The back-end process to setup a merchant account.

Once a merchant account application is submitted by a business, there are several steps that it must go further through before a business can get setup accepting credit cards.

I very often see merchant account providers making same day setup guarantees to potential customers. While I’m in no way saying that it isn’t possible to set a business up the same day, this is most often nothing more than a marketing scheme. Depending on the back-end processor, some take a minimum of 24 hours for the actual merchant account to go live. In cases like this, there is nothing that any business can do to speed up the process.

The Steps:

1. Application is submitted by the business owner to the sales agent or the ISO’s applications department.
2. The application is reviewed to ensure that no required information is missing.
3. The application is manually entered into the processor’s underwriting system.
4. Depending in several risk factors, an instant approval may be received at this point.
5. If there was not an instant approval, the application is placed into the underwriting department’s quee.
6. The application is reviewed by an underwriter. The underwriter can approve the application, decline it, or request additional information. The ISO’s applications department is notified of the status change of the application.
7. If additional information is required, the ISO will get the required information (could be utility bill, marketing material, etc.) and resubmit it back to the underwriting department.
8. Once the application is approved, the ISO will setup the software, payment gateway, or credit card terminal for the business to process with. (After the application is approved, it normally takes about 24 hours before the merchant account is live. Only a few processors have the technical ability for a business to start processing immediately.)
9. Once the account goes live, and the merchant’s processing system is setup, they can now process credit cards.

In the end, a considerable amount of human work needs to be done for a merchant account to get setup properly. Any problem or error at any step of the process can greatly delay the merchant account getting setup. Unfortunately, there is little ability for automation to occur through the application process. Even though, technically it makes sense to create an automated system, one of the main purposes of this process is to prevent fraud. Computer algorithms score application for fraud, but it must be a human to make the final decision.