How to Get a Merchant Account: Requirements, Costs, and Timeline

Most customers don’t carry cash anymore, so if your business can’t process card payments, you’re most likely losing revenue. To accept credit card payments, whether through an online store, in-person checkout, or via telephone, you’ll need a merchant account. It acts as the financial gateway between your payment processor and your bank, so funds are processed securely and deposited into your account quickly.

Getting approved takes more than just filling out a form. Merchant service providers take a close look at how your business operates before approving your account. And businesses in regulated industries or with limited credit history may face increased scrutiny.

This guide breaks down the entire application process. You’ll learn what documents are required, how fees are structured, how long approval typically takes, and how to improve your odds of success (regardless of your business type).

• A merchant account lets your business accept credit cards, debit cards, and digital wallet payments such as Apple Pay and Google Pay.
• Approval timelines vary based on your risk category, transaction history, and the completeness of your documentation.
• Expect fees covering setup, monthly service, per-transaction charges, and compliance requirements.
• Businesses in high-risk categories can still qualify with proper preparation and a provider that supports their industry.

How to Apply for a Merchant Account

If you’ve never set up a merchant account before, it can feel intimidating. But it’s less complicated than it looks. Whether you’re starting from scratch or switching providers, having your documents ready and knowing what to expect makes the whole process much less stressful.

Step 1: Get a Business License

Before anything else, payment processors need to confirm that your business is legally established. That usually starts with a valid license from the city, county, or state where you operate. 

You can apply for a business license through your city, county clerk, or Secretary of State. Most applications are online, but requirements and fees vary. You’ll need your business name, address, ownership info, and legal structure.

Some businesses also face stricter legal requirements based on what they sell or how they operate. For certain industries, such as CBD and firearms, you may need permits like a state hemp license or a federal firearms license in addition to your standard business registration.

These documents initiate the verification process. Processors start by confirming your business is legitimate and correctly registered. An active license establishes your legal standing. Once that checks out, they’ll turn their attention to verifying that your funds have a safe, authorized destination.

Step 2: Open a Business Bank Account

You need a business bank account registered under your company name to receive settled payments. When establishing a business bank account, you’ll usually have to provide:

• Your Employer Identification Number (EIN) or Social Security number
• Business formation documents
• Government-issued photo ID
• Proof of business address

Double-check that the business name on your bank account matches exactly what’s listed on your application and license. Even small discrepancies can slow things down and are a frequent reason applications get held up.

Step 3: Evaluate Your Business Needs

Once the fundamentals are squared away, step back and look at the bigger picture. Take a close look at how your business runs day to day and how your customers prefer to pay.

Before signing with any provider, make sure you’ve thought through the basics:

• Where are payments happening? Online, in-store, over the phone, or a combination?
• What types of payments will you accept? Credit cards, debit cards, ACH transfers, digital wallets?
• What hardware or software do you need? Mobile readers, virtual terminals, embedded checkout systems?
• Are you serving a local market, or do you need infrastructure for processing international transactions?

Addressing these points early gives the provider insight into your transaction flow and risk exposure, helping them determine if their system fits your operations. Need subscription billing? Make sure they have the tools to let you accept recurring payments smoothly. Ship physical products? Look for built-in tax and shipping tools.

Your payment system should adapt to your business, not force you to work around it.

Step 4: Compare Merchant Account Providers

Some providers offer better pricing or stronger support. Others are more open to working with specific industries. These factors directly affect how well a provider can support your business model, so consider them before you commit:

• Clear, easy-to-understand pricing with no hidden fees
• Access to fraud prevention tools and chargeback monitoring systems
• PCI compliance support
• Technology integrations with your shopping cart or software, including plug-in and API integrations
• Experience in your industry

If you’re in a high-risk category, verify the provider has a track record with similar businesses. Those familiar with your industry are more likely to anticipate compliance needs and guide you through a smoother approval process.

Step 5: Complete and Submit Your Application

Once you’ve picked a provider, gather the documents you need to submit an application. Most require:

• Active business license
• Completed merchant application
• EIN or SSN
• Bank account details or voided check
• Government-issued ID
• Details about products and services
• Bank statements from the past three months
• Processing statements from the past three months (if you have them)

High-risk or high-volume businesses may need to provide extra statements or vendor invoices during underwriting. Double-check everything before submitting. A typo in your business name or a missing policy on your website can stall your entire application.

Step 6: Undergo Underwriting

Underwriting is a review process in which banks assess the legitimacy and financial risk of your business. They’ll verify your documents and decide whether your operation meets their standards for secure processing by evaluating:

• Your industry classification code (MCC)
• Credit history
• Transaction volume and typical sale amounts
• How you handle refunds and disputes
• Whether your website shows clear policies
• What fraud prevention and security measures do you use

As of March 2025, providers must ensure that new merchant accounts meet PCI DSS 4.0. However, many businesses fall out of compliance as PCI rules are updated and resources fall short, making clear security practices and up-to-date documentation even more important.

Credit checks are also part of the underwriting process, especially for newer businesses or those in higher-risk categories. Be sure to lift all credit freezes before applying, as a locked report can delay or even derail your approval entirely.

Step 7: Get Approved and Start Processing

After approval, you’ll get your account credentials and access to your processing tools. Most merchant services providers also offer onboarding support, which can include:

• Connecting a payment gateway
• Shipping POS terminals
• Setting up recurring billing
• Running a test transaction

At this point, your payment processing is live. Customers can pay by card, and the funds start appearing in your business account after you transfer them from your merchant account. All those pieces you put together are now running quietly in the background, doing exactly what they’re supposed to. Your merchant account handles the actual processing, safely and reliably, day after day.

