The retail and e-commerce industries are experiencing tremendous breakthroughs, as more technologies continue to penetrate its core and change how the consumer market behaves. Now that consumers have more purchasing power than ever before, thanks to merchant services, businesses are taking advantage of the many opportunities for profit by using innovation to engage more customers.
In this era of digital and wireless technologies, consumers are drawn to the convenience of making electronic payments. Add to the robust economy of e-commerce, consumers have more access to a wide range of goods and services. From clothes, gadgets, and even groceries, people can do all their shopping and payments online, then literally lounge on their sofas while waiting for their deliveries to arrive. The industry of retail branched out to e-commerce, as cash payments for merchant services.
What Are Merchant Services?
Now that some of the world’s economies embrace cashless payments through credit and debit cards, any sensible business realizes that this is the high time to get a merchant service account. It requires capital for specialized equipment, but one cannot afford to limit the many opportunities for revenues it opens. While having a merchant service account makes you blend in the trend, it also puts up an advantage for your business in the market.
What are merchant services? It is a broad range of financial services that caters mainly to facilitating credit and debit card transactions, but can also process check payments and other alternative forms of payment. A merchant service provider acts as the mediator between the issuing bank (the one who issues credit and debit cards to consumers) and the merchant (the retailer or seller). It makes sure that the credit and debit card payment process is seamless, and that the critical information and data involved are secured and well-protected from fraud and identity theft.
Merchant services continue to experience an evolution, especially now that other technologies are affecting the consumer behavior in indirect ways. The social media and the proliferation of mobile devices are just some of the trends that influence the way people avail or purchase products and services. And merchant services tie up these interactions, making it an important part of maintaining a system for efficient online selling and payment services to commence.
Role of Merchant Services in the Retail Industry
There are actually two types of merchant accounts – retail and online merchant accounts. Retail merchant services, or accounts, point to the face-to-face payment transactions that involve credit and debit cards. The plastic card is swiped on the POS terminal, and the customer is asked to sign a receipt to validate the transaction. These transactions are considered to be carrying a lower risk than its online counterpart, due to the physical interaction between the card holder and the merchant.
Since retail merchant accounts carry a lower risk than online merchant accounts, the transactions it process are also incurring a lesser and lower merchant services fees. A typical merchant fee includes a transaction fee, statement fee, discount rate and a monthly minimum. Usually, it is the risk that dictates the fees involved, and the physical presence of all the elements involved – the seller, the card holder and the actual goods, implies a lesser risk. But of course, there are also other considerations for risk like the type and price of goods involved, and the volume of transactions that the merchant can process. These can also affect the fees that merchants need to pay per transaction.
Accepting credit and debit cards widen the services of retail stores, encouraging more customers to conclude their visits to the shops with a purchase. It is not only convenient, it also gives them more purchasing power by means of a high credit limit. For debit card holders, this spares them the hassle of withdrawing money from an ATM. Merchant services play a significant role in strengthening the trade within the retail industry.
Benefits of Merchant Services for E-commerce
Digital technology opened the doors for the market to expand its services and products by using electronic media to advertise and now, even to process the whole shopping process. The concept of e-commerce, or electronic commerce, started from the likes of Home Shopping Network, where you can get to see different products being demonstrated on television. The next thing happening is you, picking up the phone, dialing the hotline number, and ordering the item to be delivered to your home.
But basically, e-commerce is now being referred to as the trade and market that use computers and computer networks to facilitate shopping and payments. It is most closely associated with online retail or online shopping – where both businesses and customers are taking advantage of the internet to advertise, show catalogs, provide an online “shopping cart” and proceed to the “check out” portal and pay for the items and delivery fee.
There is a surprising revelation in a report by Business Insider about the first quarter results of 2014 ComScore’s Quarterly State of Retail. In it was found that about 198 million Americans have already purchased something online, which translates to 78 percent of the whole US population. It was also found that men and women do more or less the same spending online, but men dominated mobile e-commerce. More and more businesses are now experiencing the benefits of merchant services as the number of consumers is taking advantage of using their plastic cards in transacting.
Merchant services have long been participating in the e-commerce, letting customers use their credit cards to pay for the goods they ordered. Most e-commerce businesses offer money-back guarantees, so that unsatisfied customers can return their items and have their money back. The likes of Amazon, Ebay, and Alibaba are leading the pack of online shopping sites, providing concrete testimonies on how lucrative the profits are, by taking advantage of the internet. With the advancements in mobile technology, there is no stopping from these websites to reach another hiatus in terms of profits and innovation with their product and service offerings.
Fortunately, merchant services evolved alongside the industry of retail and e-commerce, basking in the opportunities to process more payment transactions of a growing number of online consumers from around the world. In fact, 54 percent of shoppers surveyed in the Global Retail 2016 conducted by PWC Global said that they buy products online on weekly or monthly basis. Regardless of what area evolved first – merchant service or e-commerce – the collaboration of the two technologies accelerated the growth of each other in ways nobody has ever imagined.
Trends in Merchant Services
In marketing, we saw how the approach has become more customer-oriented; that the succeeding trends went to the use of social media for branding, and now mobile devices for user experience and payment services. However, consumers still couldn’t resist the convenience of credit and debit card use in POS especially that the stigma of online fraud still exists. Holding on to a physical payment medium, either in cash or plastic, is still preferred by many. But the trends have spoken; we see that integration is already happening.
The past two years marked the booming and dominance of mobile devices, and we are now starting to see how this affected consumers with the way they deal with the market. Aside from search and advertising, your mobile device can now be used to purchase goods and services online. With the advent of mobile-based wallets and mobile shopping applications, we see that technology placed more power within the consumers’ hands.
Merchant services will remain strong in its place, as the integration point, bridging financial service institutions to merchants using the web technology. Highlighting global trends, which include merchant services-based technologies like POS solutions, EMV, and mobile wallets, and government compliance standards like the PCI-DSS, we see the balance between gaining financial freedom to purchase and regard for credit and debit card data security and protection.
Getting the Right Merchant Service Provider
The rapidly changing merchant service landscape, and the growing market for service providers, poses greater challenges ahead when it comes to quality and long-term provision of merchant services to different types of businesses. But one has to remember that there is no one-size-fits-all service package, only industry-specific or customized options. Nonetheless, the market is robust enough to cater to your unique needs.
In choosing the right merchant service provider, make sure that you’ve exhausted your options, and have carefully considered its long term impact over your business. As you see, handling credit and debit card transactions can be expensive, wherein fees rely on many factors and criteria such as risk, amount, volume and activity (online or face-to-face transaction). It is best that you negotiate with your provider to avail the best options so you can still reap more benefits than having to pay the extra profits to the merchant service companies alone.
Looking for the top merchant service providers in the market today? Learn them from their actual clients. Visit CrowdReviews.com to hear different merchant service providers reviews, ratings and feedbacks, and help you assess the right provider to meet your business’ unique needs.
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