Obtaining a conventional Merchant Account
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Traditionally, to be allowed to accept credit cards you must be granted Merchant Status by a major bank and obtain a Merchant ID from them.

What is involved?

All major high street banks have what is known as an acquiring bank e.g. NatWest has 'Streamline', LloydsTSB has 'Cardnet', Barclays has 'Barclays Merchant Services', HSBC has 'HSBC Merchant Services' and so on.

All these acquiring banks are able to issue a Merchant ID and allow you to start taking credit cards in your business. They will authorise or decline each customer transaction, collect any payments on your behalf and pay the money into your bank account.

There are obviously costs involved - typically the bank will include setup charges, monthly or annual fees, monthly rental of a terminal for you to process card details, and maybe insist on a dedicated telephone line for the terminal. You will also be charged a percentage of each transaction which they process, you may have a minimum monthly volume of business imposed, and in some cases you will have to provide a substantial bond or deposit as extra security.

Unfortunately that's the good news! - before you can even start accepting credit cards you will have to satisfy the bank that you are worthy of their trust in the first place, and you will usually have to provide two years audited accounts and demonstrate a sound business track record in order for your application to proceed. (Which is why some banks also require a cash bond and an extensive business plan if you cannot satisfy all that, for whatever reason)

Even if you achieve all that you will then be able to accept card payments in your 'traditional business' only. If you want to set up a web site to accept card payments you will find that the acquiring banks will not accept any information coming from you via the Internet. The banks will only accept information from a web site which has been processed by an approved Payment Service Provider (PSP).

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