Merchant Service Provider: What Does It Mean?
Any business like payless Merchant Solutions allows retailers to take credit/debit payment cards, and is known as a merchant service provider. MSPs often provide a broader range of services in addition to payment processing, such as business data, point-of-sale software, and payment gateways.
Acquirers, processors, and merchant account providers are all terms used to describe merchant services providers. Merchant account providers, payment services providers (PSPs), payment gateway providers, and any other kind of company that enables you to accept payment options apart from cash or paper cheques are all included under the phrase merchant services providers at Merchant solutions.
How Do Merchant Accounts Function?
For most businesses like payless merchant solutions, merchant accounts are part of their company operations. When it comes to selecting a merchant account service provider, traders have choices, with transaction fees being a factor. Merchant solutions acquiring banks, which work with merchants to enable electronic payments, offer merchant accounts.
If a physical and mortar company decides not to take electronic payments and accepts cash, they will not need to open a merchant account and may depend on a simple deposit account at any bank. However, since electronic payments are the way for consumers to make purchases, online companies must create merchant account relationships as part of their company operations.
Obtaining Bank Services by a Merchant
If a business like Payless merchant solutions wants to accept electronic payments for their products or services, they must first open a merchant account with a merchant acquiring bank. Merchant acquiring banks are critical to the smooth processing and settlement of payment transactions in the electronic payment process.
The Different Types of Merchant Service Providers
Although not all merchant services providers provide the same capabilities. They fall into one of many categories that help them stand out from the competition. The following are the most frequent kinds of merchant service providers:
Providers of Merchant Accounts
These are the most typical merchant service providers you’ll come across. A business account provider may offer you a merchant solutions account and credit card processing services, at the least, to guarantee that you get paid when a client with just a credit or debit card. While any merchant account provider may open an account for you, only a handful of the biggest businesses can provide management merchant’s solutions to process your payments via the credit card networks Visa, MasterCard, American Express. Industry giants such as First Data, Elavon, and TSYS Merchant Solutions are examples of direct processors. The majority of other merchant account providers entrust their merchants’ transactions to one of these direct processors.
Providers of Payment Services (PSPs)
While having a merchant service account is a good idea for all but the tiniest companies, accepting credit or debit card payments does not need one. Without a dedicated merchant account, a payment services provider (PSP) such as Square (see our evaluation) or PayPal (see our review) may enable your company to accept credit card payments. Instead, the account is merged with other merchants, and you will no longer have a separate merchant ID number. This approach has the benefit of essentially removing the account fees and long contract periods that traditionally come with just a merchant account. These merchant service accounts are more likely to be frozen or canceled without warning, and the customer support choices aren’t as extensive as with a full-service merchant account. PSPs are an option for companies that only handle a few thousand dollars in credit/debit card transactions per month or are only open for a few months each year.
Providers of Payment Gateways
With the rise of ecommerce, a new kind of service provider has emerged: payment gateway providers. These businesses may provide you with a payment gateway, which you’ll need to take online payments. However, also provide you with a merchant account to go along with it. One of the biggest and oldest gateway providers, Authorize.Net, offers you the option of utilizing one of their merchant accounts or their gateway with your current merchant account. Other companies, such as Pay Trace, provide a gateway service. You’ll need to open a merchant account with a third-party supplier.
Using the Merchant Services of Your small business
The Rates Aren’t Reasonably Priced
Despite carefully phrased marketing gimmicks that “promise” you won’t find a better rate, the reality is that these assurances are often limited to one specific charge waived by the bank when you establish a merchant account. You’d be hard-pressed to find anything cheaper than free if they waive a charge. Banks may eliminate some costs if you also handle credit cards with them, but not all banks do, so you’re probably not saving anything.
Hidden fees or tiered processing rates can damage a merchant’s bottom line much more than waiving setup charges (which most processors no longer charge anyhow). Credit unions, for example, typically provide better terms and cheaper costs to merchants solutions that seek an all-in-one banking solution than banks.
Banks are often the intermediary.
While some banks (such as Chase Bank) handle payments directly for customers as the acquiring bank, Bank of America and Wells Fargo use First Data to do so. That isn’t always a negative thing, however. In fact, in the payment business, this arrangement is quite typical. Elavon is used by Helcim. Just because a merchant solution service provider is part of a corporation doesn’t imply you’ll get poor service. All you have to do now is make sure whomever you select is willing to go the extra mile.
When larger banks resell goods, they frequently do so at a high markup while they utilize hardware to rope you into a long-term lease and contract, as we found when evaluating many different kinds of merchant accounts here at Merchant Maverick. In our study of Bank of America Merchant processing Services, we go over several of these issues. This is significant because, as a merchant, you must understand who is pulling the strings behind your agreement. Read and understand the conditions of your contract. It includes understanding when your contract expires and how to terminate it. If your salesperson claims you won’t charge an early termination fee, be sure your contract states so or that you have a waiver document signed and attached to your contract.
You Don’t Get Paid Any Quicker
Next-day financing is a selling point for banks that provide merchant solution accounts. If you establish a bank account with them, that is. This service is available from both Wells Fargo and Bank of America. Surprisingly, Chase Paymentech does not provide this service. The majority of money is accessible within two business days, which is the industry norm.
That isn’t to suggest that you won’t be able to obtain same-day processing elsewhere. Vanity, for example, provides same-day and next-day financing. That isn’t the only business that does so. Dharma Merchant Services, Fatt merchant, Payment Depot, and Helcim are among our top-rated processors, providing next-day financing. This choice is not the default, but you can obtain it if you qualify to spend a little extra.
