Q&A – Kickstart Solutions

Q: What is a merchant account, and who needs it?

A: Opening a merchant account is the registration of a trading account for a legal entity in a banking institution to accept payments from Mastercard, Visa and other payment systems.

Without opening a merchant account, you can no longer imagine any online business or marketplace. This is the key to the global consumer market for your products or services.

It allows you to accept payments around the clock from different countries of the world, regardless of the work schedule of the banking institution. Customers can pay at night, on a holiday weekend, and still receive the payment quickly and on time. Operating a business without borders and 24/7 – isn’t that what every entrepreneur wants?

A merchant account is a modern e-commerce solution that provides payment acceptance. It is necessary for B2C businesses that are structured, in particular, through non-resident companies abroad. We are not necessarily talking about online sales. Opening a merchant account will also be necessary for offline trading. Opening merchant accounts is usually necessary for online stores, online casinos, and online game operators.

If you feel the need to open a merchant account and want to get an expert opinion to confirm your conclusions, please contact us.

It is advisable to contact experts at the stage of preparation for the registration of a foreign company, so that they can choose the most profitable option of the jurisdiction and bank for the needs of the client.

Q: How does a merchant account work?

A: Opening a merchant account is not possible without having a regular current account of a commercial company.

When a customer pays for a purchase with their bank card, the funds are transferred not to the supplier’s current account, but to the merchant account. It receives payments from bank cards. If certain rules are met, only after that the funds are credited to the settlement account in the bank of the seller. Accordingly, the opening of a merchant account is only available to legal entities.

Opening a merchant account is necessary to ensure the chargeback procedure. It means a forced refund of money to the buyer that was previously withdrawn from his payment card. Thus, consumer protection is enforced. Each customer always has the right to start a chargeback if the seller has not fulfilled the obligations assumed or has illegally withdrawn funds from the bank card.

The possibility of initiating this procedure always encourages sellers to supply only high-quality goods and services without abusing their position. What does this mean?

Opening a merchant account is actually the tool for the seller to withdraw money from customers’ bank cards in unlimited amounts. Acquiring banks are responsible to their customers. But banks cannot rely solely on the integrity of the supplier. Therefore, they open such intermediate accounts, from which they can return money to customers if necessary.

Moreover, the more charge-backs occur over a certain period of time, the more expensive the bank’s processing services are.

Q: What are the advantages of a merchant account?

A: Opening a merchant account brings the following benefits to business owners:

Simplicity and speed of settlements with clients.
The ability to sell goods and services online without interruptions in the work of banks and weekends.
A customer on another continent gets the opportunity to pay for an item found on the Internet to receive it by mail.
The seller (company) has the ability to accept payments for their products or services from anywhere in the world.
Making a transfer of funds to a merchant account for the buyer in most cases is cheaper than the cost of a bank transfer.
The merchant account owner knows the information about the payments made using his personal account, which allows him to control the dynamics of sales and make reports.
Use of modern security technologies that meet the current requirements of international payments: the use of two-factor identification, Mastercard SecureCode and Verified by Visa technologies.
If the bank provides multi-currency processing, when a payment is received from another country, the conversion is not carried out, the merchant account holder

Q: What are the requirements of banks when opening a merchant account?

A: The process of opening a merchant account hides many pitfalls. Trying to do it without help is likely to end in failure and rejection on the part of the banking institution. For a successful result, you do need the help of experts. Therefore, we suggest that you discuss it with our professionals. The services of Kickstart Solutions expert team will save you time and effort.

The actions of foreign banks are mostly typical. Knowing the behavior patterns of banking institutions, the applicant is better prepared and guaranteed the successful opening of a merchant account. Let’s look at the requirements of respectable foreign banks to foreign firms:

An open current account of the organization to receive funds from the merchant.
Provision of complete personal data of the final beneficiaries of the applicant company.
Copies of the company’s constituent documents, notarized and apostilled.
Perfect credit history for a non-new company.
Paid hosting, an SSL certificate and one domain zone for all pages of a web resource used for conducting the company’s trading activities.
A full-fledged business plan, printed in English and including the financial part with the British accounting terminology.
Communicate your attitude to refunds to customers. To do this, submit a Chargeback policy document.
Provide multilingual telephone support for site users.
Providing evidence of the financial viability of the company and its beneficiaries.

