Merchantaccount
Merchant account
- What it is
- A special account for accepting payments from customers by card and online
- Who needs it
- A business that accepts payment by card or through a website
- How it differs
- It is not an ordinary current account: money arrives via acquiring with a delay
- What is checked
- The type of activity, turnover, reputation, level of refunds
- The main risk
- A high share of chargebacks is grounds for closure
In plain words
A merchant account is a special account for accepting payments from customers: by card in a shop, online on a website, through payment links. Put simply: an ordinary current account is for making payments and receiving transfers, while a merchant account is for accepting payment from customers.
It works through acquiring: the payment passes through a payment system, the acquiring bank deducts a fee, and the money reaches the business not instantly but with a delay. The bank may hold part of the turnover in reserve — in case of refunds and disputes. The terms depend on the type of activity and the assessed risk.
For international business this is a sensitive subject. Banks and providers look closely at the field of activity, the geography of customers, turnover and the level of chargebacks. High-risk industries get more expensive terms or a refusal, and exceeding the chargeback ratio is a typical ground for closing a merchant account.
Who needs a merchant account
What the provider assesses
- Type of activity
- Turnover and average ticket
- Customer geography
- The acquiring fee
- Crediting time
- A reserve on turnover
- The share of refunds
- Customer complaints
- A high-risk industry
- Ownership structure
- Beneficial owners (KYB)
- Licences where required
How a merchant account is opened
- 01Preparing the company documents
- 02Checking the business and beneficial owners
- 03Agreeing tariffs and the reserve
- 04Technical integration
- 05Accepting payments
What you need to know
- A merchant account is not a substitute for a current account
- Money arrives with a delay, not instantly
- The bank may hold a reserve on turnover
- A high level of refunds leads to closure
- Not only the company but also the beneficial owners are checked
Common mistakes
- Concealing the real type of activity when applying
- Not allowing for the reserve and the delay in cash flow
- Ignoring a rising share of chargebacks
- Working without a back-up payment provider
- Mixing personal and business flows
What this means for a BRIDGES client
If a business is the basis of your income and of evidencing the source of funds, its payment infrastructure becomes part of the immigration picture. We help put the documents and ownership structure in order so that they withstand both the bank’s check and the programme’s due diligence.
Frequently asked questions
01 /How does a merchant account differ from a current account?
A current account is for the company’s payments and transfers; a merchant account is for accepting payments from customers by card and online through acquiring.
02 /Why does the money not arrive immediately?
The payment passes through the payment system and the acquirer, and part of the turnover may be held in reserve in case of refunds and disputes.
03 /What is a high-risk industry?
A field with a high share of refunds and complaints. For it the terms are more expensive and the requirements stricter, and sometimes the provider simply refuses.
04 /Why are merchant accounts closed?
Most often because of a rising share of chargebacks, a mismatch between the declared and the actual activity, or customer complaints.
05 /Is a back-up provider needed?
Preferably. Losing the only channel for accepting payments stops sales instantly, and connecting a new one takes weeks.
06 /Does this affect an immigration application?
Indirectly, yes. If the business is your source of income, its transparency and documents will be checked when you evidence the source of funds.
See also
Read next
This material has undergone editorial review by BRIDGES.
Is a business your source of income?
We will help prepare the documents and structure so that they pass both the bank and the programme’s check.