One of the most important aspects of business that business owners need to consider is merchant services. Merchant services, or merchant processing, refers to the types of financial services that businesses use primarily for processing payments. Here we’ll break down what these services are, how they work, and how a merchant processing audit can help businesses save more money on merchant processing fees.
What Exactly Are Merchant Services?
Although the term “merchant services” used to principally refer to the processes used for accepting and processing credit card payments, today it covers payment processing methods, tools, and companies used to provide services for a business. In seeking reliable merchant services, business owners need to make sure they locate the right partner to provide them. Merchant processing fees can be steep. They can minimize profits if businesses don’t take the time to find the most suitable provider.
How Do Merchant Processing Services Work?
Merchant processing entails a number of steps when interacting with customers. Generally, the process starts when a customer provides the merchant with a debit or credit card. The merchant then processes the payment and eventually receives the funds into a bank account. Through the use of merchant services, businesses can determine the payment methods, the steps involved in processing payments, and the company that provides these services.
Specifically, merchant processing begins when the merchant accepts a customer’s credit card or types the credit card information into a terminal. Following this step, the payment processor will submit the credit card information and confirm it with the customer’s bank. Depending on whether the information is correct, the processor can then choose to accept or decline the payment. If the bank and processor approve the payment, the processor will charge a processing fee. Then it will deposit the rest of the profits into the business’s bank account.
What Is Needed for Merchant Services?
If a business only receives cash payments, merchant services aren’t required; all that’s needed to process payments is a basic cash register. However, for businesses to complete credit card transactions and process payments, they will need several assets. For example, they will require a payment terminal for processing customer credit card information. You’ll also need equipment for scanning credit and debit cards. To procure this technology, companies will need to work with a dependable payment processor that can provide merchant services.
The following are what you will need for merchant processing:
Merchant Processing Products
The different types of technology you will need to complete credit card transactions include:
- Credit card terminals that are installed in your physical store: These allow you to scan credit cards or manually enter information into them. Merchant service providers will then be able to process the payment by connecting to the terminal.
- Payment gateway software that’s compatible with your company’s eCommerce platform: This will enable you to securely accept and process payments via credit or debit card.
- Point of sale (POS) systems: These include both hardware and software for accepting credit card payments. These systems are also capable of performing other tasks, including running reports, processing sales, and managing loyalty programs.
Merchant Service Providers
When selecting merchant service providers, businesses can look for either:
- Traditional merchant account providers: These services open up a merchant account that enables the business to accept and process credit card payments.
- Payment service providers that consolidate funds into one merchant account and distribute funds to a business’s existing bank account. These services include Square, PayPal, and Stripe, among others.
How a Merchant Processing Audit Can Help Reduce Costs
In merchant processing, the largest cost is often merchant processing fees. While there may be other costs associated with merchant services, these merchant processing fees are frequently the biggest factor. In addition to high processing fees, the statements involved in the merchant services process can be extraordinarily complicated and detailed. That makes it hard for business owners to understand what they’re actually paying.
One of the best ways to make sure that your business isn’t paying more than it needs to for merchant processing is to have an audit. A thorough merchant processing audit can identify any errors, inefficiencies, or anomalies that might lead to significantly higher costs. If you’re working with a merchant service provider and want to find out if you can save more on credit card processing, consider scheduling an audit to analyze your services and invoices for any potential issues. In the process, you may be able to save more money while avoiding the need to switch to different equipment or processing banks.
Merchant services are essential for processing credit card payments. But it may be worth conducting an audit to make sure you’re getting the most from these services. Contact Util Auditors today to learn more about the process.