Looking back to the past decade, various payment options are being made available to customers for making online payments, in order to offer them a convenient shopping experience for more than ever. This emerging trend helps businesses benefitting immensely as they are able to offer multiple payment options to their customers. As this is an innovative way to acquire new customers, and also an excellent method for keeping existing customers, this multiple payment method is gaining its drastic popularity. Still, the problem lies in maintaining the growing payment options as it involves extra costs, labor and data security issues. This is the part where the roles of Merchant Service Provider or Payment Service Providers (PSPs) come in.
So, what are the merchant services?
Merchant services cover a range of financial services that are tailored to the needs of businesses. These are the services which include processes such as processing of payments, setting payment gateways and some special programs offered by merchants like loyalty programs.
The solutions of Merchant service providers for businesses include the support of delivering intuitive software, hardware for payment processing and efficient steps to achieve hassle free payment processing.
The major advantage that the merchant account provider (MAP) provides with the business owners is offering a merchant account. These accounts have the processes of authorizing payments, checking credit limits, and payment processing. After the confirmation of completion of transaction, the funds from the merchant account will be moved to the business account which typically takes a few days to be done.
Various merchant service providers’ offerings include payment processors, or payment gateways. If you are the owner of a conventional physical store and having an eye on presenting your online presence, you can make use of your existing merchant account for the online transactions also. There is no need for a new account opening for the online store.
The solutions of Merchant account services differ in the offering of different account types, processing volumes, fee structures, and transferring time duration. These are some essential points to consider when choosing a merchant service provider.
How do merchant services work?
Merchant services involve the most important processes of how a business accepts its payments, different types of payments acceptance, and choosing the provider. Typically a merchant service process starts when a customer pays for his purchase and the process completes when the funds are deposited to the bank account of the business owner. In general, a business requires a card processing terminal and use of digital technology that is required for accepting debit and credit card payments.
Let us imagine a situation: A customer swipes his credit card, now the information is being entered into the credit card processing terminal. Now, the payment processor starts transmitting the data and checks with the status of the bank of the customer before it starts to accept or deny the transaction. If the customer’s bank approves that transaction, the entire transaction is over and the purchase gets completed. After the completion of the transaction, the payment processor collects a fee. This is the reason behind why some merchants take fees for transactions for the purchases from the buyers towards the credit/debit card usage. The funds remaining after the process fee take up will be deposited to the business account of the merchant.
Importance of Merchant Service Providers
E-commerce industry and online transactions are becoming huge issues and have become prone to activities of criminals in terms of fraud. This is the place where the right merchant service provider can reduce the fraudulent activities.
Criminals are finding loopholes with transactions, and they try to take the most advantage of it. These days where the digitized advanced world, allow businesses to accept transactions within hours of setting up their store or account. Although it seems to be great news, it still acts as a way for the fraudulent to create a quick and easy way for identity theft. There are situations where the Merchant providers find it hard to differentiate between legitimate transactions and fraudulent transactions.
The merchant transactions are not posted to the business account during the time of purchase or refund. In general these transactions will be usually posted during or after the settlement process of merchants. Based on the business type or model and the specific payment gateway, the process of settlement will be done manually or as automated that occurs at a specific time of day.
Choosing the perfect merchant services provider – Tips to consider
Cost
You should consider the upfront costs and the ongoing monthly services with the service provider options that you have listed out. You can prefer the person or service who offers you a flat rate payment within your budget. Otherwise, you can also prefer to choose the one with fluctuating payment processing fees.
Payment processing duration
It is vital for you to know of when the payment will be received in your account. Some providers or processors may make the process payments delay, hence this is the major thing that you should look at before picking a provider. You can have a glance on their online client reviews to know about what their existing customers feel about the average payment processing times.
Customer service
Having a good customer support system in hand, besides great merchant services, is essential for businesses. Know about their service or level of support and ensure that they can give ongoing support after you have done the purchase of hardware or software.
Other Recommendations
Ask thorough questions before you establish a relationship with the provider and try to find the capabilities of the provider. Enquire about all the fees, charges, and conditions. Know about their expertise in handling different products and services and ask for the details of previously implemented products/services.
Merchant Cash Loans
Some of the Merchant service providers offer loans on products or cash advances to businesses. If you are sort of fund for buying tools and inventory, you can choose those persons who can offer these facilities and get benefitted from these services. However, it is important to inquire with the merchant service provider before you sign the contract.