At the most basic level, merchant services is an industry term for credit card and debit card processing for businesses. Merchant Services Providers (MSPs) function as the intermediary between banks, your business, and your customers, giving your customers multiple ways to pay and enabling you to accept the payment and get paid. When a customer swipes a card, the merchant services provider moves the customer’s funds to your bank account. That’s the simple version; however, merchant services encompass a whole lot more than just credit card processing ranging from software to hardware, to the equipment needed to process payments for online or mobile orders.
Merchant Services Defined
If you are a new business owner in today’s technological, fast-moving world, if you want to be able to accept credit cards or electronic payments, you’re going to need to utilize merchant services. As payment technology has evolved, the extent of services that an MSP offers can vary and is harder to define. Most merchant services providers group multiple products under their umbrella of merchant services. This article sets out to explain as plainly as possible what those products and services are.
Merchant Services and Card Processing
While there can be a broad range of features to keep up with today’s modern buying methods, the bulk of merchant services is the equipment and services needed to process card payments, whether it be credit or debit cards. Therefore, merchant services will at a minimum typically include a card processing terminal and the supporting technology to run credit and debit cards safely and securely. A merchant services provider’s job begins once a customer swipes their card. They handle the authorization, clearance, and funding working with the acquiring banks and credit card associations to ensure you receive secure payments into your business account.
Expanded Merchant Services
As mentioned earlier, the range of services offered by a merchant services provider has grown over time. An MSP now offers payment gateways that encrypt and run your customer’s card information online, allowing for secure transactions from your website. If you have an eCommerce business, then getting a bundle through your merchant services provider that includes an online payment gateway will be paramount to being able to offer your customers a streamlined checkout process and for you to be able to obtain payments deposited safely and securely into your business account.
Point of Sale Systems
Some businesses require more comprehensive merchant services that extend beyond transactions, and so they’ll opt for a point of sale system. Point of sale systems not only accept payments but they also help manage your business with a suite of additional features such as inventory and sales tracking, managing employees, reconciling commissions or tips, analyzing data, running reports and accepting contactless payment options like Apple Pay, Samsung Pay, and Google Pay.
Over time, traditional merchant services and point of sale systems have become intertwined. Industry leaders like CardConnect™ Virginia offer merchant services bundles so you can customize what you need and choose from a menu of services, such as card processing, merchant services, POS solutions and gateways for all business types.
POS systems can be expensive, but the cost of installation, setup, and training usually is included. The system will typically include a primary server and one or more terminals, a credit card swiper, a cash drawer, and a receipt printer. Based on your specific business needs, you might also opt for a bar code scanner or other specialized equipment. The company that provides your POS system will handle the installation of all hardware and software, and train you and your team on how to use it.
Common Merchant Services Pricing Models
Merchant services will typically come with one of the three following pricing structures:
One of the most common types of pricing is flat-rate pricing. Typically, a flat-rate pricing model involves the merchant services provider taking a small percentage of the transaction value, plus a small flat fee per transaction. Some merchant services will charge your business a fixed percentage of the transaction value, without the per-transaction flat fee, although the fixed percentage could be higher to offset not charging the per transaction fee.
Another standard pricing model is the interchange-plus model. This pricing structure is not as straightforward as flat-rate pricing, but your monthly bill will detail out all the charges, giving you more insight into how the calculation of fees. The origin of the pricing model name is from “interchange” which is the amount your merchant services provider will pay a credit card association such as Visa or Mastercard for each transaction. The “plus” is the markup that the merchant services provider charges your business.
With tiered pricing, providers group their services into pricing tiers. Based on the number of transactions your business does, you will be assigned a pricing tier by your provider. Tiered pricing, while easier to understand, tends to be one of the more costly pricing models.
Typical Merchant Services Fees
Beyond these base pricing models, costs attached to merchant services can also involve different miscellaneous fees. It will be vital for you to familiarize yourself with some of the common fees and keep a watchful eye out for them. In most cases, a provider will waive many of these fees. Other costs, not waived, should never exceed industry standards.
Getting Started with a Merchant Account
We recommend you work with CardConnect™ Virginia who offers valuable business processing consulting and solutions, regardless of your vertical. When your account is established, usually within two business days, CardConnect™ Virginia will provide supplemental revenue saving opportunities for your company, such as no-obligation quotes and credit card processing rates as low as 0.25%.
With their highly trained technical staff available around the clock, you’ll be back on your feet in no time should you encounter a technical problem with your payment solution. CardConnect™ Virginia ensures their solutions are tailor-made to suit the specific needs of you and your business. With a fully guided set up of your payment environment, you will be ready to provide a payment option that today’s consumers have come to expect.