Foreign banks usually require a history of the company’s work with processing and chargebacks. They want to know as much information as possible about their potential client and predict their behavior.

The processing history needs to be developed. To do this, private firms open an account with a processing company. This financial institution acts as an intermediary and assumes financial risks. That is, the online business will work with the bank through this intermediary. Of course, the cost of servicing trade transactions increases. Although there are cases when the processing company presents lower prices, if it has a wholesale bank tariff.

It is enough to cooperate with a processing company for six months to develop a history of activity and chargebacks. With this baggage, you can contact the acquiring bank to open a merchant account and work directly.

Q: What types of merchant accounts are there?

A: The type of activity and the level of chargebacks are the criteria for dividing merchant accounts into two types:

high-risk;
low-risk ones.

A high-risk account requires a lot of time to open and submit a lot of additional documents and information. Accordingly, the cost of servicing such an account is higher.

Q: How do I open a merchant account?

A: First, you need to contact our experts and get a consultation. You can easily and comfortably do it using this contact form.

Our professionals will analyze your business model, on the basis of which the optimal jurisdiction for conducting business will be selected. You can safely trust our professionals to help you register a foreign company and a current account before applying for a merchant account.

Companies with a history need the following information so that experts can assess compliance with the requirements of acquiring banks:

The address of a web resource on the Internet.
Processing history for 6 months.
Statistics of chargebacks.
The size of the average receipt.
Turnover data for the previous period.
The minimum and maximum amount of a single transaction.
Statutory documents.

The client can count on signing a non-disclosure agreement to use the services of our experts.

We open a merchant account remotely, and we select banks and jurisdictions specifically for this purpose. Although it should be remembered that with remote registration, the list of requirements is much larger.

After selecting the jurisdiction, the bank and collecting all the necessary documentation, the experts will conduct the procedures to register the business and the current account without the personal presence of the client. To do this, you need to issue a power of attorney to our representative. If the client has already opened a company with a current account, the experts will immediately start applying for a merchant account.

If the bank makes a positive decision to open a merchant account, the client is assigned a merchant account ID, then the system integration into its infrastructure is carried out with the issuance of the necessary funds for account management. From this point on, you can start accepting bank card payments on the site.

Every business is different. If, after analyzing the above-mentioned facts, you have doubts about the possibility of opening a merchant account for your business, still contact our experts for advice. We are sure that we will find a way out and achieve a successful result.

Q: How can I integrate a payment gateway on my website?

A: To integrate a payment gateway on your website, you need a merchant account. To open a merchant account, you need to provide us with the following:

Certificate of incorporation. This document confirms your company as a legal entity. According to our professional experience, a state governmental entity or corporation issues a certificate. The duration of obtaining a document varies from three days to two months. It depends on a country your company is registered in.
Certificate of Incumbency.
Copies of valid passports with visible bearers signatures for all company officers and owners.
Application. The application is required by a PSP to analyze your company’s structure, turnover, and geo-preference

We realize you might have lots of questions concerning opening a merchant account or integrating a payment gateway. That’s normal. We are ready to give you a detailed consultation/ Feel free to get in touch.

Q: What do I need to know about a certificate of incorporation?

A: A certificate of incorporation relates to the company or corporation formation. Usually, a state governmental entity or corporation issues a certificate to a merchant. The information in this certificate varies from country to country, but may include the following:

Type of the corporation – professional, cooperative, management, insurance.
Name of the corporation – the company’s name with endings as Company, Corporation, Incorporated.
Legal address – includes the country and state of your office’s registration.

The duration of the procedure may differ according to the country. For Europeans, getting the certificate of incorporation may take up to three days while others may require up to two months.

