These days, being able to accept credit cards, virtual wallets, and other forms of payment is essential for businesses. Consumers expect the companies they do business with to offer a range of payment options. If yours doesn’t, potential customers will turn to the competition without giving it a second thought. While payment processing appears to be an effortless, automatic process to those on the purchasing end of the spectrum, several underlying mechanisms have to be in place to make it all come together and work properly. That’s where merchant services come into play.
What Are Merchant Services?
Merchant services are the platforms that make it possible for businesses to accept payment methods other than cash. They’re essential for today’s businesses since so many consumers now prefer to use something besides cash for purchasing products and services. When they’re conducting transactions online or over the phone, cash just isn’t an option. Because of that and many other factors, credit and debit card and online payments are becoming ever more popular.
Several alternatives to cash are now available, not the least of which are credit and debit cards, physical gift cards, e-gift cards, online wallets, and rewards points. If your company accepts those alternate payment options, you stand to gain a great deal. Otherwise, you’ll drive prospects right into the arms of your competitors. Though you can schedule a free call for merchant services information and options, we’ll go over some of the basics right now.
In short, merchant services serve as agents between your company and customers’ bank accounts and credit providers. They can give you the option to accept payments from top worldwide online payment options and leading credit card companies alike. They can also work for Automated Clearing House, or ACH, payments directly from consumers’ bank accounts. Furthermore, they can even allow for international payment platforms and local credit unions with only single branches available to account holders.
Every time a customer swipes or inserts a credit or debit card at your store or enters a card or account number into your payment processing system, merchant services take over to make the transfers of funds possible. Your merchant services can range from on-site point-of-sale terminals to online payment gateways. At the same time, they can come directly from a specific bank or credit card company or from third-party companies.
Why Merchant Services Are Important for Businesses
Merchant services are important for businesses for many reasons. First of all, they broaden companies’ horizons and provide more income opportunities. If you can accept a wide range of payment options, customers are more likely to spend money with you. Numerous credit card companies, banks, virtual wallets, and other solutions are available to people these days. That means not all of your customers are going to need the same types of payment options. The more of their needs you can cater to, the more money you’ll bring in.
Customers also tend to spend more money with companies that accept credit cards and other payment methods than they do with those that only accept cash or checks. You’ll have more consumers choosing your company over the competition, and each customer is likely to make larger purchases if you offer them more ways to pay. They’ll appreciate the convenience, and they’ll tell others about their positive experiences. In turn, those people will come to you, and the cycle will continue indefinitely.
Additionally, tracking sales and keeping up with the revenue you bring in will be simpler and more accurate. Merchant services can include various analytics and reporting options that help your company keep track of the money it’s bringing in. You’ll be set up to accept payments for recurring subscriptions or services as well. Merchant services might even go a long way toward helping you determine which products and services aren’t selling as well as others. As such, you’ll be able to fine-tune them or eliminate them altogether depending on which course of action would best serve your company and customers. You may also be better equipped to keep tabs on exchanges, refunds, and other matters.
What to Consider When Choosing Merchant Services
Quite a few considerations enter the mix when it comes to choosing merchant services for your business. It’s important to weigh all the factors carefully before deciding which provider is the best fit for your company. To help ensure you choose the right merchant services for your needs, take a look at some of the most important aspects of this industry and how providers can vary.
Cost
Cost is a primary concern for all businesses. Each new expense that comes into play can detract from your bottom line. Numerous costs arise when you incorporate new merchant services into your company. Some providers operate on a tiered basis. They offer varying service packages and equipment at different prices. Although the lowest tier may be the least expensive, it’s probably also the least inclusive. That means you won’t get as much freedom and range as you would with a higher tier.
On the other hand, a higher tier may offer options your company just doesn’t need. Think about which payment methods your customers use most often, which types of gateways you need the most, and other factors if you’re looking at tiered packages. While higher tiers may include more expansive opportunities, it wouldn’t make sense to pay more for options you don’t really need.
Another pricing module is interchange-plus. That simply means a merchant services provider charges individual fees for each transaction that’s carried out. Those prices generally consist of the amount of money the provider has to pay the credit card company or other financial institution plus a small fee for their trouble. Keep in mind that the more payment methods you accept with your platform, the more varied your costs will be with this type of pricing module. Service providers have the freedom to choose their additional fees. Some may give you a choice between tiered packages or interchange-plus pricing. Others only offer one or the other. Certain companies may adopt a hybrid pricing module.
Other costs might come into play as well. These can include account setup, monthly maintenance, and statement fees. Some companies also charge extra if you have transaction disputes or don’t process a specific number of transactions during a statement period. You may also be asked to pay deposits or make periodic payments on any software or hardware required to set up your payment processing solutions.
Security
Security is a major concern these days. In fact, studies show that cybercrime is surging at a rate of 15 percent per year and could reach a combined annual total of $10.5 trillion within the next few years for businesses alone. An estimated 58 percent of cyberattack victims are small businesses based on a recent report, and 60 percent of those targeted are ultimately forced to close their doors forever.
Because of that, it’s essential to choose a merchant services provider that offers the utmost security. Failing to consider the security of the provider could place you, your customers, employees, vendors, and anyone else involved in your daily operations at great risk. Certain providers offer help with Payment Card Industry, or PCI, compliance and other measures to ramp up security. Some even offer varying levels of fraud protection to help safeguard against the costs of data breaches.
Security provisions often come at a cost, so they increase the expenses that are associated with your merchant services. You may also be offered security solutions that go above and beyond a provider’s standard options at an even higher price. Some companies forego security solutions due to their price, but many regret it in the long run.
In truth, the costs of additional safeguards against cybercrimes are far lower than those of actually becoming the victim of an attack. Once a company experiences a security breach, making a financial comeback can be difficult to say the least. To make matters worse, consumers tend to be leery of businesses that have been targeted, so there’s a chance you could lose a significant portion of your customers if something like that happens.
Ongoing Support
Businesses have an array of technological advancements to take advantage of at present. This gives them innumerable benefits and conveniences, but it also comes with certain problems. The more companies come to depend on technology, the more things could go wrong with their tools and equipment.
When an issue arises with your payment processing platform, it could lead to extensive downtime and lost revenue from consumers who just aren’t willing to wait until the problem is resolved to make a purchase. There’s a good chance you’ll need help to work through those issues. Be sure your merchant services provider won’t leave you in the lurch after you sign a contract. Look for one that offers ongoing and all-inclusive support to keep your software and hardware up and running.
Finding the Right Merchant Services for Your Business
Several merchant services providers are available to today’s businesses. All of them claim to be the best, but they’re not all equal. Cost, security, and support are a few of the primary aspects to consider when deciding which merchant services are best for your business. Think about those elements carefully before making your final choice.
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