Running a business involves making crucial decisions to improve your operations. These include upgrading your processes and hiring the right experts to work with. Considering whether to subscribe to merchant service providers is also one of these decisions that could impact your profits.
But in order to see how merchant services for business can have a positive effect on your revenue, you need to understand how it works.
What is Merchant Services?
According to Make it Cheaper, a business solutions provider, merchant services allow businesses to accept electronic payments. These means your customers can pay using their credit or debit cards, checking accounts, gift cards and even EBT. These added on payment options is one of the reasons businesses need merchant services.
How Does Merchant Services Work?
Understandably, you would like to know how the process works. It starts with the customer making a purchase or subscribing to your service. When you swipe their card on the terminal provided by the merchant service company you work with, it transmits data about the transaction. It also collects the account information of your customer.
The account is validated from the bank that issued the card. Customers who purchase on credit are given time to pay off what they charge. However, as a business owner, you are entitled to receive payment without having to wait for days or weeks. This is why you need to have a merchant account set up where the funds will be withdrawn from to be deposited to your business account. Providers of merchant services help you set this up.
The process is secure as top merchant service providers set in place advanced security measures to protect you and your customers from fraud.
To enjoy their services, providers charge you a number of fees. There is a monthly rental charge of the charge machines you use and a per transaction fee. This may be a percentage of the credit card transaction or a specified amount per debit card purchases.
It is advisable that you check with the provider about the fees they will be charging before deciding on which one to work with. This will ensure that you are aware of all the costs involved in using their services.
Who Can Benefit From Merchant Services?
Merchant service is a business solution that can be used by various types of businesses. Whatever type of business or industry you are in, you can benefit from using this service.
- Retail Companies – Processing credit and debit card purchases swiftly is crucial for a retail company. The last thing you want is for customers to get impatient as you process their payment. Card terminals help expedite the process so you can finish with the check-out much sooner.
The service also allows you to process gift cards as payment which will help boost your sales as these types of payments are exclusive to your store. In addition, customers who pay with gift cards often end up purchasing more than the amount on the card.
- Restaurants – The POS system helps ensure that billed orders are accurate as all the information is in one location. Wait staff use it to take orders and also to create the bill when the customer asks for it.
These systems are also often accessed on mobile devices such as tablets so the servers can take it with them to the tables. The interface is often similar to other mobile applications so employees can easily navigate through it with minimal training. That means there is less chance of errors due to being unfamiliar with the system.
- E-Commerce or Online Businesses – Merchant service firms can web designers and developers to ensure that the site is optimized to handle different modes of payment. It can also include reporting tools to help you keep a track of your transactions.
Mobile payments can also be included so your customers can pay upon delivery. Some customers are still hesitant about purchasing from online stores so having this option can help you gain more sales.
- Professional Services – If you are a private practitioner, it would be benefit your practice to be able to accept clients or patients who opt to pay with credit or debit cards. Merchant services for professional services allow you to accept recurring and installment payments to help you manage your receivables more efficiently.
Some other benefits you receive are reporting tools and full technical support in case you experience problems with the system.
How Can Merchant Services Increase Your Profits?
Whether you’re running a start-up, an SMB or an established business, working with a merchant service can help improve your company’s revenue.
- Expands your market – When you have more payment options available, you have a bigger chance of winning more business. For example, if you have a small restaurant business, turning away diners who pay with credit or debit cards can have an effect on your revenue.
Over 30% of customers prefer to pay with credit cards, and over 40% choose to use debit cards. With those consumers opting to make electronic payments, you can improve your revenue by simply making your products and services available to them. Only 9% of consumers nowadays pay cash and restricting your business to that can be disastrous.
- Reduces the Risk of Penalties and Fines – One of the biggest threats that consumers who use credit and debit cards have to face is fraud. PII that are compromised result in millions of dollars lost. While consumers are generally the ones who suffer the most, your business can get sizeable fines for failing to protect the data.
Merchant services play different roles in your business, providing you with secure and safe channels for handling PII is one of its most important functions.
- Improve Workforce Efficiency – With an automated system, you reduce the risks of costly errors. For example, inaccurate processing of orders at restaurants or retail locations may result in chargebacks. This is when a charge is reversed due to a dispute. This can result in losing products and revenue as well as penalties incurred for the chargeback.
Merchant services can help protect businesses from chargebacks. The system helps your staff fulfill tasks more efficiently so errors become less likely.
With these benefits, you can run your business more efficiently. You can increase your profit and drive your company to become more successful. The next step is choosing the right provider to fit your needs.
Choosing the Right Provider
As mentioned earlier, running your business requires making decisions. Here are some tips on how to choose a provider that can deliver the solutions you need.
- Read the Fine Print – When looking at the rates and fees of providers, don’t forget to read the fine print. Keep in mind that these merchant service firms are still businesses that use creative marketing techniques. For example, you might see the ads saying that swiped transactions would be charged a 1.5% fee. However, these might be limited to specific types of cards. Reading the fine print may give you more details. Non-qualified cards might have a fee that’s double of what’s listed on the advertisement.
These charges that are not mentioned on bigger and bolder fonts may end up inflating your costs without you being aware of it. In order to avoid this, make sure to research as much as you can before making your final selection.
It would also be ideal to reach out to their customer service or sales representatives so you can get clarification on any details you find confusing. Ask specific questions to get the information as these may not be proactively be provided by the representatives.
- Avoid Using Multiple Service Providers – Your merchant service should not resemble a Lego creation. Don’t combine services from different providers to create your ideal business solution.
Work with companies that can offer everything you need. The package they provide should have all the services that your business needs to have an efficient payment process.
- Find Experts – There are numerous merchant service providers in the market. With so much competition, rates and services offered may vary. So, when choosing one for your company, pick one that offers merchant service solutions specific to your time of business. For example, if you’re running a restaurant, then it would be best to subscribe to a merchant service firm that focuses on restaurant operations.
By working with best in class instead of generalists, you can guarantee that the solutions your provider will offer are ones that can address your specific needs. Some features that may be needed for merchant service for retail may not be necessary for a restaurant business.
- Do Research – Marketing ads from providers are designed to wow and excite you. These are also designed to create a sense of urgency so you pick their service right away. This is what’s called a call to action strategy.
You may often see ads where it states that if you click “try it” within a specific time period, you will be getting free added on features. But while these may be enticing, you should give yourself time to learn about your other options.
Merchant service provider reviews available from third party sites can offer you a better insight on which service to choose. These are often generated from other users or industry experts who can provide vital information to help you decide.
With the growing popularity of electronic and virtual payment methods, it would be beneficial to ensure that your business is equipped to handle these. Check out the list of merchant services providers on CowdReviews.com so you can discover your best options today.
Trevor Price
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