A Detailed Guide to Filling Out Your Merchant Application

We may not be able to cover every line item in your contract, nor can we explain all the fine print--at least not in this article--but we can prepare you to better understand what you can expect to encounter. In this guide, we’ll cover all of the major components of a merchant application that will have a measurable effect on your bottom line.

If you’re reading this article, it’s safe to assume you’re holding a merchant application in your hands (or have one open in another browser tab). And, if you’re like most merchants, you probably have no idea what you’re looking at. It’s okay. We get it. Merchant applications are long, complicated, and come with an insulting amount of fine print. Most payment processors use these applications as a way to squeeze as many pennies out of your business as they can. If you’re not careful, you might fall prey to hidden fees or fluctuating rates. But you won’t fall for any tricks. You’re reading this post, after all. As bad as merchant applications are, they’re a necessary evil for any business that accepts credit cards. That’s why we’ve created this guide to merchant applications. We may not be able to cover every line item in your contract, nor can we explain all the fine print--at least not in this article--but we can prepare you to better understand what you can expect to encounter. In this guide, we’ll cover all of the major components of a merchant application that will have a measurable effect on your bottom line. One note before we jump in, though. If something in your application is not covered in this guide, don’t hesitate to leave it blank. Filling out only what you know is more helpful to a processor than filling out every field with potentially incorrect information. In fact, there are a few things that you should leave blank in your merchant application. We’ll cover those later on. Now that we’ve covered that, let’s get started.


That’s right, we’re starting with the easy stuff. You should know most of this information (assuming you’re not some fraudster using a made-up company). You might run into trouble, however, if your application asks questions about beneficial ownership or control ownership. Too many businesses come to this section and think that they have to list every investor in their company. As a rule of thumb, you’re only required to list any individual who owns more than 25% of the company as a beneficial owner. The control owner would just be the individual with the highest ownership percentage (or the one who has the most clout in decision-making). If you operate a partnership where ownership is 50/50, the applicant should be listed as the control owner, with the partner as a beneficial owner. Just be sure to accurately portray the ownership percentages when asked.One additional point to remember (and one that may or may not come up in this section of your application) is that some processors might request information for a personal guarantee. This section should not be filled out unless you operate a sole proprietorship or if your business credit is poor enough that the processor requires it. Filling this out when it’s not required is a waste of time.


After learning about the business itself, your processor will want to know a little bit about what they can expect from you should they become your processor. This section can be confusing for a few reasons, but the most common one is that the layout is just too confusing for any normal person to understand (if you got this on your first try, congratulations on your superhuman abilities).Let’s use this WorldPay merchant application as an example. Again, this might not mirror your application exactly, but it’s a good representation of something you might encounter.

  1. You can check this box if you are seeking a new processor due to a change in ownership or if your business is reincorporating. Otherwise, leave this blank. The information requested to the right of the checkbox will only be applicable in these cases and refers to your existing merchant account.
  2. Annual volume refers to the dollar amount you expect to transact with cards over a given year. As an example, let’s say you run a donut shop that does $500,000 in sales each year, 50% of which comes from cards. You’d enter $250,000 here. Good work, donut man (or woman).
  3. Your average ticket refers to the average dollar amount you expect per transaction. This helps processors to spot fraud. If your donut shop had an average ticket of $6, it might raise a red flag if there was suddenly a transaction for $800.
  4. Your highest ticket is another anti-fraud measure. If your donut shop occasionally does catering orders that top out at $150, then write in $200. It’s wise to guess high here, as any transaction above this amount will automatically be flagged as potential fraud. Just don’t guess so high that the amount would be wholly unrealistic for your business (nobody’s spending four million dollars at your donut shop, sorry).
  5. The dreaded card matrix from hell (notice how I’ve circled it in red). This thing’s a real piece of work, but here’s how it works. See that blue box at the left? Those two numbers (percent card present and percent card not present) will represent every transaction in a given year. Your donut shop would likely be 100% card present transactions, but if you sold donut-themed apparel online as well, you might see 80% card present and 20% card not present. These are rough estimates, so don’t go looking through all your transactions from last year to get an exact percentage.
  6. These four boxes (outlined in green) are types of transactions that contribute to the percentages we put in the blue box to the left. When entering percentages here, each row should total the percentage amount you entered in the blue box to the left. In other words, these boxes are asking for the percentage of all transactions that fit the given criteria. Returning to our donut shop example, we know that 80% of card transactions are card present. If the large majority of those are swiped, then we would input that 70% are swiped, and 10% are keyed in. MOTO refers to mail order or telephone order transactions. In this case, because we’re running an online shop, the remaining 20% of transactions can be assigned to the 'internet' category.
  7. These last two boxes (outlined in purple) are unrelated to the boxes to their left, but still should be given as percentages of all transactions. Our donut shop sells directly to consumer, and the online shop doesn’t ship overseas, so these will both be zero in our example.
  8. The rest of this table (outlined in orange) should be fairly self-explanatory. One thing to note: if you’ve been accepting payments through another processor in the past, it’s wise to include statements from that processor when you submit your application. It just helps them test the accuracy of the information you’ve provided and speeds up the due diligence process.

