What Every Small Business Owner Should Know About Merchant Services

Owning a small business can be challenging at times, especially if you handle the enterprise alone. As your establishment grows, you get more clients, and accepting and processing payments may get more demanding.

With merchant services, you have nothing to worry about. They are not only fast but reliable as well.

As per studies, at least 75% of small enterprise owners in the U.S. rely on merchant services for smoother payment acceptance and processing.

Merchant services are more complex than receiving money and stashing it in the register. These services vary among small establishment owners.

What are Merchant Services?

Merchant services are a variety of financial services that a business uses to accept payment. More specifically, these services deal with credit card payment since you do not need any special service to receive a cash payment as an establishment owner.

Merchant service providers provide these services. Merchant service providers are generally placed in two main categories:

  • Payment Service Providers- offer traders the ability to approve electronic payments and group all their operators into a single merchant account. Examples are Square and PayPal.
  • Merchant Account Providers- as the name suggests, they offer establishments merchant accounts. They also work with business owners to ensure that their accounts are functional. Some common examples are Dharma Merchant Services, Payment Depot, and Fattmerchant.

How do Merchant Services Operate?

Different services use different merchant services to facilitate payment approval. Some of the factors that determine your service choice are the provider you choose to work with, how you accept payments, and the type of payments you accept.

On a general level, however, the procedure is similar. 

It begins when you enter a customer’s details into the terminal.

The merchant service provider transfers the details and checks with the client’s bank prior to accepting or rejecting it.

Should the client’s bank accept the dealings, you can approve the payment via your terminal, and the purchase is complete.

Immediately the purchase is accepted, the processor takes their payment and places the rest of the money into your commercial merchant account.

Tools Used for Merchant Services

The equipment used in merchant services is arguably the most important component of the process. Without them, seamless acceptance and processing of payment would not be possible. They are:

  1. Point of Sale Systems

Also known as POS, point of sale systems are a mixture of hardware and software that an enterprise owner requires to run transactions.

The hardware includes transaction tools such as a cash drawer and a receipt printer, as well as an internet-enabled machine that can run the software.

The software is made up of an array of functions like customer, payment processing and staff, and inventory management.

  1. Payment Gateways

Payment gateways make online purchases possible. They are software applications that plug into a customer’s eCommerce platform to allow online payments.

As we had seen earlier, the online purchase process is pretty straightforward. Finding the right gateway for your enterprise, however, needs more than a positive word from your friends and family.

When choosing a payment gateway:

  • Go for one that accepts various payment types, as this gives your enterprise a professional edge over the rest.
  • Consider the cost. There are three charges linked to gateways: Transaction fees, setup costs, and monthly charges.
  • Choose one that provides 24/7 support.
  • Ensure that it is compatible with your current platform.
  • Select a gateway that offers top security
  • Consider the payment location. Do you want a gateway that enables you to finish the checkout procedure on your portal or one that makes you redirect to a different site?
  1. Credit Card Terminals

Credit card terminals are convenient for approving an in-person payment. They are a device that a business owner can use to tap, swipe, or dip a credit card.

They are available in different sizes and shapes, from handheld terminals to simple magstripe swipers.

Fabrizio VanMarcino

Fabrizio Van Marciano is a self-taught web designer, front-end web developer, and content creator. He is the founder of FVM.