In order for any business to begin accepting credit cards they must apply for whats called a 'Merchant Account". A merchant account is a bank issued number that identifies your business within the payment network in order to transmit credit card deposits into the bank account of your choice.
The applicaiton process for a merchant account is failry simple. A simple 2-3 page application will ask about your buisness, what you sell, how much sales volume you anticpate, your average ticket and general personal information about you including your ss# and drivers license number. These requirments were added shortly after Sept 11th and prior were not required for approval.
Once your application has been completed it will be sent to whats called 'Underwritting" to review the type of business you have and to see if you fall into one of the many 'Non-Acceptable" business types. For example, pornography, get rich quick or weight loss pills are simple examples of merchant types that can be very very difficult to get approved. The reason that some types of merchant types are not acceptable is due to the fact that credit card processing in many ways can be viewed as an unsecured loan to the merchant. This is because the customer who purchases something from you has upto 265 days or more to contest or dispute a credit card purchase. When a sales is contested it is called a charge back and the merchant is ultimatley repsoncible for the chargebacked amount. Here lies the BIGGEST risk to ALL credit card processors. The fear of not being able to collect on a chargeback from a merchant.
