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It’s tough for a company to be successful without having multiple ways to accept payments from
customers and business partners. At one time, a cash register and a calculator were all you
needed to accept customer payments and keep track of your finances.
However, we’ve come a long way since those days.
In modern times, consumers pay for goods and services with a variety of payment methods.
Credit cards, debit cards, mobile payments, and cryptocurrency are several popular payment
methods. With so many payment options available, it’s helpful for your business to have an easy
way to manage various transactions.
Companies offering the easiest checkout processes (and typically earning the most revenue)
facilitate customer payments through a merchant service.
In this post, you’ll discover what merchant services are, what to consider before choosing help
with merchant services, and more.
What Is a Merchant Service?
A merchant service is a business that helps companies process and facilitate payments. This
type of company typically helps business customers accept multiple payment types. Merchant
service accounts also enable companies to accept in-person and online payments.
In the merchant services industry, your business is the merchant. When your business (the
merchant) completes customer transactions, a merchant service authorizes each transaction.
Then, your business submits its transactions and typically receives the funds in its commercial
bank account.
Merchant services also help speed up the time it takes for companies to get paid. A merchant
payment solution confirms that funds are available in a customer’s account while fronting your
business these funds. This way, your business, and the merchant services provider receive
money.
Benefits of Having a Merchant Account
The many benefits of setting up a merchant services account may surprise you. Check out
these benefits below if you’re on the fence about utilizing merchant services.
● Accepting debit card, credit card, ACH, and other payment types
● A smooth and fast transaction process for your company’s customers
● Making more revenue by offering convenient and multiple payment options
● Potentially opening your business to new, international markets
● Authorizing and accepting payments around the clock
● Benefitting from accepting ecommerce payments
● Having more protection against fraudulent transactions
● Lowering expenses normally paid toward chargebacks
What to Consider Before Choosing a Merchant
Account Provider
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As you may already know, many merchant account services exist. Different companies offer
various solutions to cater to their target audiences. Here’s how to help ensure your business
finds the perfect merchant service to partner with.
The Industry Your Business Operates In
Depending on the industry you operate in, you might need a merchant services provider that
excels at different things. For instance, someone who operates a small art supply store won’t
need the same things from their merchant service provider as someone who operates in a high
risk industry such as vaping. Some other examples of high risk industries can include:
● Adult Dating
● Firearms
● Vaping
● CBD
● Multi-Level Marketing (MLM)
Working in a high risk industry doesn’t disqualify a company from achieving success. However,
from a traditional lender’s standpoint, these industries are seen as riskier than more well-known and longer-lasting industries.
Fortunately, merchant service companies exist to help companies in high risk industries. These
merchant services can help mitigate chargebacks, fraudulent transactions, and other problems
that plague high risk industries.
Payment Types You Want to Accept
As mentioned earlier, many payment types exist. However, that doesn’t mean your business
has to accept all of them.
The most common payment types companies accept are debit and credit cards. These two
items are the basis for many online and in-person payments. But they’re not the only payments
your business can accept.
Some companies accept blockchain-powered cryptocurrency as accepted payments. While
these transactions may incur higher fees, there’s also the possibility of these currencies rising in
value. That said, cryptocurrencies may also rapidly lose value. Your company may also find it
beneficial to accept Automated Clearing House (ACH) payments, facilitating transactions
between two bank accounts.
How (and Where) Your Company Processes Transactions
Typically, an average company has two ways to process payments: in-store or online. Whether
a customer buys something online or in-store, both result in sales for your business. However,
the process of completing these transactions differs.
Accepting in-store payments means needing help from a retail card processing company. Your
business may also need new or updated equipment to complete transactions properly. You’ll
typically hear these items referred to as card readers and other POS hardware.
A merchant services company can also offer tools to enable mobile card swiping. Mobile card
swiping is ideal for people who make deliveries or otherwise work outside of a traditional office.
Extent of Help Required
It’s important to distinguish that not all companies use one business to handle payment
processing and merchant services. With that said, companies often find it beneficial to seek out
and work with businesses offering both services under one roof.
Some companies providing merchant payment solutions also offer accounting-related services.
These services are great for companies, especially smaller businesses without the budget to
hire a team of full-time accountants.
Service Costs
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Understandably, price will always be a factor in any business decision. That said, it’s not
advisable to base merchant services on price alone. Not all expensive merchant service
providers offer excellent service, as low-cost providers don’t always offer poor service.
Your business is also likely to pay setup fees when first working with a new merchant services
provider. You’ll also need to pay or set up a payment plan to purchase transaction-related
equipment such as POS systems.
Once you begin working with a merchant services company, it will typically offer one or multiple
pricing models.
Flat-Rate Pricing
The most common pricing model merchant service providers use is flat or flat-rate pricing. Flat-
rate pricing charges your business a small percentage of each transaction it completes. This
type of pricing is beneficial for its simplicity.
Tiered Pricing
Tiered pricing separates transactions according to how qualified they are. Qualified transactions
receive lower rates while the rates are higher for semi or non-qualified transactions. This
method is a bit more complex from a record-keeping point of view. It may also incur higher
overall transaction fees.
Interchange-Plus Pricing
This pricing model involves two separate costs: an interchange and a plus charge. A credit card
company sets your company’s interchange rate. Additionally, a credit card processor sets up its
plus fee. Your business pays both fees to authorize and approve a customer’s transaction.
Reviews and Testimonials
Another vital consideration involves looking at a company’s reviews and testimonials. It’s no
secret that shoppers rely heavily on product reviews, and it’s easy to see why. Reading about
past customer experiences, both good and bad, gives you an idea of what to expect from a
business.
Support Offered
Understandably, almost nothing is more important for a company than the money it makes.
When payment processing and authorization systems aren’t working, it leaves sales and money
on the table. This problem is even worse when payment-related software and hardware go
down at peak business times or seasons.
While impossible to avoid, you understandably want a merchant services company capable of
quickly resolving potential payment issues and problems. Finding a business that can offer 24/7
support is even better for your business.
Companies benefiting from around-the-clock support include any business utilizing ecommerce
to make sales online. Having 24/7 support also helps businesses that operate outside traditional
business hours.
Opening a merchant account is a worthwhile consideration for every business. If your company
is one of many that would benefit from a merchant services provider, speak with company
representatives, attend consultations, and check out reviews from their customers to find the
best fit.
