Opening a merchant account

Opening a merchant account

Players use a wide variety of payment methods, but the most common are credit and debit cards. In order to process transactions with payment cards — as well as other methods — online casinos and sportsbooks need a merchant account. 

Read below to learn about opening a merchant bank account — and how LicensingAid can make it happen for you. 

What is a merchant account?

A merchant account is a type of bank account that allows businesses to accept payments, usually with debit or credit cards. With the use of a merchant account, the business receives the money immediately, without waiting for the customer to pay their credit card bill. 

Payment processing for gambling businesses

So, how does payment processing with a merchant account work?

  1. The player swipes their card.
  2. The merchant account provider sends the account details to the card issuer.
  3. The issuer approves or denies the transaction and sends data back to the payment portal.
  4. The funds go from the player’s account to the merchant account.

Risks for gambling merchant account 

Online casinos can face a few difficulties when opening a merchant account.

Many financial institutions are hesitant to cooperate with gambling businesses, which they view 

as inherently riskier than other industries. They’re also seen as being prone to excessive chargeback and refunds. Furthermore, there’s a common perception that gambling businesses are at a high risk of being used for money laundering, or otherwise having a connection to organized crime.

The best — if not only — way that an online casino or sportsbook can demonstrate its legitimacy is to have a license. In most cases, banks won’t open a merchant account for unlicensed casinos or sportsbooks.

Payment processing requirements for the gambling business

There is no universal list of documents and requirements for opening a gaming merchant account. 

Ultimately, the list of documents and other requirements will vary depending on the jurisdiction in which you open the merchant account; some will be easier than others.

Here is a list of the documents that are most often required: 

  • Application forms.
  • A gambling license.
  • Company registration documents.
  • Memorandum of articles of association or an equivalent document.
  • Identity verification of the founders and shareholders of the company.
  • Transaction forecast, including estimated number of transactions, average amount per transaction, and total amount.
  • Information about the cardholders.

Additionally, any director, officer, shareholder and ultimate beneficiary of the company must provide the following documents:

  • Original and certified copy of identity documents. 
  • Certified copy of a utility bill as proof of address, with full name and full address of residence (issued within the last 3 months).
  • Curriculum Vitae.
  • Letter of recommendation.

How much does it cost to open a merchant account?

The cost of opening a merchant account for gambling business depends on jurisdiction, type of your business, and experience. LicensingAid specialists will help you to choose the right jurisdiction and correctly structure the company, as well as calculating the final cost of opening the merchant account. 

How can LicensingAid help?

LicesingAid is an agency offering advice and assistance for online casinos and sportsbooks in regulated markets. We help applicants prepare documentation and acquire licenses, as well as providing financial and business advisory services. We promote the legal gambling industry by helping new enterprises acquire a license, making sure the world of regulated gambling can grow.

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