How do I get a merchant account?

Taking payments in a retail store

By Rob Binns | Senior Writer | Published: 24 January 2019

How to open a merchant account

So now you know what a merchant account is (and if not, then read this now). And you also know that, if you want to start accepting card payments at your business, you're going to need one. But how do you open one? Well, the first step is to arm yourself with the necessary information to get an accurate quote.

Providers will need to know:

  • The nature of your business — what you sell and how you sell it
  • Monthly turnover for card payments — or forecasted turnover if yours is a new business
  • Average transaction size
  • Your credit rating (although you don't have to provide this)

Remember, when it comes to providing information for your merchant account, honesty is the best policy.

Once you have all this information, it’s time to compare providers — and Expert Market can help you do that. Simply fill in the short form at the top of the page with a few business details, to compare quotes from leading merchant account providers.


How can you get a merchant account with a bad credit rating?

Man staring at a computer screen in disbelief

As part of the vetting process, merchant account providers will look at your credit rating to decide whether you'll be a reliable customer. It's helpful to access this in advance via a credit reporting bureau, so you can clear up any unresolved issues and arm yourself with answers to anything that looks a little unusual.

The important thing to remember is that your credit rating isn't set in stone. If you have late payments marked on your credit report, resolve them – then write to the bureau and ask for them to be removed.

And if your credit rating remains poor? You'll just have to prepare for access to fewer merchant account suppliers, stricter contracts and less favourable fees. But hey, that's not the end of the world. At the end of the day, being able to offer your customers a cash-free way to pay is the main thing, and it's worth even the least favourable rates.


Why does it matter which merchant account provider I go with?

The provider you choose matters because of two reasons: fees and contracts. Merchant account fees vary. A lot. They can vary with the same provider from month to month, let alone from provider to provider. So it’s super important you weigh up all the options before signing a contract.

Once you sign on the dotted line that’s it, they’ve got you. Merchant account contracts are typically a year long. And while early termination fees are rare, you most definitely will be required to pay any remaining rental costs.

Learn. Compare. And choose your merchant account wisely.


Which type of merchant account is right for me?

I'm a small business with low sales volume, looking for the cheapest rates

An aggregate merchant account such as Square is the best fit for you. Aggregate merchant accounts generally have low, straightforward fee structures, and their simple approach makes them perfect for small businesses and startups new to taking card payments.

I'd like a merchant account, but want to negotiate custom rates and fees for my business, and get paid when I say so.

Fair enough! You should probably opt for a dedicated merchant account provider, then. It offers custom rates unique to your business' size, industry, and sales volume, and affords you greater control of when you get paid.

I want to start taking card payments at my business, but I have a bad credit rating. Should I lose hope?

Absolutely not! You'll just need a high-risk merchant account provider, that's all. Thankfully, there are plenty of them catering to Aussie businesses, and the rates aren't as high as you might think!


Merchant account types: explained

1. Aggregate merchant accounts

An aggregate merchant account is a service offered by a payment facilitator (PF), and is often the best choice of merchant account for small businesses. Why? Because PFs pools transactions from multiple merchants together and channel them to the acquiring bank to be processed in one jumbo, shared merchant account. That means that small or medium-sized businesses like yours can get the same low rates available to larger enterprises.

The downside of an aggregated merchant account is that you have less control over when your money is paid to you. Plus, for some businesses, it may be the case that they’re able to negotiate better rates with a dedicated merchant account.

2. Dedicated merchant accounts

A dedicated merchant account is set up directly with the acquiring bank. It offers greater control over when your money is paid to you, and allows you to negotiate rates specific to your business.

3. High-risk merchant accounts

Some businesses may struggle to get approved for a merchant account from mainstream providers because they’re considered “high-risk”. If this is the case for your business, don’t be offended, it’s (probably) nothing personal.

There are several criteria that the banks look at to assess risk. They are:

Longevity and stability: How long has your company been in existence? And what’s its track-record in terms of financial performance? Are there good years and then bad years or is turnover consistent?

Industry sector: Do you operate in a sector classified as being high-risk because of above average rates of chargeback and cancellation? Gambling, travel and monthly membership and subscription services are all marked down on this front.

Credit record of Directors and owners: Have you or any of the other major players in the business gone bankrupt in the past? (If you fail on this criteria it’s entirely personal.)

So, what to do if your business is refused a merchant account? Don’t despair. Rates are a little higher, but there are plenty of providers out there which specialise in merchant accounts for high-risk businesses.


Next steps

Now you know everything there is to know about getting a merchant account, it's time to… get a merchant account. We can help you with that. Simply pop a few details into this short form (it doesn't matter if you don't have exact figures to hand).

Or in the meantime, why not check out our guide to the best merchant account rates and providers in Australia, or a bit more information about what a merchant account is, and how it works.

Rob Binns
Rob Binns Senior Writer

Rob writes mainly about the payments industry, but also brings to the table industry-specific knowledge of CRM software, business loans, fulfilment, and invoice finance. When not exasperating his editor with bad puns, he can be found relaxing in a sunny (socially-distanced) corner, with a beer and a battered copy of Dostoevsky.

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