Is a Business Name a Prerequisite in Establishing a Merchant Account

A registered business name is needed when applying for a merchant account. Reasons for requiring a business name include: merchant account is not for personal use, greater chance of approval, fast approval time, and pays lesser fees.

A registered business is one of the requirements when applying for a merchant account. However, this is not an absolute requirement that would result to a declined application. While not all providers ask for the same set of requirements; some would for some obvious reasons like:

Not for personal use

A merchant account is definitely not for personal use. Obviously, there should be a valid business that is legally operating before one can be granted a credit line by the bank.

Greater chance of approval

As much as possible, merchant account providers grant merchant account only to those qualified and legitimate business companies with good credit standing for security purposes. Approval can also be granted to those unregistered businesses, but would be categorized under high risk merchant accounts.

Fast approval time

A merchant account application that has been legally set-up and has passed all the basic requirements set by the provider will get a faster approval compared to those unregistered ones. Most of the reputable companies have financial sheets to show the financial strength of the company. A proven track record will serve as a strong supporting document when applying for an account.

Pays lesser fees

Recognized companies registered by law that have been operating for at least a year or two are considered low risk and stable businesses; therefore, pay lesser fees than the high risk businesses. New companies and illegally operating businesses are categorized as high risk businesses because they are more susceptible to fraud, prone to delinquency, and even subject to bankruptcy.

To have a greater chance of getting an approved merchant account, one needs to have an established and operational business. Aside from a registered business, account providers require the following other requirements: business license, tax returns for the last 2 years, valid ID (driver's license), voided check, latest 3 months bank statements, business phone number and website if there's any.