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Merchant services, also referred to as card processing services, are facilities that handle electronic card transactions, enabling the transfer of funds from customers to businesses.
Merchant services are now a necessity for any business that sells products or services and needs to take card payments. Some of the benefits include:
The type of merchant service solution you choose will depend on the type of transactions you make with your customers.
In order to accept card payments online, you will need a merchant account and a payment gateway. If you’re running an online shop, you will also need a shopping cart or ecommerce platform.
To understand how these facilities make online card transactions possible, let’s take a look at what happens every time a customer makes a card payment to an online shop:
This entire process takes place within 2 to 3 seconds.
Once the merchant has sent the order to the customer, the payment is cleared and the card issuer sends the payment to the merchant account provider. The merchant account then deducts a transaction fee from the payment and deposits the rest into the merchant’s business bank account.
You can set up a merchant account through a bank or an independent sales organisation (ISO). Most high street banks offer merchant accounts, but don’t discount ISOs as most of them offer highly competitive rates. You can get a payment gateway from a payment service provider (PSP). Most merchant account providers also offer payment processing services, but it’s best to look into third-party PSPs and what they have to offer.
There is a huge number of merchant services providers on the market right now and choosing the right one can be quite tricky.
You can choose to go to your nearest high street bank to apply for a merchant account and use their own PSP. However, as mentioned above, there are plenty of ISOs and third-party PSPs that offer more competitive rates compared to those offered by banks. It will really serve your business well if you take the time to shop around.
Your choice of a merchant account provider and PSP will depend on:
When it comes to using merchant services, size does matter. If your business is new and small, you might find it hard to apply for a merchant account from a bank as most banks have a rigorous application process that includes a thorough credit history check.
Fortunately, there are ISOs that support small businesses and offer accounts and services even to high-risk merchants.
Your sales volume will also affect your choice of provider as different providers have different pricing structures. The general rule is that the higher your sales volume, the lower your processing fees will be.
Again, there are specific providers who are better suited to small businesses with low sales volumes. You can see some of these in our article on the cheapest merchant service providers.
There are merchant services providers that offer their services only for online merchants while there are some that cover all types of transactions and offer them as bundles, including the EPOS systems.
Cost will always be a prime consideration when choosing your merchant services provider, so make sure to look into each provider’s pricing structure and always watch out for hidden costs.
To help you get started, use our comparison form above to get competitive quotes from reliable and trusted merchant services providers.
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