• Zed Team

Step By Step Process of Setting Up A Merchant Account

Updated: Nov 13, 2021

What is a merchant account?

A credit card merchant service or a merchant account is a bank account that allows companies to accept transactions through debit or credit cards. To be precise, a merchant account is a relationship made by a retailer, a merchant bank, and a payment processor to settle all the card transactions. Zed Founder and entrepreneur Alan Safahi explain “When a customer transacts using their debit or credit card, the fund gets transferred into the merchant account at first.” From there, it goes to the business bank account. To operate an e-commerce business, every business requires an online payment system through debit/credit cards, e-wallets, etc. If you want to have online payments, you need a merchant account for credit card transactions.

Merchant accounts involve additional costs, so brick-and-mortar businesses dodge paying the cost by accepting cash for deposits in a standard business deposit account and not go for a merchant account.

How does a merchant account work?

Alan Safahi explains, when a customer orders a product or a service, they make the payment via credit/debit card using the card reader. The customer’s card details are sent through a card reader to the company’s merchant bank account (acquiring bank). The bank then sends the information to a relevant card company such as Visa, Mastercard, etc.  The card company then forwards the transaction details to the customer’s bank, also known as the issuing bank. The card company’s reason to send the detail is to check if the card holds enough money to pay for the product or the service. This completes the transaction process, and the customer gets a confirmation message that says the payment has been successful.

How do I get a merchant account?

There are a few things you can do on how to get a merchant account to accept credit cards. Keep reading if you are interested to know.

How do I get a merchant account - ZED Network

Step 1

Decide how you would like to accept the credit card payments. Will it be via the website, over the phone, swiping, or the contactless method.

Step 2

Next, search for an acquiring bank to make a merchant account. The easiest way is to get a trustworthy bank and ask for the facility. If your business is already involved with a bank, now is a good time to ask. If you have known your bank for a few years now and if the transaction is good enough, they won’t have a problem providing you one. You can get a merchant account through an independent sales organization as well if you fear that your bank won’t provide an account.

Step 3

Once you have talked to the bank and agreed, it’s time to open up an account. But before that, you need to compare. Different banks have different protocols for merchant accounts, so make sure you do research and compare fees. You will get two fee payment systems for transactional costs: a flat fee for each credit card payment and a percentage-wise fee for the number of transactions. These fees vary depending on the type of cards used and the number of transactions made per month. You have to pay a fee per month if you don’t have the minimum number of transactions. You also need to provide statement fees, which will be deducted for receiving your statement.

Step 4

While choosing a merchant account, make sure it comes with a payment gateway. For accepting card transactions, you need a gateway. You don’t need one if you already have one. The payment gateway’s role is to receive requests and connect with the card companies for checking the funds to facilitate a transaction. If the cardholder has sufficient funds to purchase their desired item, the transaction will occur, and the cardholder’s funds will be transferred to the merchant account.

Step 5

It’s time to do the action! For the bank’s approval to get an account, you need to show them that your business is financially stable and that all your paperwork has been carried out. Even if you have lesser transactions done for new businesses, it will still be easy for the bank to approve an account, as a lower transaction means lesser risk.

Step 6

Now, you need to create your processing history, for which you need to provide 6 months of processing statements in your application. Make sure you include the number and volume of transactions, refunds, and chargebacks to give your bank the clearest idea about your business transactions. You also need to provide business and personal information to the account provider.

Step 7

It is better to have your credit score while applying for the account because the bank, most of the time, wants to know whether you are good with credit risk. They will review your credit history if they need to, so getting a copy of your report is useful.

Step 8

Sometimes you need to attach a cover letter with your application to address concerns. This is optional because the account provider will communicate with you over the phone most of the time if they see any issue. However, you can reap benefits from it; for example, if you have bad credit and think that might affect the application, state the reason and address how you will improve the situation if you haven’t already. The cover letter gives the bank a little more insight into you and your situation.

Step 9

Now, it’s time to review the terms and conditions given to you. It’s vital that you read every line carefully. Take your time to read, no need to rush. You have to sign a guarantee, which means that you take the full liability of the contract. Talk to your merchant account provider if you have confusion. Once you are satisfied with the terms, you need to sign the document, and you are done!


Here is your step-by-step merchant account setup process. For processing the payment online, you need to install the software to be compatible with your website. Keep in mind that aside from the pricing, you need a merchant service that is easy to use and works well with the hardware and software.

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