Now that we’ve covered that, here’s the same table you saw above, but filled out with our hypothetical donut shop information:


Depending on your processor, these items might be grouped together or separated throughout the application. But each item mentioned in this section will be vitally important to how your business operates and how you will budget funds.The first thing to keep an eye out for is your business’s bank account information. Typically, when you’re providing that information, the processor will ask how you’d like to be paid. Most applications will have 'Premium ACH' or 'Alternate Funding' options. While Premium ACH is the standard--these deposits typically take 24-36 hours--alternate funding might be a better option for businesses that rely more on receiving their deposits as soon as possible, as these deposits come the next day (assuming batching is completed before a predetermined deadline). A restaurant that distributes tips to servers each night is a good example of a business that could benefit from alternate funding.Speaking of batching, your processor will likely request your preference for how frequently you’d like to batch transactions. You’ll receive a deposit with every batch you complete, so how often you batch is up to you. However, keep in mind that processors typically charge a batching fee (which we’ll cover in our next section), so make sure to consider that when making your choice. We recommend batching transactions at the end of each day; it ensures that deposits are consistent while minimizing the fees that might come with batching each transaction individually or at the end of every shift, for example.If you are sending multiple batches during the interval between deposits, your processor will also ask whether you’d prefer deposits be made by batch or as one lump sum. Again, it’s up to you. The money you receive will be the same either way.


And now for the section everyone loves to hate: credit card processing fees. We really hate these things, and we have written extensively about how to avoid them and how to negotiate them. All of that starts right here with your merchant application.First things first, never ever ever sign an application that offers you tiered pricing. Never. Just don’t do it, man. In most cases, you should be working with an interchange-plus or pure percentage (flate rate) pricing model.There are a few ways to tell if tiered pricing is involved in your contract. First, they might just say it outright with an ‘Application Type' or 'Pricing Type' section. If they’ve checked 'tiered,' hightail it out of there while you still can. Of course, not all are that specific. Some might disguise tiers by using terms like 'qualified,' 'mid-qualified,' and 'non-qualified.' If you see these terms, write in zeroes where percentages and dollar amounts can be added. Your application should only reflect base processing rates (though some exceptions might need to be made for American Express cards, which face higher interchange rates).Once those rates are set, you’ll want to indicate your discount preference. Basically, this allows you to choose whether you’d prefer to pay your processing rates as you go (daily discount), or if you’d like them to be taken out in one big chunk at the end of the month (monthly discount). If you want all your fees to be in one place so they’re easy to compare month-to-month, the monthly discount might not be a bad option, but in most cases, a daily discount will be easier to work with.Lastly, you’ll likely see a box indicating occurrence fees or something similar. Basically, these are fees you incur each time a certain action is taken, whether it be a chargeback from a customer, a transaction batch, or a change in bank account. These can be negotiated, but unless you anticipate paying them often, it may not be worth your time.


As we mentioned earlier, there are two parts of your application that should be left blank: compliance and equipment. You could try to fill these out yourself, but in most cases, you won’t be able to complete them without your processor on the phone walking you through it. These sections are heavily dependent on the type of hardware and software that you’ll be using to process payments. If your processor is providing either of these, you’ll need their help. If you’re bringing your own software and hardware, you’ll still need their help. It’s best to leave these up to the pros.

Taft Anderson

Taft Anderson

Taft Anderson is the former Product Marketing Manager of Swipesum. A graduate of Washington University in St. Louis' Olin Business School, Taft is a content and branding expert.

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