How to Set Up a Merchant Account in 2023: Only 5 Easy Steps

Setting up a merchant account can be easy if you follow the right steps. Read our guide to find out how to get the best results for your business.

Starting a new online business? Having a merchant account is a common way to accept credit card payments from your customers and transfer the funds to your own account. 

Opening a new merchant account may seem daunting if you’ve never done it before. I know it was for me when I had to do it for the first time! Now that I’ve been through the process several times, though, I know that setting up a merchant account can be easy if you follow the right steps.

I’ll share the entire process with you in the guide below. You’ll also find some expert tips and tricks to ensure things go smoothly. You should be able to start accepting credit cards on your website in no time.


What Is a Merchant Account?

Unlike a standard bank account, a merchant account is a special type of bank account that allows you, as a seller, to accept credit card payments. In essence, the merchant account is a written agreement between a seller, a merchant bank, and a payment processor. 

Here’s how it works:

  1. A customer makes an order on your site and enters their payment information.
  2. Your payment processor transfers the payment request to the acquiring bank.
  3. The acquiring bank then sends the request to the customer’s issuing bank.
  4. The issuing bank validates the request and sends back an immediate response.
  5. If the transaction is authorized, you and your customer are both notified that the purchase went through and the funds are transferred to the merchant account.
  6. If the transaction is rejected, you both receive a failure notification.
  7. The funds stay in your merchant account until the transaction settles, and are then transferred to your business account.

Merchant accounts are very common in the world of ecommerce, but it’s also possible to accept payments without one. You can read more in our guide on how to accept payments without a merchant account. 

Step-by-Step Guide: How to Set Up a Merchant Account

1. Prepare Everything You Need   

Set Up a Website

If you don’t have a website yet, there’s no better time to get one online. You’ll need it as part of the merchant account application process. There are plenty of beginner-friendly website builders out there that can help you get an ecommerce site online quickly.

Providers may look for specific details, such as:

  • Your own domain name
  • Detailed descriptions of your products/services and their prices
  • Your contact information, including customer service channels
  • Shipping information, if applicable
  • Clear return and refund policies
  • Secure web hosting (e.g. an SSL certificate)

In many cases, the credit card networks themselves are the ones setting the standards that ecommerce sites are required to meet. Without adhering to these regulations, you will not be able to accept payments. It’s better to make sure all is in order before choosing a merchant account provider. 

Gather All the Documents and Information About Your Business

Any merchant account provider will ask for certain documents. This is your way to prove you’re opening a legitimate and registered business. You may need some or all of the following:

  • Business license: This is a document you should receive when you first register your business. In most cases, it can be downloaded from your local government or municipality website. Based on the type of business you run and/or product or service you sell, you may have more than one type of license.
  • Business ID: This is your company’s tax ID or other identification number, depending on local laws.
  • PCI compliance: There are rules and regulations in place to make sure that anyone who processes customer payments online is taking the right precautions to prevent fraud. While you do not necessarily need to be PCI compliant before you open your merchant account, it could be helpful to know in advance what protections you already have in place and be able to provide the documentation. 
  • Bank account details: Your merchant account providers may ask for your existing business bank account details so they can transfer payments to you when the time comes.  

Each provider will have their own documentation requirements, and the requirements may also vary depending on the size of your company, how long it’s been in existence, your expected volume of transactions, and the level of risk. 

Most providers will request some additional information, like where you plan to sell, your expected average turnover, and the price range of your products or services. 

Decide Which Payment Methods You’ll Accept and How

There are many different types of online payment methods out there, most of which require a merchant account. It’s a good idea to research your target market to determine which options you are going to offer. This way, you can check to make sure your merchant account provider can support all the methods. 

Here are some common payment methods:

  • Credit and debit cards: You can choose whether to accept all major credit cards, just Visa and MasterCard, or any other combination that makes sense for your business. 
  • Mobile payment services: Mobile payment apps like Apple Pay and Google Pay have become very popular in recent years, and many consumers appreciate the convenience they offer.
  • E-checks: Some consumers prefer to pay via electronic check instead of using a credit card.
  • POS (Point-of-Sale) terminals: If your business will have a brick-and-mortar location, you’ll need a physical point-of-sale terminal so you can swipe credit cards. 
  • ACH Payments: If you might have customers who will want to pay via bank transfer, you can consider accepting ACH payments

It’s important to consider how you’ll accept payments online. This could impact your decision whether to open a merchant account with your local bank or consider other providers. 

