How to Accept Credit Card Payments Without a Merchant Account?

-Can I accept electronic payments without a merchant account?
-Yes (if the very term “merchant account” scares you). But be ready to go through the necessary background verification process. It is, by the way, more or less, the same as the process of getting a regular merchant account.

-Can I pay for a product or service if there is no money in my pocket?
-Well, yes, if you have a payment card with you. Or if you have some payment app on your gadget. In either case, you need to have some money on your respective account.

-Can I travel without a passport?
-Yes, if it is local travel within the EU or USA, or the UK, etc. However, you should carry some other kind of ID with you (unless you are the Queen of England).

-Can I board an aircraft without an airline ticket?
-Yes, if you are the pilot. Or the owner of the plane or you got bumped from some other flight. 

Many people nowadays are asking this last question. The idea of accepting electronic payments without a merchant account is gaining popularity. However, the situation around this issue has two sides. The technological basis of the electronic payment industry is continually improving. But the requirements for those who want to accept electronic payments remain rigorous.

The rule every service provider must obey first and foremost is “know your customer.” Why? Well, because merchant services are associated with several categories of risks. Primarily, these relate to chargebacks, customer fraud, and merchant fraud. Any service provider that allows you to accept electronic payments (as a merchant or other similar entity) assumes financial liability for your operations. That is why background verifications are unavoidable.

For example, you have a PayPal account. You accept payments within the PayPal network. But now you decide to accept credit card payments as well. So, you have to upgrade your basic account. In order to do this, you need to go through the same background verification process an ordinary merchant goes through.

There are great services, such as myPOS and SumUp. They allow you to accept credit card payments smoothly and seamlessly. And get funded almost instantly. Their payment terminals support advanced technologies (including NFC). But to use their services, you still need to go through rigorous background verification.

Do you really need a merchant account to accept payments?

Here is an excerpt from myPOS terms: “When you have registered and signed up for an Account and accepted these Terms, we may perform a credit check on you and may require you to supply additional documentation for us to be able to carry out any necessary checks in accordance with applicable anti-money laundering and anti-terrorism financing laws and regulations as determined by us in our sole discretion. We shall obtain such credit information and make such additional checks, and you shall assist us in that regard to the extent necessary.” These guys are making their point very clear, aren’t they?

And this is how it is with every service allowing you to accept electronic payments. For instance, if you are in the US, you will probably, be required to provide your SSN, tax ID, and some solvency guarantees. Do you come from geography that is considered high-risk? Does your business represent a high-risk industry? If the answer is yes, then it will be problematic for you to get either a merchant or any other similar account.

The situation has a certain amount of irony to it. Those who do not want to get a merchant account are, in fact, just reluctant to go through the necessary background verification process. The good news is that if your background is clean, then the procedure is usually smooth and fast. No matter, whether you want to open a regular merchant account, some premium PayPal account, or register with myPOS or SumUp.

Good luck with your projects, whatever they are!