Hong Kong merchant account requirements for new companies

Hong Kong Merchant Account Requirements for New Companies

A newly incorporated Hong Kong company that wants to accept card payments must apply for a merchant account through a payment service provider or merchant acquirer. The requirements differ from those for opening a business bank account, although the document sets overlap. The acquirer’s underwriting focuses on the company’s website, products and refund policy. It does not focus only on the ownership structure.

Being a merchant is not a licensed activity under Hong Kong law. A company that takes card payments for its own goods or services does not need a licence from the Hong Kong Monetary Authority or any other regulator. The merchant acquirer or payment service provider is the entity that may be subject to regulatory oversight, not the merchant itself.

Merchant Account Application Documents Hong Kong

The documents a merchant acquirer asks for overlap with those a bank requests for account opening. The two processes are separate. The acquirer assesses the same documents for a different purpose: underwriting payment risk rather than satisfying customer due diligence under the Anti-Money Laundering and Counter-Terrorism Financing Ordinance.

A newly incorporated company should prepare the following for a merchant account application:

• Certificate of Incorporation issued by the Companies Registry
• Business Registration Certificate issued by the Inland Revenue Department
• Articles of association
• Identification documents for all directors and beneficial owners
• Proof of address for directors and beneficial owners
• Evidence of the intended business, such as a business plan or supplier agreements

The acquirer will request these documents even if the company has already submitted them to its bank. The assessment is conducted separately and may reach a different conclusion.

Payment Processor Requirements New Company Hong Kong

Payment processors and merchant acquirers in Hong Kong apply their own underwriting criteria. These are not prescribed by statute. The Hong Kong Monetary Authority publishes a Code of Practice for Payment Card Scheme Operators, but this code addresses the conduct of card scheme operators and authorised institutions that run merchant acquiring businesses, not the specific documents a merchant must provide.

For a new company, the payment processor’s requirements include:

• A completed application form with details of the intended business
• The company’s website or a description of the online sales channel
• A clear refund and returns policy
• The average transaction value and expected monthly turnover
• The product or service category

The processor will verify that the company’s website displays accurate contact information, terms and conditions, and a privacy policy. A company that sells through a third-party platform rather than its own website should provide the platform details and evidence of the seller agreement.

Hong Kong Merchant Acquiring Underwriting

Underwriting is the process by which the merchant acquirer assesses the risk of accepting card payments from the company’s customers. The acquirer’s questions are about the website, what is being sold and the refund position. They are not only about the shareholding.

The underwriting team will examine:

• Whether the product or service is in a sector the acquirer has exited, such as gambling, adult content or certain financial services
• Whether the refund policy is clear and accessible to customers
• Whether the company has a history of chargebacks or disputes, if it has been trading elsewhere
• Whether the beneficial owner has a personal credit history that indicates financial stability

A company with no trading history may be offered a rolling reserve. A percentage of each transaction is held back for a period to cover potential chargebacks. The reserve terms are negotiated between the merchant and the acquirer.

Distinction From Bank Account Opening

A merchant account is not a bank account. The merchant acquirer is not necessarily an authorised institution under the Banking Ordinance. Payment institutions that are not banks offer merchant accounts, but deposits held with such institutions are not protected in the same way as bank deposits.

The bank account opening process focuses on customer due diligence: verifying the identity of directors, shareholders and significant controllers, and understanding the source of funds. The merchant account underwriting process focuses on payment risk: whether the company’s customers are likely to dispute transactions and whether the company can honour refunds.

A company may have its bank account approved but its merchant account declined, or vice versa. The two decisions are made by different teams applying different criteria.

Documents Required by Merchant Acquirers

The merchant acquirer commonly asks for the Certificate of Incorporation, the Business Registration Certificate, identification and proof of address for directors and beneficial owners, and evidence of the intended business. This set overlaps the bank’s set. It is requested and assessed separately.

The acquirer may also request:

• A copy of the company’s bank statement, to confirm the account is active
• A utility bill or tenancy agreement as proof of the registered office
• A sample invoice or receipt
• A copy of the company’s privacy policy, if it collects customer data

The acquirer will verify the documents against the Companies Registry’s public records. Any discrepancy between the documents submitted and the registry’s records will delay the application.

Regulatory Context

The Payment Systems and Stored Value Facilities Ordinance (Cap. 584) governs stored value facilities and retail payment systems. A merchant that merely accepts card payments does not fall within the scope of this Ordinance. The merchant acquirer may be a designated system operator under Cap. 584. The merchant itself is not.

The Hong Kong Monetary Authority expects authorised institutions that run merchant acquiring businesses to apply sound risk management practices. The HKMA’s Code of Practice for Payment Card Scheme Operators sets out expectations for scheme operators, but does not impose direct obligations on merchants.

A company that accepts card payments should ensure its website displays a clear refund policy and contact information. The acquirer will review these as part of the underwriting process. Failure to maintain them may result in the merchant account being suspended or terminated.