If you expect to have customers in multiple locations or even internationally, it might make more sense to work with a payment service provider like A service like this can help you set up a merchant account as well as the rest of the infrastructure you’ll need to accept payments on your website. 

Consider the Fees and Legal Terms

There will be fees involved in the process of setting up a merchant account (they’re unavoidable, unfortunately). Different providers have different fee structures, but even before you start researching your options, it’s important to know what your business can afford. 

It’s perfectly acceptable to set a maximum limit for your fees. This may help you narrow down your choices when you start looking into specific providers. 

When it comes to terms and conditions, each merchant account has its own. It’s important to read the fine print carefully before signing anything. 

Consider your own limits and preferences. For example, some providers may require you, as the business owner, to sign a personal guarantee that says that if the business cannot afford to pay the fees, you will be personally responsible for them. If that’s not acceptable to you, be sure to check if it’s a requirement.

Determine If you Need a High-Risk Merchant Account

If your business is considered “high risk,” you may need to provide additional information or look for a specific high-risk merchant account provider that specializes in your industry. This will increase your chances of being approved for a merchant account.

Some possible red flags that could cause your business to be considered high risk include:

  • Poor credit rating (for the business or you personally)
  • High-priced items only
  • Subscription sales
  • Industries known for high rates of fraud 

2. Choose a Merchant Account Provider

Once you’re prepared, it’s time to find a merchant account provider that best suits your needs. 

Here are some important factors to keep in mind as you’re shopping around:

  • Does the provider offer the complete package with all of the services that you need? For example, can you get invoicing, recurring payments, and mobile payments all in one package? Does it have experience working with other sellers in your industry?
  • Will you be able to customize your buyers’ user experience? You’ll want to make sure your shopping cart and checkout page can have the same look and feel as the rest of your website.
  • Is the service easy to use? Will you be able to start accepting payments quickly? Will it be easy to teach your employees how to use it? Is any technical knowledge required? If you’re just starting out, can help you start accepting payments within minutes.
  • What about security? Is it PCI-compliant? What precautions are in place to ensure that customer data is secure?
  • And how about customer service? What support channels are available, and are they going to be convenient for you? Is support available 24/7?
  • What fees does the provider charge? Is the solution going to be cost-effective for your business?

It’s important to do your research and make sure you don’t get locked into a contract that could cause problems down the line. If you can, get your attorney to review any contract before you sign it. 

3. Apply for a Merchant Account

Some merchant account providers may let you fill out all your information online and approve your account right away. Some may require an original signature, while with others, you might have to wait for a call from the sales department or even set up a face-to-face meeting.

In any case, since you’re well-prepared and you’ve already gathered and organized all your important business information, this step should be fairly easy. Just be sure to fill out any forms carefully and accurately. You don’t want your approval to be delayed over a technicality. 

Click here to read about the different types of merchant accounts.

4. Submit Your Application and Wait for Approval

The approval process for a merchant account can take anything between a few minutes to a few days, depending on the provider’s process and your risk profile. If you are high-risk, you may be approved with certain stipulations that you will have to fulfill. 

The approval process might include some back and forth and you may be asked to provide additional information. 

Remember that the merchant account provider wants your business and is on your side. Don’t be afraid to ask questions and try to work with them to get approval. 

5. Start Accepting Payments!

Once you’re approved, the provider will onboard you. If your business is online, you’ll have to set up the infrastructure on your website, select the payment methods you want to accept, and customize your checkout page. 

This may sound like a very technical process, but the best providers make it really easy to do.

Once you have everything set up, you’ll be able to start accepting payments right away. 

Types of Merchant Account Providers

While most banks provide merchant accounts, you may not want to open one with your existing bank. It’s worth shopping around to look for the best terms and conditions for your needs. 

