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As the popularity of electronic payments grows, customers tend to prefer businesses that accept a variety of payment methods. Therefore, the selection of an appropriate merchant service provider can be a critical success factor for your new business.
Let’s explore what a merchant service provider is and what factors should be considered when selecting a suitable merchant service provider.
The term ‘merchant’ refers to a seller or a business that is looking for ways to receive payments from customers. A merchant service provider acts as a facilitator between you, your bank, your customer, and your customer’s bank or credit card processing company.
The primary role of a merchant service provider is to allow you to receive the funds as quickly and securely as possible. It simply acts as an intermediary and protects the stakes of all the parties involved in the process. Some of the best merchant service providers include Leaders, Flagship, and Payment Cloud.
Merchant service providers offer a range of functions, products, and services for payment processing that may include secure credit card processing, secure debit card and credit card gateways, POS or point-of-sale systems for integration of payment processing with inventory control, and other e-commerce business functions, and more.
The merchant service providers products and solutions vary. Some of the most common ones include:
A credit card terminal, or card reader, is a device, or equipment, that allows you to swipe, tap or insert credit cards and debit cards in order to accept customer payments. The device securely transmits the information and acts as an initial medium of confirmation for a transaction.
A payment gateway or virtual terminal is a type of software that is similar to a credit card terminal. It integrates with your website and allows you to accept and process card payments online. It also acts as a secure medium to transmit customer information.
POS systems are a combination of hardware and software that not only allow you to accept payments but also allow you to manage your sales and operations. Using this payment processing method, you can control and manage inventory, expenses, and cash reconciliations.
Apart from cards, the other modern payment methods include mobile payments, such as from PayPal, and contactless, RFID-enabled payments, such as Apple Pay and Google Pay. Merchant service providers also offer solutions to help you accept payments through all these methods.
The popularity of cash and checks is rapidly diminishing. Customers now prefer paying via credit and debit cards—or other electronic payment methods. Mobile payments are also becoming increasingly popular. Having a merchant account with a service provider allows you to accept card payments, thereby increasing your customer base. It will save you from an otherwise loyal customer, simply because you do not use modern payment systems.
A number of studies conducted on consumer buying patterns have found that customers spend more when they use credit or debit cards instead of cash. Plastic money has been identified as a key driver of impulse buying, and you, being a business, can take advantage of these insights. Having a merchant service account not only opens your doors to new customers; it can also allow you to have higher sales from existing customers.
Proper management, handling, and security of cash is problematic for many business owners. Having a merchant service that accepts a range of electronic payment methods (including contactless payments) can reduce many of these challenges and streamline your business transactions.
Most merchant service providers allow you to view detailed reports about your payments. Payment processing reports let you reconcile payments received with sales receipts to identify discrepancies. You can also use payment processing reports for sales forecasting.
Using a reliable merchant service provider can improve your brand image, as your business will be seen as a modern platform that accepts a wide range of payment types. Your existing customers will also have greater flexibility in choosing their payment method, which will ultimately lead to a smoother checkout process and better customer satisfaction.
Merchant services and accounts also allow you to automate credit card processing. For instance, if you run a subscription-based business with recurring payments, you can automate the process so that customer details and recurring transactions are securely stored and triggered with the merchant service software.
Many new business owners assume all merchant service providers offer the same features. However, this is far from reality, and you need to consider the individual features of each merchant service or POS provider to find the merchant service solution that fits your business needs. Here, we have compiled a list of the most important factors to consider in choosing the best merchant service partner for your business type.
The first, and most important, consideration when comparing merchant services should be the range of payment types and methods accepted by the service provider. You should avoid payment processing solutions that only offer a limited range. While you may run a brick-and-mortar business now and not need online solutions, for now, it is best to proactively plan for the future, and switching your merchant service partner at a later stage can be costly.
Payment Cloud is a merchant services provider that offers an ample range of POS solutions for managing card transactions including physical and virtual terminals, mobile processing and integration with Woo Commerce, Big Commerce, Shopify, Zen Cart, and other powerful e-commerce platforms.
From a security perspective, it is best to stay away from small-scale merchant service providers. Similarly, you should also pass on service providers that have previously known security failures. Customer credit card information and other personal data, along with your own transaction records, require secure management. In addition to harming your brand and affecting sales, security breaches may result in hefty fines and even litigation, so finding secure POS and merchant solutions for your business should be a top priority.
Almost every business wants to integrate its data, and you should select a service provider that can be easily integrated with your operational and accounting software. This will not only save your time by avoiding manual data entry, but it will also eliminate any data–related discrepancies. Fattmerchant, for example, can easily be integrated with QuickBooks. is a merchant service providing easy integration with QuickBooks?
While processing rates and overall merchant services pricing are less important than security when choosing a merchant services provider, they still constitute major expenses for business owners. Most merchant service providers charge a processing fee, setup fees, and cancellation fees. However, some service providers, such as Flagship, do not charge any setup or early termination fees, so it pays to do your homework when shopping for payment processing solutions. Once you have shortlisted some potential partners, compare their fee structures along with their merchant service features to make the right decision for you. Low rates, while appealing, may not have the features to fill your business needs.
Payment processing can be complex as customers may complain about reversals, pending payments, and unauthorized deductions. Any error or downtime can adversely affect your sales and customer satisfaction. Therefore, it is important to use a service provider, such as Leaders, that offers 24/7 customer support. Avoid selecting a partner that has received excessive complaints about customer support in the past.
All businesses can benefit from using a merchant service. The choice your business makes, however, should be backed up by research, which requires diligence. The right service provider can greatly enhance your business performance, but a wrong choice will surely drain key resources and leave a poor impression on the customers.
Carefully consider the company history, payment methods and types (do They process Visa, MasterCard, and American Express?), software and shopping platform integrations, safety records, setup costs, payment structures, and customer support before making a selection for your small business, medium-sized business, or large corporation.