Merchant services 101: A complete guide

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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. Merchant services, in particular, are a simple and efficient way to set payments up.

What are merchant services?

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

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

What do most merchant services include?

Credit card processing

The way businesses accept credit card payments is crucial to the day-to-day functioning of the company. Merchant services usually offer both online and in-person credit card processing services.

Payment gateways

If your business accepts online payments, you’ll need a secure payment gateway that a merchant service provider can offer. This is a piece of software that works in tandem with your website or e-commerce store to help you take payments.

Online transaction processing

Similar to a payment gateway, online transaction processing requires some work behind the scenes. Online transaction processing is essentially a piece of database software that manages customer orders, processes payments and updates stock levels to complete an order.

Point of sale systems

A point-of-sale (POS) system usually consists of hardware required to take payments and the software to process them along with it. These systems allow you to take payments, process sales and even keep track of inventory.

Check services

If you have customers who are likely to pay via check, you will need a system that can process checks as well as cash and digital transactions. Some merchant service providers will be able to offer this.

Loyalty programs

Some businesses offer loyalty programs that automatically reward customers after certain purchases. In order for this to work, a merchant service provider can help you set one up which connects your payment processor to your loyalty program.

Credit card terminals

Another common merchant service that businesses use is a credit card terminal. This is for those accepting in-person credit card payments and is a physical device you can swipe or tap to make a payment.

Which companies offer merchant services?

Intuit

Intuit, also known as QuickBooks, offers a merchant service called QuickBooks Payments. Intuit provides a range of different payment services including a point-of-sale system and payment processing. This can be integrated with QuickBooks bookkeeping software to keep a record of all transactions for tax purposes.

Square

Square provides a range of merchant service tools to help you run your business. With Square, you can set up payments and a point-of-sale system. Square provides you with the tools to start selling and receiving payments online, as well as payment processing hardware such as credit card terminals.

Bank of America

As well as providing banking services for individuals and businesses, Bank of America also provides merchant services. With an intuitive point-of-sale system, Bank of America can provide both hardware and software to help you accept payments with ease.

Clover

Clover specializes in a point-of-sale system that supports mobile payment hardware, contactless payments and online ordering. It uses a virtual terminal to help you keep on top of all the payments you receive from customers.

Fattmerchant

Fattmerchant offers credit card processing and supports both in-person keyed/swiped payments and contactless payments. This merchant service provider brings smart technology to your business and supports you with a dedicated customer success manager.

PayPal

Needing no introduction, PayPal can also provide merchant services to businesses around the world. PayPal offers ways to sell in person, online and via phone. This can all be set up with a card reader and a smartphone to enable customers to pay by credit card, debit card, contactless or through Apple Pay.

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, processing fees, tiered pricing packages or flat rates.

If you go with Clover, you’ll notice they offer a range of different pieces of hardware. For the Station Pro package, which is designed for taking payments at restaurants, you’ll need to pay $1,649 upfront and then $39.95 per month.

Fattmerchant offers different prices for swiped and keyed payments. Payments start at $99 per month, plus 15 cents per transaction.

On the other hand, the Bank of America will charge processing fees of 2.7 percent on payments taken by card for the Clover Station solution. It’s also 3.5 percent plus 15 cents per transaction for payments with no card present.

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:

Cost

Weigh up the upfront costs plus the ongoing monthly services. You may prefer a flat rate payment so you can budget for it. Alternatively, you may prefer to pay fluctuating payment processing fees.

Customer service

Customer service is always key, but having a support system on hand, along with your merchant services, is crucial. Take a look at online reviews for each provider and make sure you check what ongoing support you will receive once you purchase the hardware or software.

Payment processing times

Knowing when you will receive your payments is important for a number of reasons. Some payment processors may not be able to process payments as quickly as you need, so this is something you should look into before choosing a provider. Again, you may want to look at online reviews to see what existing customers say about average payment processing times.

Integration

Ideally, your merchant services will seamlessly integrate with other pieces of software or hardware, including bookkeeping software or transaction processing software. Choosing a familiar name like Intuit comes with the benefit of knowing it will integrate well with Intuit’s bookkeeping software.

The bottom line

Choosing a merchant service provider is not a decision you will want to take lightly. There are lots of things to research and weigh before you decide to use one provider over another.

The key things to watch out for include ongoing or hidden costs, how fast payments are processed and what ongoing support you can expect to receive should things go wrong.