There are four major types of merchant account providers:

  • Merchant Bank Providers: These are just regular banks that will partner with a merchant services provider (MSP) or independent sales organization (ISO) in order to offer merchant account services as part of their product portfolio.

  • Merchant Service Providers (MSP): MSPs work with traditional banks to offer the technology, services, and infrastructure needed to operate a merchant account. They aim to provide their clients with a one-stop-shop to meet all of their merchant account needs.

  • Independent Sales Organizations (ISO): ISOs are similar to MSPs (some companies are both), but they tend to work with a network of other independent organizations to sell their merchant services solutions without being tied to a specific bank.

  • Independent Merchant Agents: Independent agents partner up with MSPs and act as a reseller of their services. If you work with an agent, you may have access to a number of different MSPs making it easier to compare and contrast and find the one that best suits your needs. Of course, there are also plenty of fraudulent agents out there, so make sure you check their references and reviews. 

How Much Does a Merchant Account Cost?

No matter what solution you choose, you will have to pay fees in order to use a merchant account. The amounts can differ quite significantly per provider, so you will need to do the research and calculate exactly how much each option would cost you.

The most common costs include:

  • Initial setup fee: This one-time payment covers the costs of onboarding your business and getting your account set up.
  • Monthly fee: Some providers charge a flat-rate monthly fee for the ongoing use of the service. The fee amount may vary depending on the size of the business or other factors. 
  • Transaction fee: This fee may be instead of or in addition to a monthly fee. It’s a charge (usually a percentage) for each transaction that is processed. 
  • Processing fee: Some providers may add an additional credit card processing fee for each transaction.
  • Equipment fee: If you rent or lease equipment like a physical POS terminal, you may have to pay a monthly equipment fee.
  • Cross-border fees: Some providers may charge additional fees for international payments.

How Long Does It Take to Open a Merchant Account?

Preparation for a merchant account can take a few days, a few weeks, or even a few months, depending on the size and complexity of your business and how much research you need in order to decide on a provider. If you know exactly what you’re looking for, the preparation doesn’t have to take very long.

Once you begin the application process, things can move quickly. A simple business should be able to get approval and set everything up within a few days at the most. 

The Bottom Line: Should You Set Up a Merchant Account for Your Business?

If you’re planning on accepting credit card payments, you should definitely set up a merchant account. If you collect all the documents and information you need and follow the steps in this guide, the process should be painless.

In fact, is so easy to use, you can get set up in minutes and start accepting payments today.


Can I create my own merchant account?

You need to work with a merchant service provider, an independent sales organization, or a traditional bank in order to open a merchant account. It’s not something you can create on your own.

What does it take to get a merchant account?

Any licensed and registered business should be able to open a merchant account. Different providers have their own requirements and vetting processes. In general, you’ll need to provide a business ID, financial statements, and other paperwork proving that you are a viable business.

Is it difficult to get a merchant account?

In most cases it is not difficult to get a merchant account. Assuming that you can provide the required documentation, it can be a fairly quick and easy process. If your business is high-risk, the process can take longer, and you may need to seek out a merchant account provider who specializes in high-risk businesses.

How do you get approved for a merchant account?

Each provider has its own requirements and approval process. In some cases, you can just fill out an online form. Other providers may require you to speak to a sales representative or set up a face-to-face meeting.

How much does it cost to set up a merchant account?

The cost depends on the service provider you choose. Some charge an initial setup fee followed by a flat rate monthly fee and/or per-transaction fees. Some may not have a setup fee, while others may charge only a flat rate or a per-transaction fee. It’s a good idea to do your research to find the right pricing structure for your business.

What banks offer merchant accounts?

Many traditional banks partner with merchant service providers and offer merchant accounts as part of their portfolio.

What’s the difference between a merchant account and a business account?

As a business owner, you use your business account to conduct your own transactions, making withdrawals and deposits as you see fit. The merchant account, in comparison, is simply a holding pen for funds to wait until they settle and are then transferred to the business account.

Meet the author
Emily Kirschenbaum
Emily is a content writer with a special interest in fintech and business. She loves sharing her knowledge to help small businesses take their first steps towards success.
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