With 19% of all retail sales now online, choosing the right merchant service provider is a critical decision. From accepting more payment options to processing transactions quicker, merchant services is a term that covers all of the payment related services, including equipment, that a business might need.
However, with so many merchant service providers available, how do you know which is the best solution for you?
What are Merchant Services?
A merchant services provider helps your business take electronic payment transactions.
Merchant service providers enable versatile payment acceptance, covering various methods such as cards, contactless and digital wallets. These providers deliver essential tools, including Point of Sale (POS) systems for physical transactions and payment gateways for online payments.
Merchant service providers also help to protect the security and legitimacy of transactions, implementing measures to mitigate fraud risks. They prioritise compliance with industry regulations, including the Payment Card Industry Data Security Standard (PCI DSS), to uphold the highest security standards.
In addition, they manage the financial flow between businesses and customers, offering reporting tools and analytics for effective financial oversight. Customer support services are provided to assist companies in navigating payment operations seamlessly.
Merchant Services Include
Credit Card Processing Providers
Credit card processing is a crucial service provided by merchant services. This involves the handling of credit card transactions, enabling businesses to accept payments via credit, debit, and prepaid cards. The service includes authorisation of transactions, capturing funds, and secure transmission of payment data. It’s designed to facilitate seamless and swift payment experiences for both the merchant and their customers.
Payment Gateway Providers
Payment gateways are essential for online transactions. They act as a bridge between a merchant’s website and the payment processing network. This service encrypts sensitive payment information, ensuring secure data transfer during online transactions. Payment gateways are integral for e-commerce businesses, providing a secure pathway for payment processing.
Online Transaction Processing
Online transaction processing refers to the system that manages and processes online payments. This service ensures real-time processing of transactions, which is critical for the efficiency of e-commerce operations. It involves various checks for validation and authorisation, ensuring that online transactions are processed accurately and securely.
Point of Sale Systems
Point of Sale (POS) systems are a comprehensive service offered by merchant services. These systems encompass hardware and software that manage sales transactions. POS systems can range from simple card readers to complex systems integrating inventory management, customer data, and sales reporting. They are pivotal in streamlining in-store transaction processes.
How to choose a merchant services provider in 10 steps
Here are 10 points to consider when assessing which provider to choose:
Select a provider with straightforward pricing. Investigate all costs, including any monthly charges, transaction fees, and potential hidden fees. Industry surveys suggest that hidden fees are a common issue with some providers, so transparency is key.
Essential Payment Options
Focus on providers that support a range of payment methods. Statistics show that credit cards are used in over 40% of online transactions. Also, digital wallets like Apple Pay and Google Pay are rapidly growing in popularity, accounting for a significant percentage of mobile transactions. Offering these payment options can increase customer satisfaction and sales.
When evaluating a provider’s reputation, consider factors specific to merchant services: uptime reliability (aim for 99.9%), quality of customer service, and speed of transaction processing. Industry reviews and forums can provide insights into these areas.
Ensure the provider’s software integrates seamlessly with your existing systems. This integration can reduce errors and save time in reconciliations.
Robust Security Measures
Security is paramount. Look for a provider compliant with the latest PCI DSS standards. Data breaches in the industry have highlighted the importance of robust security measures.
Responsive Customer Support
Customer support is critical, especially for resolving transaction issues. Opt for a provider that offers 24/7 support with positive service reviews.
Clear Contract Terms
Carefully review contract terms. Industry studies indicate that long-term contracts with high termination fees are common pitfalls.
Reporting and Analytics
Advanced analytics can help you understand sales patterns and customer preferences. Providers offering detailed transaction reports and analytics tools can be invaluable for business growth.
Evaluate if you need services like advanced fraud protection (crucial as fraud rates in online transactions are on the rise), loyalty programs (which can increase customer retention by up to 20%), or marketing tools.
While comparing prices, consider the total cost of ownership, including equipment costs, if any. Studies show that businesses often overlook these aspects, which can significantly impact the overall budget.
Merchant Services FAQs
What is an example of a merchant service?
An example of a merchant service is a card payment processing system. This system enables a business to accept credit and debit card payments from customers. It typically involves a combination of hardware (like card readers or POS terminals) and software solutions that process and authorize the card transactions securely. This service is essential for businesses operating in retail, e-commerce, hospitality, and other sectors where non-cash payments are common.
What are the costs associated with Merchant Service Providers?
Businesses should be aware of various costs associated with MSPs, including setup fees, monthly account fees, transaction fees (which may vary by card type and transaction size), and potential additional charges like chargeback fees or PCI compliance fees.
What is the difference between a Merchant Service Provider and a Payment Gateway?
While a Merchant Service Provider offers a broad range of services including payment processing, hardware, and security compliance, a Payment Gateway is specifically a technology used to capture and transfer payment data from the customer to the acquirer and then to the payment processor.
Can Merchant Service Providers integrate with existing business software?
Many MSPs offer solutions that can integrate with a business’s existing software, such as accounting systems, CRM tools, or e-commerce platforms. This integration streamlines operations by automating payment data entry and providing cohesive financial overviews.
What security standards should I expect from a Merchant Service Provider?
Businesses should expect their MSP to adhere to the Payment Card Industry Data Security Standards (PCI DSS). Additionally, look for features like encryption, tokenization, and fraud detection tools to ensure the highest level of security in your transactions.
How do Merchant Service Providers handle data privacy?
MSPs must comply with data protection regulations such as the General Data Protection Regulation (GDPR) in Europe. They ensure data privacy by implementing strict data handling and storage protocols, using encryption, and providing businesses with guidance on maintaining customer data privacy.
What customer support should I expect from a Merchant Service Provider?
Businesses should expect robust customer support from their MSP, including 24/7 technical support, assistance with setup and troubleshooting, and ongoing support for transaction queries and chargeback management.