If you have a business and you do business with customers in the United States, you may run into some issues when it comes to processing payments. Many payment gateways and credit card processors work exclusively with US based businesses, which makes it harder for foreign companies to accept payments by debit or credit cards. You may be interested in opening up a US merchant account.
A merchant account is an agreement between you, the seller, and a bank, on payment card transactions. The member bank usually has a partnership with Visa and Mastercard, two of the largest brands of payment cards.
Requirements to open a merchant account varies with each bank. You may have to be in business for a certain amount of time, have a physical location, or live in a certain area in order to qualify. You also must either be incorporated in the US, or have a DBA, or Doing Business As, in the country. So even if you’re not a resident of the United States, your company must have a presence there.
Merchant accounts can come with a variety of fees, including a setup fee, authorization fee, monthly minimum fee, transaction fee, annual fee and more. You’ll want to know ahead of time how much it will cost your business to be order to charge customers by debit or credit card.
If you’re setting up a merchant account to avoid international Paypal fees, you may want to compare which one is the most cost efficient choice for you.
Before your account is opened, the bank will assess the risk of taking you on as a customer, depending on factors such as your location and your business’ track record. Depending on what the bank determines, your approval after application can be take a few days.
Merchant accounts also come with contracts, ensuring that if you or your business cannot pay whatever is owed to the merchant bank, the bank has the authority to pursue retrieving those funds until the debt is paid. These contracts may be for a specific amount of time, and ending it prematurely can result in termination fees.
Setting up a merchant account is a simple process, but not necessarily a quick one. In some cases, businesses would fare better to not open one depending on how much they would expect to have to pay in regular fees. However, opening a merchant account and allowing your US based customers to pay for your product or service using their payment card establishes trust and credibility.