Understanding Merchant Accounts (and Why They Matter)

A merchant account is a financial tool that lets you accept card payments and route them securely to your bank. When customers pay with a credit or debit card, the funds don’t go directly into your business bank account. Instead, they are processed through your merchant account before settlement and deposit.

Behind the scenes, payment processors, card networks, and issuing banks work together to authorize transactions, screen for fraud, and ensure funds are available. Your merchant account connects these systems and helps facilitate the secure movement of funds.

While all merchants benefit from using a merchant account, high-risk businesses often require specialized providers. High-risk merchant accounts typically involve stricter underwriting and additional approval requirements, which we’ll cover in this guide.

Types of Businesses That Benefit Most from Merchant Accounts

Most businesses that accept payments benefit from merchant accounts, but some rely on them more because of their operating model. Industries with recurring charges or elevated risk profiles may need more robust processing tools to avoid disruptions or account freezes.

Here are some common examples of industries that depend on merchant accounts to keep payments moving based on how their business models work:

• eCommerce Stores: High card-not-present fraud risk
• Subscription and Membership-Based Services: Recurring billing requiring specific infrastructure
• Professional Service Providers: Invoice-based payments
• Retailers and Restaurants Using POS Systems: High-volume sales
• Regulated Industries like CBD, Adult, Travel, or Supplements: Often classified as high-risk, due to increased chargeback rates and fraud

These industries handle more complex payments, so they rely on the support that merchant accounts provide. A merchant account can provide more fraud protection and flexibility that online businesses need to operate successfully.

This is especially true for merchants needing a high-risk merchant account, who face stricter documentation requirements and longer approval times. They also pay higher fees across the board. Finding a provider with industry experience can speed up approvals and reduce the risk of account holds by equipping your business with the right tools for your model.

Common Reasons for Application Denial

Even with a strong application, approval isn’t guaranteed. Applications can get denied for several reasons, including:

• Incomplete or inconsistent documentation
• Website missing privacy, refund, or shipping policies
• High chargeback rates
• Unclear or unverifiable business model
• Industry classification not supported by the provider

High-risk merchants get rejected far more often than standard businesses, and it usually has nothing to do with paperwork. Banks view industries such as CBD, adult entertainment, travel, and subscription services as risky due to elevated chargeback rates and regulatory complexity. Standard processors reject these applications outright, even when everything looks solid.

But the problem isn’t your business. You’re just applying through the wrong kind of merchant services providers. And most of these issues aren’t permanent. Once you know what caused the denial, you can address that specific problem and reapply. Here’s where to focus:

• Fix documentation errors
• Improve your credit rating
• Clarify your business model
• Reduce chargebacks
• Choose the right provider

How to Choose the Right Merchant Account Provider

Not every provider is right for every business. The best choice depends on your volume, model, and risk level. When comparing providers, focus on the factors that affect how smoothly you can operate:

• Merchant account fee structure (flat, tiered, or interchange-plus)
• Platform integrations
• PCI and fraud prevention support
• High-risk experience and flexibility
• Transparent terms with no hidden charges

If you run an online business or operate in a higher-risk space, find a provider that understands your industry. Aggregate processors like PayPal, Stripe, or Square are quick to set up, but they come with limitations. They typically rely on preset pricing models, and accounts may be frozen without notice during spikes in suspicious activity or chargebacks. 

A dedicated merchant account requires more upfront work, but it offers greater scalability and stability. You get solutions built around your business and more control over processing from a provider who won’t panic when your sales spike. For businesses that need reliability and room to grow, a merchant account is the better choice.

Cost of a Merchant Account

According to the 2024 Federal Reserve Report, 48% of small businesses cite payment processing fees as a top concern. Before committing to a provider, take time to review their full merchant account agreement. This document spells out your fees, contract terms, and any special conditions attached to your account. Standard costs you’ll encounter include:

• Setup Fee (Can Be Waived): This is a one-time charge to establish your merchant account and get your processing infrastructure running.
• Monthly Fee: You’ll pay this recurring charge to keep your merchant account active and maintain access to your processing tools.
• Per-Transaction Fee: This gets charged every time a customer swipes, taps, or enters their card to cover the cost of processing an individual sale.
• PCI Non-Compliance Fee: If your business doesn’t meet Payment Card Industry Data Security Standards (PCI DSS), you’ll get hit with this penalty until you’re compliant.
• Chargeback Fees: When a customer disputes a transaction, you pay this fee to cover the administrative costs of investigating and resolving it.
• Interchange Fees (Set by Card Networks): These fees go directly to the bank that issued your customer’s card. And Visa and Mastercard determine the rates, not your processor.

While fees can take a noticeable cut from your revenue, cost alone shouldn’t guide your decision. What matters more is finding a provider that aligns with how your business operates and can scale with you over time.

Ready to Review Your Payment Setup? Here’s the Next Step

You’ve done the hard work. Now you need to pick a provider who can support your growth.

That means finding a partner with extensive industry knowledge and the backend strength to keep transactions moving without interruption.

PaymentCloud works with businesses that fall outside of the usual boxes. Whether you’re launching an online venture or operating in a high-risk space, we build fast, flexible solutions tailored to what you actually need. Our team works one-on-one with each merchant to make setup easier and protect your payments as you scale up.

Learn how PaymentCloud can help you secure a merchant account that fits your business from day one.

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