What Small Businesses Need to Know About Merchant Services?
If you are involved in a small business that readily accepts electronic payments, it will help to get a merchant account, and you need it too. Merchant accounts are the bank accounts for businesses that provide the needed permission to accept debit or credit card payments made online.
However, different options are involved, so finding the right merchant account provider can be entirely challenging.
Let’s dig in to find out about merchant services for small businesses, credit card processing, and how to find a suitable match for small businesses.
How does credit card processing work?
Credit card transactions are embedded throughout the customer journey. So, no matter the industry you are involved in, it becomes less challenging to process credit card transactions if you accept payments from your customers. Here is where it helps you to learn about the procedure of working, and that is because once you get the information, you can easily determine the kind of merchant account you have been looking for. However, in online credit card processing following are the participants who are involved –
- The customers – The customer is the one who buys your services or goods, and they already have a credit card issued by a financial institution, known as an issuing bank.
- The merchant – When you want to consider using credit cards to accept payments as a business, you need to set up a suitable merchant account, and that too from a merchant bank. You will receive credit card payments in two different ways. The first one is when you make e-commerce purchases that are further processed with an online payment gateway. Another one is in-store payments that are usually accepted by credit card readers.
- Payment processors and gateways – The payment gateway collects the information from different customers making purchases and thoroughly does a check to find the frauds. Then, the payment information is sent to the acquiring bank, and the processor then connects the transaction to the credit card networks.
What do merchant services mean?
Merchant account services provide you with banking services benefits that let you process payments electronically. It can include debit cards, credit cards, and even mobile payments. On top of everything, merchant services cover the software and hardware you use or need to facilitate electronic transactions. And it is only possible with a merchant services provider.
Usually, credit card processing includes settlements, authorization, and funding. During the authorization phase, the following are the steps that take place –
- At first, your customer makes the payment for the purchases done with the use of a shopping cart or by swiping a credit card.
- Your shopping cart then makes a request for payment authorization from the payment processor.
- The payment processor then sends the required information to the credit card company during the transaction.
- A credit card company further passes the transaction information to the credit card’s issuing bank.
- At last, the bank provides its approval or declines the transaction request based on the customer account status, and then the information is returned to you.
How to find the right merchant service provider?
There are a few merchant service providers you need to consider; however, not all the options are created equal. The need of your business also influences the final list of companies you evaluate. To help determine the right and suitable merchant services payment processing provider, consider the following questions –
- Are you an e-commerce business?
- Are you in need of point-of-sale terminals?
- How many transactions do you usually process in an entire month?
- How much revenue do you generate through electronic payment methods?
The merchant service providers need to take security seriously and provide protection to both the business and customer’s information. It is why you need to consider the security practices of the company you are considering and make verification that highlights that they are adequate.