How to Choose the Right Merchant Service Provider for your Business?
Regardless of their size and model, all businesses need to accept payments from the customers. In fact, the payments received from the customers are their only source of regular cash inflows.
With the ever-growing popularity of electronic payments, 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 in selecting a suitable merchant service provider.
What is a Merchant Service Provider?
The term ‘merchant’ refers to a seller or a business that is looking for ways to receive payments from the 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, Fattmerchant and Payment Cloud.
Key Merchant Service Products
The merchant service providers offer a range of products and solutions. Some of the most common ones include:
Credit Card Terminals
A credit card terminal is a device, or equipment, that allows you to swipe, tap or insert a credit card 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 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.
Point of Sales (POS) Systems
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 these, you can control your inventory, expenses, employees, and cash reconciliations.
Mobile and Contactless Payments
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.
Benefits of Merchant Services
Accepting Card Payments
The popularity of cash and checks is reducing day by day. Customers now prefer paying via their card or other electronic payment methods. Having a merchant account with a service provider allows you to accept card payments, thereby increasing your customer base. It will save you from returning an otherwise loyal customer, simply because you do not accept a modern payment method.
Increase Sales Revenue
A number of studies conducted on consumer buying patterns have found that customers spend more when they use 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 just opens your doors to new customers, but can also allow you to have higher sales from the existing customers.
Better Money Management
The management and handling of cash remains to be a headache for all business owners. Not only is the counting and safety of cash problematic, but unchecked employees may also use it for their personal activities. Having a merchant service that accepts a range of electronic payment methods can save you from all these challenges and streamline your business transactions.
Most of the merchant service providers allow you to view detailed reports about your payments. You can view the amounts you have received from customers and compare them with your sales to identify any discrepancies. You can also use these reports to forecast future cash receipts.
Source of Customer Satisfaction
Using a reliable merchant service provider can improve your brand image. Your business can be recognized as a modern platform that accepts a wide range of payments. Your existing customers can have greater flexibility in choosing their payment method, which ultimately leads to a smoother checkout process and better customer satisfaction.
Merchant services and accounts also allow you to automate the charging process. For instance, if you run a subscription-based business with recurring payments, you can automate the process so that customer details are securely stored with the merchant service. The card is then charged on the renewal date, making it easy for your customers to pay. This also transfers the onus on your customers to cancel their payments instead of requiring you to send periodic reminders for renewals.
Features to Look for in a Merchant Service
Many new business owners consider all merchant service providers to be offering the same features. However, this is far from reality, and you need to consider the individual attributes of the service to arrive at the right decision. Here, we have compiled a list of the most important factors to consider in choosing your right merchant service partner.
Payment Methods and Types
The first, and most important, consideration should be the range of payment types and methods accepted by the service provider. You should avoid a solution that only offers a limited range. While you may run a brick-and-mortar business now and not require online solutions for now, but it is best to proactively plan for the future, and switching your merchant service partner at a later stage can be costly. Payment Cloud, for example, offers a range of hardware and software solutions.
Safety and Security
It is best to stay away from a small-scale merchant service provider. Similarly, you should also skip a service provider that has previously failed to secure its systems. The payment information of your customers and your cash records are both of paramount importance, and you should not select anything less than the best for the sake of a small incentive. Remember, failure to uphold customer information can result in litigations and make you liable to hefty fines and penalties.
Almost every business wants to integrate its data, and you should select a service provider which can be easily integrated with your operational and accounting software. This will not only save your time from recording manual entries but also eliminate the data related discrepancies. Fattmerchant, for example, can easily be integrated with QuickBooks.
Setup Costs and Fee Structure
While the fee is not as important as security, it can constitute a major cost for your business. Most merchant service providers charge a processing fee, setup fees as well as cancellation fees. However, some service providers, such as Flagship, do not charge any setup or early termination fees.
Once you have shortlisted some potential partners, compare their fee arrangements to make the right decision.
The process of making and receiving payments often involves complexities. The customer may raise complaints 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 numerous complaints about customer support in the past.
All businesses can benefit from using a merchant service. The choice, however, needs to be backed up with due diligence and a fair amount of research. The right choice 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 history, payment methods, types, integrations, safety records, setup costs, payment structures and customer support before selecting the best merchant service or credit card processing company for your small business.