As we can see above, the terms are used interchangeably, and for the majority of people they often mean the same thing. Example: A processor is a company that facilitates the processing of payments on behalf of the merchant.
As to the definition used in the industry, payment processor refers to the services to which a payment gateway sends transaction requests. The payment processor then processes the transaction requests and sends the Visa and MasterCard authorization and settlement files, and distributes them across the network to various merchant account providers and payment gateways. The payment processor also handles other aspects of the transaction such as processing requests and settling chargebacks. In short: payment processor is an umbrella term that is used to refer to the company that processes Visa and MasterCard payments.
Why Do I Apply to Open a Merchant Bank Account?
To explain this in the simplest way possible, the reason you need to submit an application to be able to open a merchant account is because merchant account providers risk losing money every time they process a card transaction credit on behalf of your business. Visa and MasterCard have a very clear policy that is applied when the cardholder pays for a good or service: The cardholder must receive the promised product or service. If the product or service in question is not delivered, the cardholder has the right to get their money back.
This is one of the basic principles of consumer protection that applies to transactions made with credit cards. To mitigate the risk, the credit card payment processor has a selection / application process. Note that most processors charge a processing fee, and only a few of them will reimburse the processing fee if they are denied. If this concerns you, ask if your application fees are refundable. This is not an unreasonable request, and if your chosen processor does not accept, you can find another that will.
Beware of Surreal Promises
When discussing with your potential Internet banking payment solution, ask what documents will be required and how long it will take for high risk merchant account instant approval. You should receive concrete answers to these questions. In particular, if you receive responses like “we approve any type of account” (especially if you know your product or service carries a higher risk), you should be very skeptical.
This is also a situation where you should make sure you get a copy of your business agreement before signing it. If the clauses do not inspire you with confidence, and do not contain an explanation of the process or references to the supporting documents, then be careful: you may not receive what was promised.
How to Get Your Merchant Bank Account Opening Approved
Gather your Financial Statements
Financial statements are the best bargaining chip you can use to get the best deal of approval. I sometimes work with clients who do not wish to present their financial statements. This is usually because they run a private, medium-sized business, and want to keep their information confidential. However, this is a huge mistake when negotiating with e-commerce payment solution providers. Insurers pay attention to financial stability first, to know that the company will continue to operate successfully in the future.