Most important, it is required to open a bank account. A certificate of incorporation confirms that your company is a legal entity. Also, it’ll show that the company constituted correctly. As one opens a bank account, he/she needs to take his/her identity documents, certificate of incorporation, and other documents about company formation. A certificate of incorporation is the only way to start receiving the income generated from your company’s sales.

Many business owners form companies online. That’s why the certificate of incorporation can also be in an electronic form.

So, a certificate of incorporation is a certificate that governmental or non-governmental institution issues to a business owner. The main aim of the certificate is to prove the proper incorporation and company’s existence.

Q: What is an incumbency certificate?

A: An incumbency certificate is an official document that provides the names of the company’s current directors and chief officers. A limited liability company or a corporation issues this official list. The certificate of incumbency is one of the documents merchants send to the payment processor during the account opening. Fair to say, the certificate provides information about a person’s position in the company. The main aim of the certificate is to identify the person. It’s vital because directors/officers have a legal right to make transactions on the company’s behalf.

The incumbency certificate is a company’s official document. That’s why one assumes it transparent and accurate. The corporate secretary issues the certificate. As a norm, the document has a company’s seal on it. Nevertheless, the public notary can notarize the certificate.

In the non-US countries, the incumbency certificate might have the following names: certificate of officers, register of directors, or secretary certificate.

Normally, the certificate provides an incumbent name, his/her position in the company, either he or she was elected/appointed, and the office’s term. In most cases, you can find a director’s/officer’s signature next to further information.

The document may start from the secretary representation (name, position in the company and its name). He/she certifies the names and signatures provided in the certificate. The certificate’s text should include the director’s/officer’s list, the creation date, and the signature of the secretary.

Q: What is ISO?

An independent sales organization (or ISO) is a company that sells credit card processing services independently from a financial firm or bank. In other words, an ISO is a third-party company that can sign up your business to accept credit cards.

What an Independent Sales Organization Does

Although the ISO isn’t directly part of a bank, they’ll accept credit cards on your behalf through the partnerships they’ve established with banks.

Importantly, ISOs will work with you as a partner to establish which credit cards you accept, the fees taken for these transactions, and any markups on processing rates. They’re also able to help you with getting the equipment and terminals you’ll need to process payments. ISOs will also be the point of contact for customers with credit card issues or disputes who need to speak to someone for service on behalf of your business.

As we go forward, keep in mind that we are mostly speaking here about Visa and MasterCard, as these are the most common financial institutions that license their bank credit program.

What Is The Difference Between an Independent Sales Organization and a Member Service Provider?

There isn’t really any. These terms are used interchangeably, and the only small differences are relative to the financial institutions using the term. (For instance, one card company or financial institution may use one term over the other; MasterCard uses MSP, while Visa uses ISO.) This also can be known as a merchant service provider (MSP, too).

Q: What is 3D Secure?

A: 3D secure is a protocol used in credit, debit, and other card transactions as an additional method of security. The technology was first deployed by Visa. Now it is also implemented by MasterCard and other networks. We recommend using this protocol for increasing the security of payments.

The classic way of card verification, based only on the card number, expiration date, CVV number, is not very effective for security. Anyone who got these numbers or stole the card could make transactions without the permission of the original cardholder. With the help of 3d secure verification, it would be much harder to use the card of another person without permission, even if its CVV and other details are known to other people.

The goal of this method is to add more steps of verification during the payment. To buy something online, a cardholder doesn’t only need to use the card number, expiration date, and CVV, but also need to confirm their identity by phone or enter the code from SMS. Even if another person steals the original card and wants to use it for buying something but 3d secure authentication failed, they cannot finish the transaction if they don’t have access to a cardholder’s phone.

3D Secure makes people take more actions, like answering a phone call or entering the code. It also doesn’t let them finish the payment if they temporarily don’t have access to their phones. Many people find it annoying, even if they know that the 3D secure authentication is increasing their safety.

It is best to find the balance and use this protocol only for specific type of cards or for the riskiest transactions. For example, additional verification may be required if a user logs in from an unusual place or another country where they don’t live.

