How to apply for a Merchant Account?

Businesses conduct frequent and large transactions. A merchant account allows businesses to carry out transactions from various online and offline payment methods
 

A merchant account is a business account that enables business enterprises to use electronic transactions. Business enterprises must partner with a bank that helps process and manage electronic payment transactions in a merchant account. These accounts are crucial for online businesses, while it is optional for offline companies as they can accept payments in cash.

What is a Merchant Account?
 

Merchant accounts are commercial bank accounts that help process online transactions for businesses. It allows companies to accept card payments, including other electronic transactions. A merchant account relationship is required for online businesses if they perform online transactions.

The charges for a merchant account are a bit higher than a normal business account, but it also offers a range of services and facilities for payments and transactions.

How does a Merchant Account work?
 

Merchant accounts are essential for most businesses and merchants to conduct their business smoothly. A merchant can choose an array of services and facilities depending on the cost they can pay to maintain the account and its services.

Usually, merchant acquiring banks partner with the business to provide bespoke services and facilitate electronic payments. IDFC FIRST Bank offers Merchant Multiplier Account that provides up to 20 times the total cash deposits through POS and UPI transactions. In addition, you also get preferential charges on POS services and zero account maintenance charges.

Business owners who opt for a merchant account can choose the types of online payments they wish to enable. The partner bank provides a dedicated current account and collects payments via cards, UPI, and other online transfers. There are charges for POS and UPI transactions; however, it varies depending on the bank.

What is a merchant acquiring bank?
 

A merchant acquiring bank is the partner bank that offers merchant account services and communicates online payments and transactions to the business. The bank commonly provides merchant accounts with POS service, UPI payments, NIFT, RTGS, etc., that the partnering business can choose based on its requirements. They need to pay a nominal fee depending on the services they opt for.

The merchant acquiring bank and the business must sign a detailed agreement of terms and conditions that discloses various charges for each service. Several banks offer a rebate on account maintenance charges and free bulk transactions. You can enquire about the charges by contacting your preferred bank.

Benefits of a Merchant Account
 

A merchant account offers numerous benefits in addition to accepting online payments. A few significant benefits are mentioned below.

• Large transaction limit
• Facilitates performing frequent transactions
• Easy to process payments and transactions
• Eliminates the hassles of cash handling and maintaining physical records
• Makes business run smoothly with streamlined cash flow management
• Offers a debit card in business name to access funds conveniently on the go

Who can apply for a Merchant Account?
 

Any business that plans on accepting online payments through cards, UPI, and other electronic fund transfer facilities can apply for a merchant account. Following are the applicant categories eligible to apply for a merchant account.

• Individuals
• Hindu undivided family (HUF)
• Partnership and sole proprietorship
• Limited Company and Limited Liability Partnership
• Clubs, societies, trusts, and associations

How to apply for a Merchant Account?
 

After checking your eligibility, you can contact your preferred bank through online and offline channels and request to open a merchant account. The bank will ask for proof related to business, business owner, address, annual turnover, etc.

Once you submit the required documents and merchant account application, the partner bank will verify the details and activate your merchant account. Subsequently, you can choose the type of payment services you wish to implement for your business using your bank account.

If you are running a business, you know the importance of online transactions. It is not only fast and secure but also convenient for customers and clients. Therefore, it is always advisable to go for a merchant account to give a boost to your business.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.