After the past year’s events, cash and checks are becoming less and less common with customers. People are buying more online and are using credit cards and other forms of payments to make payments. Accepting merchant services for your business opens up opportunities for you, may even increase your sales, and add more value to your business in so many ways.
More than 70% of Americans own credit cards, so it would highly benefit your business if you set up a merchant account.
What are merchant services?
Merchant services are the tools, including the software and hardware that a business needs to process credit and debit cards for online and in-store sales. Once you open your merchant account, that’s where you will be able to accept payments, whether credit cards or debit cards.
A merchant account is a form of agreement between your bank, your business, and your payment processor. Once your account is set up, the payment processor works with your bank and the customer’s bank to process that payment from where they are issuing payments.
How does it work?
The process starts when a client gives you their credit card when they are paying for goods or services and ends once the funds are deposited into your business account. The type of merchant services you use will dictate how you accept payments, the type of payments you can receive, and which service provider you will be using.
Typically the process starts when you swipe your customer’s credit card or when the customer fills in their credit card details. Then the payment processor accepts the data and transmits the information to the customer’s bank to check whether it’s genuine to know whether to accept or deny the transaction.
If the client’s bank accepts the transaction, you can accept the payment on your end, and the transaction is finished. Once the purchase is finished, the payment processor deducts their fees and deposits the remaining balance into your merchant account.
To facilitate the entire process, you will need a terminal and the software to process credit card payments provided by your service provider. As you may have noticed, merchant services are not required for cash payments.
The types of merchant service tools
Understanding the different types of merchant services available can help you determine which one is the best for your business. Here are the various merchant services to consider;
Credit card terminals
Credit card terminals are used in-store and are helpful in that when a customer presents you with their credit card, you can swipe or tap the card. The credit card terminal connects to your merchant service provider and facilitates the entire process required to receive payment, such as verifying credit card details.
There are numerous types of credit card terminals, from mag strips to handheld terminals. You can choose the one suitable for your business.
Virtual terminals are the same as credit card terminals, but these work virtually. These provide you with the option to accept payments through a computer rather than a physical card reader.
If you choose to use a virtual card reader, you can itemize sales and create recurring or one-off payments. Examples of businesses that can use virtual terminals are ;
- restaurants that take phone orders
- freelancers who work remotely, such as graphic designers
- professionals who offer their consulting services online or over the phone like doctors or CPAs
The flexibility of not meeting with customers physically makes a virtual terminal beneficial to receive payments hassle-free.
A payment gateway is a service or software that you integrate into your eCommerce store or website that enables you to receive payments from your customers.
The procedure to include payments occurs when the customer fills in their credit card details. Then the payment is transferred from the customer’s bank account to your merchants then your business account.
A point-of-sale system is hardware and software a business uses to accept payments online. With this kind of service, customers can pay for services in the store at the counter or online when they check out.
Point of sale systems allows you to track your business sales, accept payments, offer loyalty programs, manage your team, etc. they all have different features depending on the one you get. Unlike traditional cash registrars, POS systems have software and hardware components. The extra features also help you be more efficient in running your business with more than one capability in one central place.
Automated Clearing House (ACH)
ACH is a merchant service that is used for electronic payments. If you choose this method, you can transfer money from your bank account to another. ACH payment system is usually used as a substitute for checks but can also be used in place of credit card, cash, or wire transfers.
Gift cards and loyalty programs
Gift cards and loyalty programs are capable of growing customer loyalty. You can use gift cards to attract new customers, retain loyal ones, and increase sales. You can use loyalty programs to incentivize customers by the money they’ve spent, how many times they purchase from your business, and if they purchase specific items or services.
Using merchant services for your business can widen your customer base beyond check and cash buyers. By allowing customers to process payments electronically, you allow customers to shop online or in-store anytime. Electronic payments also streamline the way your business handles transactions. For example, instead of manually balancing accounts, these systems do that for you, allowing better cash flow management.
A merchant account will make your customers happy because of the easy payment options, and they will keep returning to buy things from you. Whether it’s with debit or credit cards, mobile payments, or recurring bill payments, your clients will enjoy their experience with your business, and they can shop whenever they want with ease. So before you decide on which merchant service provider to use, read this before choosing one.