How to Get a European Merchant Account
Opening an EU merchant account is the best way to offer safe and secure online payments to European customers. European and international merchants who are considering opening a merchant account will need to know:
- What a merchant account is
- Benefits of a European merchant account
- How to get a merchant account in Europe
- Tips for maximising your sales in Europe
What Are European Merchant Accounts?
European merchant accounts process card transactions for physical and online businesses—especially those that serve customers in Europe. Together with an acquiring bank, a European merchant service provider provides a secure payment gateway through which payments can be made. The funds from credit card payments and alternative payment methods are held in the merchant account until they’re cleared and then transferred to your business bank account.
Generally, merchant service providers supply you with payment processing hardware (if needed) as well as software that can be integrated with your chosen content management system. Providers such as Unicorn Payment also provide merchant services to help you manage your business, including sales analytics, 24/7 customer service, fraud protection and chargeback mitigation tools.
Who Might Need a European Merchant Account
If you live and trade in Europe, it makes sense to have a European merchant account. Working with European banks will ensure the highest card approval ratios, the lowest interchange fees and the local payment methods your customers love—not to mention greater ease with managing your financial affairs.
If you live outside of Europe but run a business that targets European customers, you will also find that a European merchant account will provide the most cost-effective payment processing for you and the most convenient payment solutions for your customers.
Additional Benefits of European Merchant Services
European banks offer two additional advantages vis-à-vis banks in other parts of the world:
- They may provide a higher processing capacity than acquiring banks in your home country. If you frequently exceed your limit, consider a European merchant account.
- Getting a merchant account in Europe is often easier for high-risk merchants than getting a merchant account through banks in other parts of the world.
Standard, Medium and High-Risk Merchants
When partnering with merchants, acquiring banks assume the financial liability for unpaid chargebacks if your business were to become insolvent. For this reason, merchants are divided into risk categories that may affect:
- Their ability to get a merchant account
- Higher fees and stricter terms
Merchants that process payments for a brick-and-mortar store in an industry such as food or cosmetics are considered standard-risk merchants. Because they accept payments from customers using a physical card, there is less likelihood of fraud, customer-initiated chargebacks, and product returns.
Merchants who accept payments online are immediately considered to be medium or high risk because card-not-present transactions come with the inherent risk of fraud. However, even within online business, there are differences. For example, selling digital content carries a lower risk than selling airline tickets (which may be cancelled and have to be refunded by the merchant).
There are two main reasons why a merchant would need a high-risk merchant account:
- A high-risk merchant. New merchants with very little experience, no credit history or bad credit history are high-risk because they are more likely to become insolvent.
- A high-risk industry. Businesses that sell airline or event tickets are high-risk because they have a high chance of cancellations and refunds. Additionally, industries such as cannabis and e-cigarettes are high-risk because backing these products could affect the bank’s reputation.
Banks in the European Union are often more willing to take on high-risk merchants than acquiring banks elsewhere. However, you will still pay higher fees than you would for a standard account and the acquirer may maintain a rolling reserve.
It’s worth consulting with numerous merchant banks about the fees on their high-risk merchant accounts. Some banks that specialise in “high risk” may be able to offer competitive rates for your business.
How to Get a Merchant Account in Europe Step by Step
To apply for a European merchant account, you will need to have a physical address in Europe and register your business as a European corporation. Many merchant account providers offer information about starting a business in Europe as a foreigner to help you meet these initial criteria
What You Will Need
Once you have your certificate of incorporation and a physical presence in Europe, you will need to present the following documentation for European merchant services:
- An application form
- Your certificate of incorporation
- Evidence of a physical address in Europe
- Information about your business entity
- An ID for the signatory of the account
- Business bank statements from the past few months
- Your recent payment processing history
To gain approval, it’s important to show you have enough capital to support your requested processing volume. If you have a high rate of chargebacks, the provider will also ask for an explanation and your plan for bringing your chargebacks under control.
The Review Process
Over the 2-5 days after you apply, the merchant service provider will review your documentation, take a look at your ecommerce business, may try cold-calling your contact and customer service numbers and read independent online reviews. If they are satisfied that your company offers quality service and is financially viable, they will usually integrate the payment gateway the next business day and you can start processing payments. Unicorn Payment offers same-day approvals to get your business up and running faster.
Tips for Online Business Success
Once you have a merchant account, the European market is open to you. You will be able to sell your goods and services to over 700 million Europeans and accept payments quickly and easily online. To make the most of your payment gateway, be sure to implement local currencies and multiple payment methods on your site.
Merchant accounts allow companies to take payments and receive settlements in multiple currencies, so it’s worth displaying your prices in local currencies to maximise your chance of a sale. Merchant services providers like Unicorn Payment facilitate payment processing for 164 currencies, helping you offer your customers a seamless experience.
Multiple Payment Methods
The more payment options you provide, the more sales you will make. Be sure to offer local payment methods as well as major credit cards, debit cards and digital payments like PayPal. To cater to the largest number of customers, consider offering several alternative payment solutions as part of your secure gateway:
- Electronic funds transfer
- Bank wire transfer
- Card payments
- Mobile payments
- E-wallet payments
Payment preferences can also vary from country to country, so it’s important to research your customer base. For example, Germans like to pay with the open-invoice system, so you’ll need to include alternative payment methods that work with an open invoice when conducting business in Germany.
Fulfil Orders Quickly and Be Clear About Returns
Once you’ve signed on with a merchant account, you will be responsible for maintaining high-quality service and keeping your chargeback ratio low. If you have an excessive number or percentage of chargebacks, you may be placed on Mastercard’s MATCH list and barred from opening another merchant account in the future.
To prevent chargebacks:
- Be diligent about shipping the right product to the right customer in the timeframe specified in your shipping policy.
- Communicate if there are any issues or problems with getting the order out.
- Have a clear returns policy that outlines the process for completing a return.
- Process returns and refunds in a timely manner.
- Track all of your orders and keep evidence that the products were delivered—such as the signature upon receipt and a follow-up survey to check that the product arrived.
- Work with an EU merchant account that provides fraud prevention and chargeback mitigation tools. This can help you intercept chargeback requests and keep your chargeback ratio low.
European Merchant Accounts: Your Gateway to the World
Now that you know how to get a merchant account in Europe, you will be able to expand your business within Europe. But first, be sure to do your research, prepare your documents carefully and choose the most suitable bank account. The right partner for business in Europe will offer the best service for you and your customers and help your business grow to success.