Why You Need Merchant Services To Make Your Business Profitable
Although merchant services refer to a broad category of services for business, in real life, it refers to payment processing services, specifically, credit and debit cards processing. It is an industry that is necessary and confusing at the same time. Necessary because no business can afford not to have it. Confusing because there are many payment processors out there that offer more or less the same thing, making it difficult for the average business owner choose one. But then again, it really does not have to be that way.
Let’s start simplifying by understanding how credit card payments work. When a customer swipes his credit card or enters his credit card information online, the information goes through the payment processor, then to the credit card network (Visa or MasterCard). Then it goes to the bank that issued the credit card and then to your bank account.
Depending on whether or not your bank account is from the same bank as the credit card’s, you can see the money in your account right away. Otherwise, it would take anywhere from 48 hours to 72 days for the money to appear. Whenever a card is swiped and successfully charged, the processing company takes its share. Right now, transactions are charged 1% to 3% each, although there are processors that have tiered charges. If you’ve ever encountered merchants that preferred cash or offered discounts on cash purchases, it’s mainly because of those two reasons: the time it takes to get the money and the charges that need to be paid to the credit card processor.
But, as we said earlier, no businessman in the United States can afford to honor cash-only transactions. As it is right now, there are an estimated 200 million credit card holders in the country. Most people walk into a store expecting for the merchant to accept credit cards.
There are basically two types of payments processors, electronic processors and credit card terminals. Electronic processors are what you use for your websites. They require the card number, expiry date, and CVV number (3-digit number at the back of the card) to be manually entered. Credit card terminals are attached to cash registers or POS machines. Cashiers only need to swipe the credit card to use them.
If you search for “merchant services” on Google, you will see that there are many credit card processing companies. Which one do you use? There are several criteria that you need to consider aside from the charges (to recap, you have a choice between tiered charges and percentage charges). One of the most important is data security. The processor needs to be compliant with the Payment Card Industry’s standard for data security, fraud liability shift, and EMV chip cards.
Another factor you need to consider is the contract. Will you be trapped into a long-term contract if you do business with a processor? You will want to work with a processing company that offers month-to-month contracts so you can find other options, options that are, hopefully, better. Next is the equipment. Do you need to rent the swipe equipment from the processor? Because if you do, you should know that it is actually cheaper to buy your own equipment than to rent it and be locked in a long-term contract.
But perhaps the most important factor you need to consider is the performance. Go for the processor that processes payments fast. Really, nothing can irritate your cashier and customer at the same time than a credit card that needs to be swiped several times before a payment is done.
Please take note: As you are using their services, the payment processing company is NOT the only company you will be paying dues to. Each entity – the credit card issuer and the banks – involved in a transaction will take what it can from the amount that you charge your customer.
That said, as you go about evaluating different merchant services for credit card processing, do your homework and research on how much the issuing banks charge for each swipe of the credit card. It is relatively easy to get that information, just search the forums.
Credit Card Processing: Everything You Need To Know
One of the important decisions a business has to make at some point in its lifetime is accepting credit cards. Accepting cash only could mean that your business missing out on crucial sales, big time. These days, accepting credit cards doesn’t have to be difficult, it can be as simple as fitting a small card reader into your smartphone. However, you still need to contract a credit card processing company that does the actual payment processing details for you. Here’s what you need to get started.
1. Choosing a Payment Processor
The first step is choosing a service that will be processing the credit card transactions for you. The payment processor will provide the credit card machines to enable credit card payments. Presently, there are hundreds of processors to choose from including banks, dedicated payment processing companies, and even some point-of-sale systems.
2. Opening a Merchant Account
A merchant account is a must for you to accept credit card, gift cards, debit cards, or any other forms of electronic payments. When a transaction is made, the payment processor essentially transfers the money into your merchant account, where it’s held for about 5 days before being deposited into your regular bank account.
You can open a merchant account from your bank, or through the company that you chose for payment processing services. Some of the payment processors will provide you with their own merchant accounts; so just like other types of accounts, the fees will vary. For this reason, you need to shop around.
3. Steady Connectivity
Don’t forget that you need to put up a stale internet or cellphone connectivity, which will enable you to transmit the payment information per transaction.
How to Choose a Payment Processor
Some of the major differences between the payment processing companies is how much they charge per transaction, their general terms of service, and how fast you can get your money after a sale. Consider the following factors as you choose a payment processor.
