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Gingergaye here with Electronic Money Company. Let’s talk today about what’s the process is to get an application for credit card processing.
First of all, the application has to be signed by the owner or an officer of the company and if there are multiple owners, anybody owning 25% or more has to sign that application.
What kind of questions are on the application? What are we looking for?
- We need your general contact information
- We need your federal tax ID and the Social Security number of the owners
- Then we get a profile of your business
What’s the average ticket? What kind of volume are you going to be doing? What’s the highest ticket that you might take?
And then, of course, we are going to have all the rates that the processor is agreeing to charge and you’re agreeing to accept for the merchant processing.
Then we ask questions about how you’re method of processing cards:
- Are you taking cards over the phone
- Card present
- Online
- Via a mobile device or
- Virtual terminal
And finally, we do need a voided check because obviously you want the money deposited into your bank account.
So what happens to that application?
The application gets sent to the processor and goes to their underwriting department.
Underwriting is going to verify that you have never been shut down for credit card processing. You’ve never committed fraud as a merchant in a previous business. They’re going to check to make sure you don’t have a personal bankruptcy. They want to make sure you can handle the credit you are accepting.
Now, you may think this is cash because the money goes right from the credit card through the credit card terminal or gateway right into your bank account.
But you’re really offering credit. And if you can’t handle that credit, the processor is on the line for that money. So that’s why they want to know how big your tickets are and what your volume is. And then they’re going to make sure that you can handle a large transaction that got charged back.
For example, maybe you’re a jewelry store and you take 30, $40,000 transactions. They’re going to make sure that you can handle that on your balance sheet or P&L, that you are viable enough to handle that. If you can’t handle it and you close up shop and move to Mexico, the processor gets stuck with returning that money to the cardholder. So this is what’s all involved in the underwriting process.
How long does it take for an application to get approved?
First of all, the application is submitted. It maybe takes a day for underwriting to look at it unless they have some extra questions or want to ask you to provide more information like a tax return or a P&L on a balance sheet.
But generally, for most businesses, it’s really 24 hours, maybe 48 at the outside. Then you’ll get an approval. And now a file has to be built and the file has to be attached to your method of taking payments, either a credit card terminal or a point of sale tablet system or the gateway. Building the fil usually takes another day. Then it is ready to install into the device or gateway you will be using. If you’re working with somebody local, they have terminals available and that they can just go out and install you the following day. If it has to be shipped across the country, they’re shipping and then you decide if you want to pay for overnight shipping or just get it in three days, etc.
Generally we’re talking three days or up to a week if there’s more questions or shipping is involved.
Some of you might be saying, you know, if you sign up with Square, it’s a lot faster. Well, it is faster because they don’t set you up with your own merchant account. All the thousands of people using Square are all in one merchant account. They’re not as diligent about the setup and the underwriting.
The Disadvantages of Square:
- You don’t have your own merchant account.
- You don’t get reporting,
- You don’t get a reconciliation report at the end of the month that matches up with all your deposits on your bank statement.
- There’s virtually no customer service. You can’t call up and say, “Well, I don’t understand this or I don’t understand that.” Getting support is much more difficult.
- If you do have a chargeback, Square doesn’t help you fight it. Oh, no. It’s just lost. It’s just gone.
So it’s easier to get set up. But if you want your own merchant account and you’re willing to just do a little bit of extra more setup work, you will have a relationship with your processor and you’re going to get better service.
Always call us. We’re happy to answer any questions. We have our own in-house support. We take very good care of people. We’re at 505-296-2847. Don’t be afraid to call even if you’re doing your processing with somebody else.
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