Are You Using The Right Merchant Services Provider?

By Author: Sifipay
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A merchant service provider is a necessary set of tools for accepting online payments. After all, selecting the right online payment gateway provider influences each transaction, its fees and security, and a customer's comfort. This article is intended to serve as a guide in selecting the best merchant service provider based on the specific needs of the business.

Businesses that are new to accepting debit and credit cards may require a structured approach to accepting those payments. Meanwhile, businesses that accept debit and credit cards should decide whether to stick with their current setup or upgrade to a new system.

However, in order to comprehend the merchant service provider concept, we must first define what merchant services are and which needs they serve.

What are merchant services?
A merchant is a business owner who sells goods or services. Merchant services refer to the ability to accept credit and debit cards as payment.

In general, there are three basic elements in merchant services:

◉ The credit card processing company or merchant service provider. Which is a financial ...
... institution that provides a suite of tools for managing offline and online electronic payments.
◉ The business account. It is a bank account above the business account where a merchant receives money after an electronic transaction.
◉ The transaction processing hardware. Hardware for accepting electronic payments in a physical store is included in this category (POS-terminal etc.).

Merchant services can be defined as a set of hardware and software tools that enable a merchant to accept payments in both online and offline retail locations. A point of sale system, debit and credit card payment processor, online form for card transactions, virtual terminal, electronic benefit transfer programmes, and so on are examples of these services.

Before eCommerce took over the world, merchant services were primarily an offline phenomenon. However, the business has evolved since then. And, in order to fully compete in the market and potentially attract new customers, a merchant must be present online as well. If this is the case, accepting electronic payments via the internet is a must.
A merchant must have an agreement with one of the merchant service providers in order to accept electronic transactions. Every service provider has advantages and disadvantages, which is why the merchant's goal is to find the best one.

3 types of merchant service providers
Merchant service providers are classified into three types. Each allows a merchant to accept electronic payments while providing varying levels of technical and support assistance. There is no such thing as a bad option; however, a decision should be made with caution. Let's look more closely at these three types.

Merchant account providers
First and foremost, a merchant account provider establishes a merchant account for the business owner. As previously stated, the only account that can be used to collect electronic payments is a merchant account.
The merchant account provider can set up credit card processing for both offline and online businesses, but they usually require extensive documentation and charge exorbitant fees. In the case of eCommerce, technical tools such as an online payment processor and online payment gateway India are also required. Which are not always included in a merchant account provider's agreement.

Payment service provider
Payment service providers are typically a better option for an online business, particularly for small and medium-sized enterprises. They may or may not offer the opening of a merchant account, but they are unquestionably easier and often less expensive to work with.
A typical payment service provider includes a payment processor and payment gateway, reducing the time between onboarding and the first completed transaction. Payment service providers can also easily authorise credit and debit card transactions, as well as digital wallets and mobile payments. So, if the merchant only needs a payment processor for online sales, this is the option to choose.

Payment gateway services
A payment gateway is a web-based technology that allows a business to accept credit and debit card payments online through a secure network. A payment gateway is an essential technical step in the transaction flow regardless of which merchant service provider the merchant has chosen.
However, simply having a payment gateway will not complete the payment chain. A merchant must first open a merchant account before looking for a suitable payment gateway to participate in the transaction flow. Nonetheless, it can be a good solution for those who already have a merchant account and want to start selling online.

Checklist for the right merchant services provider
We recommend that you check these key parameters when selecting a range of profitable merchant service providers for credit card processing. All service providers can be compared based on the technical aspect of their offering, client support, service cost, security measures used, and reputation.

Define the business needs
It is advisable to begin by defining the business requirements. When selecting a merchant services provider, a business owner must decide whether purchasing goods and services will take place physically in retail, online, or both.

When dealing with offline transactions, it may make sense to work with a merchant account provider to get proper hardware set up. The same is true if the company intends to conduct a large number of transactions on a daily basis. However, the high-risk business would benefit more from signing a contract with a dependable payment service provider, as merchant account providers may charge high fees and require a long-term agreement.

Hardware and software for the business
The need for a hardware card payment processor is determined by the company's presence in physical stores. In contrast, software tools are required for any electronic payment. This is especially important for eCommerce vendors.

Some merchant service providers include the entire technical set for online transactions, such as global payment processors and payment gateways, as well as setup and maintenance assistance. While some providers, such as the best online payment gateway providers, only provide a subset of these services. Which is fine for merchants who simply want to expand their business from offline to online.

Customer preferences
Accepting payments online must be both efficient for the company and convenient for the customer. We recommend enabling as many suitable payment options as needed to achieve the balance. Depending on the type of business, not only credit and debit card payments can be accepted, but also electronic wallets such as Google Pay and Apple Pay, as well as mobile payments.

Costs and fees
Because nothing in the banking industry is free, fees and costs are an unavoidable part of the electronic payment process. Charges generally vary according to the size and type of business. Banks offer lower fees to large businesses that conduct a high volume of transactions per day. However, any high-risk business usually requires more expensive services.
Dealing with one or more merchant service providers has an impact on fees as well. Payment service providers and payment gateways typically have lower fees than merchant account providers.

Company reputation
When selecting a merchant services provider, a business owner should look into its reputation. The most reliable method is to rely on the provider's previous clients and partners, as well as articles in reputable financial publishing periodicals. Aside from that, pay attention to the business verticals with which the given provider works, as this can provide insight into its area of expertise.

Support and security
Every merchant services provider provides customer service. However, not all of them provide comprehensive and personalised account management. Some small businesses may not require it due to the simplicity of their trade, but some merchants are involved in highly complex business systems and would prefer to be fully supported.

When it comes to security, there is no doubt about it. Check to see if a merchant services provider has a fraud prevention system and monitors chargebacks. Both features protect businesses from potential profit loss and bad credit.

Know more about SifiPay, please visit www.sifipay.com.