For each credit card sale, the credit card processing company will take a percentage of the money. Some charge a flat fee plus the percentage per transaction. These fees will eat up about 2 to 3% per sale. Usually there are two different rate systems applied to credit card sales: one is when a card is swiped through a card reader, and the other (slightly more expensive) is when the card number is entered manually. Swiped transactions are relatively less risky because they are done in person.
Monthly and extra fees
You should expect to pay a monthly fee to cover the services and to maintain the support you get from the company. Separate ‘gateway fees’ might be charged for offering you a secure connection that helps to protect your client’s information and protect you from credit card fraud. Keep in mind that those companies that don’t charge you transaction fees will hit you with a minimum charge. Some will charge separate fees for compliance with the security standards outlined in the Payment Card Industry.
Many payment processors will set you up and running very quickly, usually in a day or so, without having to sign a contract. However, should you decide to switch companies, you may have to cancel in writing through a notice of 30 to 60 days. You also need to find out how long it will take for the money to be deposited into your account after each transaction goes through. This usually takes 1 to 3 days.
To accept the modern alternative payments such as Google Wallet and Apple Pay, you need to set up a processor with Near Field Communication (NFC) compatibility. Moreover, as credit card processing companies continue to switch to more secure cards, you need to confirm compatibility for these as well. Don’t forget to check if the company offers 24/7/365 phone support, especially for those businesses that operate outside the traditional 9 to 5 business hours.
Final Word: Although it’s a little bit more expensive for businesses to accept credit card payments compared to cash only, the benefits outweigh the small price tag by far. Allowing your customers to pay for your products or services in other than cash only, you make it much easier and convenient for them to spend more in purchases. This easily translates into more sales.
Reasons To Sign Up For EMV Terminal
Payment methods are not the same as they used to be. Advancements have been made after several data breaches caused concerns for businesses around the world. Instead of letting things remain the same, the EMV terminal setup was launched for smart payment cards.
There are many reasons for why a business has to consider going down this path.
Let’s take a look at five reasons that stand out when it comes to the EMV terminal and what it has to offer businesses that want additional security and quality.
1) Additional Protection Through The Chip
The primary purpose of the solution is to deliver additional protection through the built-in chip reader. Smart payment cards have data put into chips that are near impossible to mimic. Therefore, the payment can be processed without wandering eyes or machines that read through and tap into sensitive data.
This safety net is a new wrinkle to how payments are processed and that makes life easier for those who are running a business and want things to run smoothly.
A business that can showcase it has this additional security blanket in place is going to be looked upon with great respect in the consumer market.
2) Reduced Costs
When weighing the pros and cons, the financial implications are always going to have a role to play, and that does not change at any point for a business. Without the expenses making sense, a business might not be as keen to go down this path.
However, studies have shown this is a feasible solution that is going to provide a lot more value than expected.
The expenses are going to be nothing in comparison to the additional business that will come in over time. This is the only payment method people trust and therefore having it place does wonders for the business and the value it can extract from incoming leads.
3) Provides Stress-Free Environment For Customers
Imagine being a customer that is reading news from around the world. You will hear about things such as security breaches where credit card information was stolen. You will get scared and might not want to go to those businesses that are unwilling to make changes.
This is a common feeling people have, and it is a fair one as well.
The concerns are real and should be considered. A business that provides this solution is welcoming people in and showing them they care.
4) Business Can’t Be Blamed
Legal liabilities are something companies are worried about and in this day and age, the issues come out of nowhere in many cases. To ensure it does not become a problem your business has to deal with, it is better to go ahead and put this solution in place.
Data breaches are debilitating for businesses, and that has been seen again and again around the world.
To avoid this from happening with your business, why not set up this payment method and know you are in good hands, and the blame is not going to lie on your shoulders at all?
For many people, the simplicity of using a chip while shopping is something that is a nice advantage as well. When the method was being launched, the emphasis was one security, and that remains the case, but the easiness of paying has also encouraged businesses to move forward down this path.
Anything that entices customers to come in is something the business can get behind in seconds.
Why not take advantage of this and let customers enjoy the benefits of using their card’s chip?
The simplicity of a solution such as this is why most businesses are now pushing towards the EMV terminal and feel this is the only way to go. Those who are still behind the times and don’t want to implement this solution are putting their business at risk when that should not be the case.
Why take a chance to a point where it is impossible to see results?
It is better to think about a meaningful solution that works and is going to provide a new layer of security while accepting payments. It protects the business now and in the future.