chargebacks. When considering how to accept credit card payments, consider the integration process, and how businesses advertise how they mitigate risk between you and your customers’ payment methods.

Luckily, there are industry-wide regulations over credit cards, and how transactions are handled. This provides an extra layer of security built into the process of accepting credit card payments. On the contrary, there is also the chance those payments are susceptible to fraud, friendly fraud, or criminal activity — all of which can hurt any business’ bottom line.

The good news? Businesses that establish solid relationships with the right financial institutions and right payment processing partners are well on their way to conducting business across multiple channels quickly, securely, and in a manner that establishing a good rapport with your customer base. Much of your success in managing your payments have to do with the trust established between the key relationships we detail above. Whether it’s your processor, bank or customer, each of them matter for getting paid on time, and without any hiccups along the way.

It’s why Payline’s mantra is focused on offering industry-leading technology and products that power killer payment experiences.

Find Your Solution


For more payments news and industry insights throughout the week, follow us on Facebook, Twitter, or LinkedIn.

Anna Kragie is a content contributor for Payline Data. She previously wrote for, as a Sr. Content Producer, where she focused on financial services and payments innovation, fraud and security, emerging payments, and FinTech news, research and thought-leadership content across the payments industry.


Receive afreecost analysis

Sales Team
Online now
Call now