Ecommerce has grown precipitously over the last couple of years, with entrepreneurs establishing different business models targeting varying markets. Regardless of your industry or business type and the corresponding business model, you will need a domestic merchant account to accept payment card payments online.

As an online business considering domestic merchant accounts, you’ve likely done some research on your target customer base, which is based largely in your business’ country of origin. Accepting payment cards online will be the lifeblood of your ecommerce business, so you need to be prepared for the steps needed to obtain a domestic merchant account.

What are Domestic Merchant Accounts?

Domestic merchant accounts are built for card payments within the US. International merchant accounts, on the other hand, are developed to handle the complexities that come with foreign currency payments.

Although they both deal with card payments, the application process is quite different. Most US-based ecommerce businesses start out with domestic merchant accounts then apply for international accounts as they expand to foreign markets.

Let’s look at the steps required to apply for domestic merchant accounts.

How To Apply For Domestic Merchant Accounts

There are several steps when applying for domestic merchant accounts. Being prepared for the process can give you an edge and ensure that your business is best positioned for success. Making sure you have all the necessary paperwork is a significant part of applying for a domestic merchant account. There are also other pieces of information about your business that you’ll need to supply to the bank or your payment services provider. We explore these below.

Prepare Identification Documents

Banks that offer merchant accounts need a full financial picture of the business, including identifying information about the business owners. Additionally, the bank will want to view your business’ historical data and proclivity to fraud. This helps the bank to create a risk profile, which may ultimately determine whether a merchant is able to obtain a merchant account. Merchant banks, just as most other financial institutions, are risk-averse, so a high chargeback ratio or a large number of customer complaints could be a red flag to the institution that your business is “high risk.” Ideally, you want to quality for a low-risk domestic merchant account, which offers more competitive processing rates.

There are several essential documents that are typically requested by all account providers;

• Photo ID: As proof of the owners’ identities
• SS-4 Form: To ascertain your specific tax ID
• Voided Check: As proof that you own a bank account based in the US. Plus provide account details for deposit of payments
• Bank Statement: To assess the financial stability of your business
• Social Security Number: To further verify your identity and run credit checks

Have a Professional Business Plan

The bank or your PSP may also ask you to submit a business plan, which helps establish credibility. If you already have a business plan, ensure it is up-to-date. Include information on your industry, business/revenue modeling, sales and marketing plans, competitive analysis, and business processes.

Financial Data & Processing History

If you are moving to a domestic merchant account from another type of merchant account, you’ll want to show that you have a healthy processing history. Presenting strong financials can build your case for a domestic merchant account and make you more palatable as a merchant for banks. Try to show at least six months of processing history, which can highlight your record keeping as well as financial health.

Operating Controls

Present your internal processes and operating controls relating to inventory management, financials, security (including PCI compliance), and management reporting. The more information you can provide paints a positive picture of your business for the bank. You want to appear stable, viable, and in control of the internal and external processes of your business.

Consider Working With a Payment Processor

An alternative to approaching the bank directly is to work with a trusted, reputable payment processor that has experience with your business model. PayArc is a leading online payment processor trusted by both small and large enterprises in provision and management of domestic merchant accounts.

We’ve helped merchants big and small to obtain merchant accounts and grow their payments operations. Whether you’re a new ecommerce merchants or seasoned online business owner, we can help you managed payments from end to end.

We assist with everyday management and big picture payments issues, including chargeback management, fraud prevention, risk mitigation, PCI compliance, reporting, and more. We partner with you to provide expert guidance and consulting so you can keep your focus where it needs to be – on your business.

here are numerous steps to take when launching an online business. You’ll likely acquire inventory, plan your marketing strategy and choose from several ecommerce platforms and payment solutions. There are an estimated 2-3 million ecommerce businesses in the world, with over 500,000 companies on Shopify alone. With so much competition, you’ll need every advantage. Cash flow will keep your business afloat during slow periods while smart investments help you grow. Want to know which funding option to choose? Keep reading.

Business Credit Cards

When you open a bank account, you may be offered additional services like payment solutions and business credit cards. If your personal credit rating is decent, then a business credit card can provide you with working capital. Drawbacks may include high interest rates, and annual fees, though you may qualify for introductory offers like 0% interest. Payments are flexible and you can earn points, redeemable for rewards, airfare, and cash back.

Business Line of Credit

A business line of credit is typically an unsecured loan. As some loans can approach $1 million, you may need collateral. You have a good chance for approval with a personal credit score over 600, and loans can be lump-sum, or divided into smaller amounts as-needed. Creditors provide different payment solutions and terms. Fundbox offers $1,000-$100,000, and next-day funding on 12-week term loans. Street Shares offers $5,000-$250,000 within 1-5 days and a term of 3-36 months. Other sources include Kabbage and BlueVine. Fees are generally high, at 10-40% or more, partly contingent on the term length.

Business Growth Term Loans

Business growth term loans, or term loans can quickly provide you with growth capital, without giving up equity. If you’ve been operating for at least 9 months and a decent business credit score, you may qualify for a term loan of up to $500,000 from a bank, credit union or online lender. You may need to put up your business or other collateral to secure the loan, but interest may be tax-deductible, and rates are typically low, depending partly on the repayment period. Unlike labor-intensive bank loans, the application process generally takes ten minutes with cash delivered within three days. Such funds are often used to capitalize long-term investments, like large equipment purchases, real estate, office renovations, and working capital.

Term loans are generally repaid within 3 years, and payments may be based on cash flow, followed by a large balloon payment due at the end of the term. There are three main categories of business term loans: short-term, traditional-term, and SBA loans.

Short-term loans are best for smoothing out cash flow issues when unexpected needs arise, such as inventory shortages or new business opportunities. Applications can often be filed within ten minutes, and you can have cash in hand within 2-3 days. Keep in mind that if you take out a short-term loan, you may not get approved for more funds until it’s paid off.

A traditional-term, or medium-term loan is a fixed amount used for a specific business purpose, such as purchasing property. You get more capital than with a short-term loan, and the application process may take several weeks. Once approved, you’ll receive a fixed amount of money over a fixed term, with a fixed interest rate. A record of on-time payments can improve your business credit score for future loans, though you might get penalized for paying off the loan early.

The Small Business Administration, or SBA is a federal agency that provides small businesses with education and contracting opportunities. It serves as a guarantor of bank loans offered by special SBA lenders, with many options available. SBA loans are good for companies that may not do well in the commercial lending marketplace, with opportunities available for women and minorities. Loan options include the SBA 7(a) for general business purposes, and the Certified Development Company (CDC) 504 Loan Program for equipment and commercial property. You may borrow up to $5 million, with possible prepayment fees on loans that mature in 15 years or longer. The SBA Microloan program provides $50,000 or less.

Streamlined Payment Processing

An overlooked way to keep cashflow strong is to work with a payment processing partner that caters to your unique needs as a business. For online businesses, the ability to accept credit card payments is lifeblood. Working with a reputable merchant services provider will enable you to get setup with a reliable merchant account so you can receive and manage payments from sales. They will also help you choose the right payment gateway so that you can begin accepting payments online right away, as well as a virtual terminal to securely enter credit card details when accepting mail and telephone orders.

Each of these items can impact cashflow, so be sure to choose a payment processor that offers quick funding along with trustworthy integrations, support, and fraud prevention tools.

Conclusion

You need positive cash flow to excel in business. Employees, vendors, and overhead must be paid, regardless of fluctuating revenues. Business loans and other credit can smooth out the rough spots, so think about your short-term, and long-term goals, and then plan your financing accordingly.