As modern commerce becomes increasingly digital, businesses need to stay relevant to customer trends. Unfortunately, accepting card payments in your company is not straightforward. You need a merchant service provider who acts as a gatekeeper between your cash register and the customers’ debit or credit cards. A merchant service provider allows you to accept card payments and maintain the security standards necessary for processing card payments. Hence, you need a mutually beneficial arrangement with a merchant account provider to keep your processing fees low and enjoy safe credit card processing. Let’s explore how a merchant service provider boosts digital payments.
What is a merchant service provider?
Before the introduction of eCommerce, businesses would process card payments using a piece of hardware. The Point of Sale (POS) system would transfer money to your account with a single swipe. Hence, companies didn’t require complex payment solutions. However, accepting payments from online customers requires more than a POS system. That is where a merchant service provider comes in to facilitate credit card payment processing for online transactions. Most merchant services provide additional functions that help you run your online store by accepting payments into the business merchant account. Aside from managing payments, a merchant service provider also has a point of sale system. It enables businesses to track inventory, monitor sales, and collect relevant data for analysis and tax purposes. Besides, the merchant services increase convenience and beef up the security of online transactions, and some offer protection against chargebacks and fraud. If you are hunting for merchant services, you need to understand the following types of service providers to find an excellent fit.
Merchant account providers
Merchant account providers are the most popular card payment providers, focusing on a few services. For instance, they provide merchant account and credit card processing functions. They are suitable for companies that need a straightforward method of accepting online payments. The account allows business owners to receive money from the customers. You cannot access the account directly, but the funds will be transferred to your bank account. If your business is brick and mortar model, your money is available when you swipe the card and the credit card issuer approves the transaction. However, online card payments require a payment gateway to authenticate the card information (similar to offline companies’ point of sale machines). The payment gateway also notifies the card issuer to authorize the payment and deduct transaction charges. When choosing an account provider, check the fees attached and the cancellation terms. Some card payment providers have a minimum term limit, and canceling them attracts a penalty.
Payment services providers
While a traditional merchant account provides fantastic services, it comes with lengthy contract terms and service fees. Besides, you need a separate account for each payment method. If you operate on a seasonal basis, a payment service provider will offer better services instead of maintaining several accounts. A payment service provider will group all the payment methods into one large merchant account. That means you can accept credit cards, debit cards, and digital wallets for online and in-person transactions. You do not need to sign multiple agreements or limit the payment options for your customers. Aside from card processing, payment service providers also minimize administration functions by generating monthly reports for reconciling transactions. It also provides a secure transaction by encrypting payment information. Payment services accounts are perfect for businesses that want to keep costs low and give customers unlimited payment options using simple technology.
Payment gateway providers
A payment gateway provider validates payment cards by capturing data necessary for credit card processing and transferring them to the acquirer. The payment gateway is an interface between the acquirer and the merchant’s websites. It ensures your customer has sufficient funds for the transaction and sends the decline or acceptance notice to the customer. Since it acts as a middleman, it prevents fraud and security breaches by encrypting credit card details and passing them securely to the relevant parties. It also limits chargebacks and protects merchants from insufficient funds, closed accounts, and expired cards. The payment gateway works alongside a merchant account, and some providers attach it as part of the deal, while others offer gateway services only. When selecting a payment gateway provider, consider the fees and additional features that come with the account. For instance, some providers offer recurring billing support and a customer information management database.
Conclusion
Most merchant service providers offer a wide range of services, making it challenging to select the best fit for your business. Aside from assessing the expenses charged, consider the features you need to run your eCommerce smoothly. For instance, a retail-only business needs a reliable credit card terminal, but online transactions need a payment gateway without a terminal. When you know the features that your business needs, you can find the ideal merchant service provider.
Story by Molly Evans
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