Merchant Services Providers
You’ve got your business started. You’re living the dream. Now you need to make some sales to keep the dream going. You’ll take payments from your customers and to do that you need a merchant services provider. What are merchant services?
Merchant services are things you need done for you so you can sell your products online and take credit card payments. They often have three names: Merchant Services, Merchant Acquirer or Merchant Account.
Here is what they all will do for you.
(1) Act as Your Representative with the Credit Card Companies and Banks
(2) Collect Your Money for You
(3) Help You Avoid Problems with the Credit Card companies
(4) In some cases, they will provide you with a payment gateway
as well. These are all-in-one payment providers.
Represent You to the Credit Card Network
The main role of a provider (also known as a Merchant Acquirer) is to represent your interests to the credit card companies and banks that issue credit cards. So what does this mouthful mean? The provider pays you your money when you make a sale. That’s their main function and the one you care most about. So here are the questions that you will want to ask your provider.
When do you pay me after I make a sale?
What do you charge for your services?
How do you help me with customer complaints and chargebacks?
Collect Your Money for You
The provider receives money from the credit card network when you make a sale. The provider will take a fee for their services and then deposit the remaining money into your bank account. This is called “funding.” You will want your money as soon as possible but the Merchant Services Provider may require a reserve. A reserve is a time period that the provider holds your money. You will want to negotiate this reserve and make it as short as possible. You should be able to reduce this reserve to two weeks or less.
- Merchant Services Provider or Merchant Acquirer collects your sales dollars for you.
- The fee for payment processing is subtracted from your sales
- The merchant services provider will hold your money for a period of time to check for problems. This is called a reserve. Make sure this is two weeks or less.
- Your money will be put into your bank account for you and this is called “funding.”
Help You Avoid Problems with the Credit Cards
The provider will help you avoid problems with the credit card network. We generally are referring to chargebacks when we’re talking about problems.
Provide you with a Payment Gateway
In most case you find a provider who will also provide you with a payment gateway. A payment gateway is what you use to send your customer’s purchase to one of the credit card networks. Your customer inputs their credit card information into your website and this gets sent by a gateway to one of the credit card networks. The mechanism that sends this payment information is called a payment gateway. A gateway is also used if you swipe your customers credit card through a credit card terminal or through your smartphone.
One of the merchant services providers we recommend is Authorize.net.