Merchant processing is an important service for businesses, enabling them to process card payments from customers. The scope of merchants encompasses credit cards as well as debit cards.
Whether you have an online business or a regular brick and mortar store, offering your customers the option to pay by card is crucial. In fact, according to one study, 80% of customers may reverse their decision to buy if they find that the merchant does not accept credit or debit card payments. That’s a huge chunk of business to lose!
Hence you need merchant services and choosing the right service provider for the same is crucial.
How Exactly Does Merchant Processing Work
When a customer hits the ‘pay now’ or ‘buy’ button on your website (or when you swipe the credit card in a physical store), an authorization request is sent to your service provider. The provider then forwards the authorization request to the issuing bank or the credit card association for approval, including in the request, relevant data such as credit card number, expiry date, and CVV number. The concerned authority then sends back the approval or rejection (decline) to the merchant processor. According the response received, the service agent conveys the message to your customer whether the transaction has been approved (order confirmation) or declined (directed to try another payment method).
The payment for the transaction is deposited in your merchant account, less the service charges of the credit card processing company.
All of this is automated, secure and occurs within minutes (probably in less the time you have taken to read this).
Points to Consider While Choosing a Merchant Processing Service Provider
The credit card processing industry is complex and several merchants don’t have a clear idea as to how exactly it works. Add to it the plethora of operators in the market, each claiming to be the best, the choice become even more difficult.
Use the following pointers while selecting a merchants processing firm to partner with.
Does the Provider offer all the Services you Need?
Not all merchant processing service providers are equal. And your needs also differ. For instance, if you have an online business, you need a provider with a payment gateway, virtual terminal and risk and fraud management. Also, if they are using proprietary software, it has to be compatible with your shopping cart. In case of offline stores, your requirements are different. So choose a company that meets all your needs.
What are the Service Charges
Though it is not recommended to always opt for the ‘cheapest’ service provider, cost is an important factor while considering merchant processing firms. More than focusing on how much you are being charged, focus on what exactly you are being charged for. Some companies do offer certain value added services at an extra cost. If your service provider is upfront about all charges and can satisfactorily answer all your queries, it may still be worth paying the (slightly) elevated service fees.
Merchant processing service is important for businesses. Make sure you choose your provider wisely to make it work for your business.