How Wholesalers Can Set Up A Merchant Account
When wholesale suppliers establish a limited company
, the most important thing required to accept credit and debit card payments is the merchant account. Before we discuss the details of how to set up a merchant account, lets first check what this account is. Merchant accounts are special accounts in different banks that are used for collecting payments made through the cards. The transferred funds are kept in merchants account for a pre specified time period and then transferred to the main business account.Setting up merchant account
In the UK, there are currently nine banks, which offer merchant accounts to businesses. To set up a merchant account, the service providers need range of information about your business. The information will help them assess your application and determine if you fall under the criterion set for having a merchant account. Some of the information you are required to provide to the authorities are: Projected or current turnover of your business, available business accounts, frequency and average transaction rate, products or niche you are dealing in and the time duration between payment arrival and products delivery.
Roughly, opening a merchant account takes four weeks. While evaluating a business for merchant account, the niche is studied on its individual circumstances. The companies like wholesale, Distributors and manufacturers with previous history of trading have higher probability of getting a merchant account as compared to companies, which have no previous trade history.
The factors, which make it difficult for the suppliers to have a merchant account, are also discussed here. Online mode of payment alone is one such factor which weakens the case for suppliers to have a merchant account. It is because online payments have always been subjected to higher risks of frauds as they are more anonymous than credit card payment made in a shop or over the phone. Companies with more online payments and less local card payments have fewer chances to get a merchant account. Wholesale companies that have longer period of time between payments made and products delivered pose more risk to the band and are thus less likely to get a merchant account.
Issuance of Merchant Account
When the merchant account provider assess the risks involved in the application and feels that the company is eligible then they issue a set of terms and conditions to the supplier. This set of terms and conditions needs to be followed precisely. The established distributors with longer history of trading could receive funds from merchant accounts in three days. While the newer companies, which are regarded as high risk companies, could have their funds withheld in merchant accounts about 30 or more days.
The above-mentioned policies should not be troublesome for you because every new business has to go through this stage. When a business gradually earn a sound trading history, the owner can renegotiate the terms provided by the merchant account.
While having merchant account, company should also watch out for chargebacks. Chargebacks occur when the customer is unsatisfied with the delivered product or services and takes the matter to bank authorities for the compensation. The wholesaler and customer will explain the series of events according to the written documentation and bank will decide in the end about the fate of customer and wholesaler.
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