Setting up a credit card processing account is usually not that difficult to do. Ideally, you will need to have reasonably good credit, identification that can be verified, and a bank account in good standing. You will then need to choose a processor for the account, and most of the time this will involve making a decision between a third party processor or bank. It is probably a good idea to first check with your current bank to find out if it offers this service, because in many cases, banks offer the best rates for credit card processing.
Banks that offer their customers the option of a credit card processing account may have very different standards regarding who can qualify. Though banks are usually considered the best provider for this type of service, they sometimes have very strict guidelines associated with account qualification. For instance, banks usually require higher than average credit ratings for those who wish to open a credit card processing account, and may even have restrictions regarding the type of merchandise or service associated with the account.
Chargeback risk is one of the reasons a bank may turn down an application for a credit card processing account. A chargeback is a term that describes funds that are withdrawn from the merchant account by the credit card company and returned to the customer, and is usually the result of a dispute being filed regarding the merchandise or service that was purchased. Some types of businesses are considered high risk for customer disputes, and for these businesses, banks may require a chargeback escrow account to serve as back up funding for these types of disputes. Without an escrow account, many banks may choose to decline the application. The dollar amount required for escrow may depend on expected monthly sales.
It is sometimes easier to get a credit card processing account through a third party processor. You can often get a list of certified third party processors through credit card companies or by browsing the Internet. Third party processors charge base monthly rates and transaction fees, and will usually transfer funds directly into your bank account. They will often accept applications from those who have marginal credit, though in some cases credit rating may affect fees. In many cases, third party processors may also require an escrow account as backup funding to protect again the possibility of customer disputes.