3D secure 2.0 has such advantages as improved messaging, fast performance in message processing, non-payment authentication of online users, and specific extensions to meet custom regulations and requirements.

This version of the protocol also has better datasets for authorization based on risks, prevents payments made by thefts if a card was stolen, and allows the merchant-initiated verifying of user accounts. It provides better support for different devices used for payments.

Q: What is a chargeback?

A: A chargeback is an activity that occurs when a cardholder disputes a transaction on their card account through their issuing bank. A chargeback can occur for a number of reasons including but not limited to:

defective merchandise
recurring payment was not stopped as agreed
fraud

During the chargeback process, funds related to a disputed transaction are adjusted, resulting in financial changes to both the cardholder and the merchant until such time as the case is resolved.

Q: What is a retrieval request?

A: A retrieval request is an activity that occurs when a cardholder does not recognize a transaction on their card account and reaches out to their issuing bank to request more information. A major difference between a retrieval request and a chargeback is that during the retrieval request process, none of the funds related to a transaction in question are adjusted. A retrieval request may result in a chargeback if appropriate information is not supplied during the retrieval request process.

Q: What is the difference between a refund and a chargeback?

A: A refund generally occurs between a merchant and a cardholder and results in full or partial credit to the cardholder’s account for a specific transaction. Additionally, a merchant generally receives the goods and/or services back from the cardholder in exchange for applying the credit back to their account. A chargeback occurs when a cardholder works through their issuing bank to attempt to receive a credit for a specific transaction or a group of transactions and may not result in a return of funds back to the cardholder.

Q: As a merchant, what do I need to do, if I receive a chargeback or retrieval request?

A: Using the case number and rebuttal deadline provided, you should forward documentation to support the transaction. This documentation includes, but is not limited to, a copy of a contract or receipt signed by the payer, a confirmation number and/or email, as well as proof of an existing partial or full refunds.

Q: Are there any steps I can take to protect myself from receiving a chargeback?

A: To reduce the risk of chargebacks, we suggest that you communicate clearly with your customers. This includes obtaining and storing a payer’s written request and authorization for payment, including receipt with client signature and/or agreement, if required.

To avoid chargebacks, be sure to respond to your customers in a timely manner. If you find that you are receiving several inquiries either directly from your clients or via retrieval requests and chargebacks, please contact our Client Services Team to review the account info you provided. In addition, we recommend the use of the CVV code and full AVS, which includes verification of the billing address and zip code.

Q: What is PCI Compliance and why do I have to do it?

A: PCI stands for Payment Card Industry. PCI DSS, often referred to as PCI compliance, is the Payment Card Industry Data Security Standard. PCI DSS is best summed up as card protection. It’s the standard anybody who touches card data in any way is expected to follow to better protect the integrity of that data and lessen the likelihood it can be compromised.

Any business handling card payment data must also be PCI compliant.

For more information regarding the PCI Security Standards Council, go to pcisecuritystandards.org.

Q: What is an SAQ?

A: SAQ stands for Self-Assessment Questionnaire and is a self-validation tool to asses a merchant’s level of cardholder data security. There are different SAQs available for a variety of merchant environments.

Q: Is the PCI compliance assessment difficult?

A: Our solutions take the majority of the PCI compliance burden off your hands, and most of our customers qualify for the basic questionnaire, making the process pretty pain-free. There are cases where systems are more complex and have additional requirements – like systems audits – but we are here to help you through the whole process as well.

Q: Once I’m PCI Compliant, will I ever have to complete the survey again?

A: Yes, you are required to renew your PCI SAQ annually. You should receive email reminders prior to expiration. To ensure you don’t miss your deadline, we recommend putting a reminder on your calendar.

Depending on the PCI scope and the SAQ type recommended for your business, a quarterly network scan may be required in addition to the annual SAQ. Once you’ve completed the initial SAQ and passing scan, the subsequent scans can be set to occur automatically with little to no intervention. Once complete, you will receive a scan summary report via email.