Key takeaways

  • Merchant services is a wide-ranging term used to describe the various payment-related services and equipment for small businesses.
  • Merchant services can include everything from credit card processing to accepting gift cards and setting up loyalty programs.
  • A small business owner will need to carefully select a merchant services provider that fits their needs for payment processing times and can integrate with other business systems.

If you’re a business owner, then you’re likely familiar with the concept of merchant services. This term refers to the ways you accept various forms of payment as a business owner, including the equipment needed, so you can get paid.

Whether it’s credit card readers, point-of-sale systems or online transaction processing, merchant services are vital to completing payments. When running a business, knowing how to accept credit card payments can be more complicated than it sounds. You first need to decide how you’ll accept payments and then get the necessary technology to process them.

What are merchant services?

Merchant services is a broad term used to describe the range of financial services tailored to businesses. These services generally include financial tools like processing payments, payment gateways and even loyalty programs.

Finding a solid merchant service provider that can help you take payments with ease is invaluable. These providers can support your business with intuitive software, efficient payment processing hardware and more that takes the hassle out of payment processing.

What do most merchant services include?

Merchant service providers handle a range of financial services that help businesses accept credit cards and other payments for goods and services. Here are the most common ones:

Which companies offer merchant services?

Many companies offer merchant services — and they do so with varying price ranges and service plans. Some of the more popular merchant services companies include the following:

What are the fees associated with merchant services?

The next thing businesses need to know is how much it will all cost. The price varies by provider and what services you have chosen.

Merchant service providers even have different methods of pricing such as:

  • Monthly fees: Like any subscription service, you pay a flat fee per month to get continued access to the provider’s equipment and support. 
  • Processing fees: This is how much it costs for a credit card network or payment processor to process a single transaction. Your service provider will charge a processing fee that’s usually a percentage of the transaction and then use that money to pay the credit card network. 
  • Tiered pricing packages: These package rates change depending on what kind of features and equipment you want and how much money you’re planning on processing through the system each year. 
  • Flat rates: In addition to a processing fee or monthly fee, you might have to pay a flat rate — usually around 10 cents — per transaction. 

Many providers even charge a combination of these fees. 

If you go with Clover, for example, you’ll notice they offer a range of different pieces of hardware. For register and counter services, which are designed for taking payments with the use of a cash register and counter card reader, you can either pay a monthly rate of $135 or $145 for 36 months or a combination of a $1,799 upfront fee and a monthly rate of $49.95 or $59.95. The different pricing structures depend on what service plan you choose. You will also pay a fee per transaction. 

Stax offers different prices for swiped and keyed payments. All-in-one software packages start at $99 per month for processing up to $150,000 a year, with higher costs for larger processing totals. These plans also typically include a fee per transaction. 

On the other hand, Bank of America charges processing fees of 2.65 percent plus 10 cents on payments taken by card at a physical station. For online purchases, it charges 2.99 percent plus 30 cents per transaction, and for keyed transactions, it charges 3.5 percent plus 15 cents per transaction.

How to choose the right merchant services provider

Choosing the right merchant services provider for your business is an important decision to make. You should consider the following aspects of each provider you research:

The bottom line

Choosing a merchant service provider is not a decision a business should take lightly. There are many factors to research and weigh against your business model and needs before you decide to sign up.

Watch out for ongoing or hidden costs, and make sure you understand how quickly payments are processed. You should also know what level of ongoing support you can expect to receive should things go awry. 

And to pay for these services? Consider using a business credit card that will let you earn rewards or cash back for those recurring payments and upfront fees. 

The Bank of America content in this post was last updated on October 3, 2024.