Merchant Account Opening Europe
In modern times, every business is expected to accept debit and credit cards as well as other forms of electronic payments in person and online. In fact, it’s a crucial factor in increasing and sustaining sales as many customers tend to stop carrying paper money with them and cashless transactions are preferred globally. If you’re willing to add this payment option to your payments ecosystem, a merchant account will be indispensable.
A merchant account is a type of bank account that enables a business to accept and process credit and debit card payments. It’s usually created under an agreement between three parties – an accepting business, a merchant acquiring bank and a merchant account service provider – and makes the merchant liable for adhering to regulations established by the card associations.
Once the account is created, your company will become a merchant, i.e. a business that accepts credit and debit card payments processed by a merchant account service provider and merchant acquiring bank. Merchants are categorised according to risks related to fraud and chargebacks, which may affect the likelihood of opening a merchant account as well as incur higher fees and cause stricter terms.
A merchant account service provider is a partner of great importance as its primary function is to be an intermediary between the bank, your business and your customers. Its role spans from processing debit and credit card and other electronic payments to processing and storing your customer data in compliance with relevant regulations.
A customer swipes, inserts or taps a credit or debit card at the credit card terminal to initiate a transaction
Your merchant account service provider or a merchant acquiring bank sends the transaction details to the payment processor
The payment processor sends the details to the card association
The card association sends the transaction details to the issuer of the customer’s card
The issuer of the customer’s card either authorises or rejects the transaction and sends the data to your company’s credit card terminal
If the transaction is approved by the issuer of the customer’s card, it’s considered completed and the money is transferred from the customer’s account to your company’s account
To set up a merchant account, you can sign an agreement directly with a merchant acquiring bank, or you can find a merchant account service provider who will offer numerous solutions, including harmonisation and coordination of multiple merchant accounts spread across different countries.
First and foremost, your company must be registered as a European company with a physical address in Europe and display evidence that it possesses enough capital to support the processing volume.
