Merchant Services 101

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Nearly all small businesses have a relationship with a merchant service provider. Yet the term “merchant services” is relatively unknown in the public sphere. Every time you make or accept a credit card purchase, you are interacting in some small way with a merchant service. While most people don’t have to think too hard about this interaction, small business owners are impacted by merchant services in a very real way.

With this in mind, today we will go over exactly what merchant service providers do, how merchant accounts help businesses and answer a few frequently asked questions about merchant accounts.

Accepting and Processing Credit Card Payments

Accepting and Processing Credit Card Payments

First and foremost, merchant accounts are meant to help businesses process credit card payments. Unlike processing a cash transaction or a debit account transactions, each and every credit card transaction must run through a complex approval process which requires a merchant account.

Processing credit cards may be complex, but it is made easy for small business owners with the appropriate merchant services provider in their corner. Merchant accounts interface with issuing banks and credit card associations (Mastercard, Visa, American Express, etc.) to get credit card payments approved in a moment’s time.

Once the payment is approved, the transaction can be completed and your business accepts payment for goods and services. Merchant services providers also by storing and paying the appropriate interchange rates which are charged by credit card companies (more on this below).

Security for Electronic Transactions

Security for Electronic Transactions

Of course, none of this does your business any good if the transactions are not secured. Merchant service providers also offer security programs such as CardSecure to make sure that your business is protected. These services should fight back against malware, store and track customer information, provide and/or store necessary security details such as authorization codes, and much more.

The other key to credit card transaction security is PCI compliance. The Payment Card Industry Data Security Standard, shortened to PCI DSS or sometimes just PCI, is an organization that sets guidelines for digital transaction security. PCI DSS compliance is extremely important for businesses of all sizes.

As you can see, credit card transaction security is important on a number of levels. Not only are you protecting your financials, but you are protecting your business from litigation and other red-tape headaches. This is yet another reason to only work with a merchant account provider you can trust!

Merchant Account Fee Structures

Merchant accounts are all but required to run a business, and that means that small business owners must find the fee structure(s) which works best for them. There are four (4) primary fee structures available to most businesses:

Interchange-plus pricing model: this is becoming more and more popular as business owners desire greater transparency. The interchange-plus fee structure offers unparalleled informational transparency when it comes to merchant fees and credit card fees.

Tiered pricing model: the godfather of credit card pricing models, tiered processing has fallen out of favor somewhat due to rigid terms and sometimes unfavorable prices.

Flat rate pricing model: similar to interchange-plus without the same level of detail. Instead, the merchant and credit card interchange rates are combined into one fee. This means business owners do not know exactly how much they are paying to whom.

Membership pricing model: for those who like to keep things simple, membership fee structures eliminate certain individual transaction fees in favor of a monthly fee.

Merchant Services FAQs

Merchant Services FAQs

Do I need to work with a merchant services provider to process credit cards?

If you want to process credit cards, the answer is yes. There is always the option to run a cash business, but this comes with its own set of drawbacks.

What risks do I run when accepting credit cards?

There are a number of risks that any business can run into when accepting electronic payments, including the possibilities of chargebacks, fraudulent activity, theft, account suspensions, and even account terminations. The key is to work with a high-quality merchant service provider and always use best practices when processing payments.

How much do merchant services cost?

A fair question, but one that is difficult to answer. As we covered in a previous section, there are a number of options when it comes to billing structures for merchant services. Additionally, different merchant service providers will charge different rates. Make sure you work with a company that provides free, honest pricing before you sign any merchant account agreements.

True Merchant Offers Merchant Services for Businesses of all Sizes

Merchant account services can be needlessly complex. That is why at True Merchant we strive to simplify the process and choose payment processing solutions that fit the individual needs of our clients and their businesses. Our merchant service professionals are able to provide flexible pricing options that fit the budget of just about any business. We are proud to offer a wide range of services including payment processing, CardPointe, CardSecure, EBT payments, and much more.

For more information, feel free to contact our sales team today and find out how True Merchant can go to work for your small business!