The fact that you need a merchant service provider is indisputable. From here on out, your potential customers will use less and less cash and lean more towards using their credit and debit cards to do their shopping. If you want to keep these customers happy, get their business and compete in the modern-day market of social media advertising, then your small business needs to offer credit card processing facilities.
How Merchant Services Work
Simply put: Merchant Services is a general industry term that is used to describe the equipment any business needs to accept and process all forms of payments including credit cards. This is very much an unsecured line of credit to the business owner and cardholder alike because once a sale is made, the money is transferred from the cardholder to the business and the cardholder has some time to pay that money off. The business owner receives this money nonetheless.
Most merchant service providers take on the risk of processing these sales for their customers on a day to day basis. Once the sale is made at the terminal using a credit card, it the merchant service provider that releases these funds (typically within two working days) despite not having been paid first. The service provider will then take on the task of following up with the customer to make sure that they pay.
This is by far one of the most convenient forms of business for small business owners. It means that they do not need to worry about cash flow (depending on what kind of payment option they offer in their establishment; checks still take a little bit longer than credit card payments). However, there is a price to be paid for that convenience. This price often comes in terms of set up fees and monthly charges levied by the merchant service provider on the merchant.
Characteristics of an Excellent Merchant Service Provider
Before you start accepting all forms of payments including debit and credit cards at your establishment, you need to choose a merchant service provider who will make all that possible. As is the case with everything else, your duty is to find a service provider that is not only affordable but also responsive and that is a good fit for your brand. Basically, you want to find someone who is:
You also want to deal with a service provider who has an easy to understand contract, discloses all associated fees, and works with you to make the business venture profitable for both parties. All these qualities will take time to identify in a merchant service provider, and as much as you might want to immediately go with the big brand names, the truth is that not all big brands are a good fit for small businesses.
You need to take your time to choose the right partner with whom to go into business. With that in mind, here are some tips on how to choose the right merchant service provider:
Tips on How to Choose the Right Merchant Service Provider
The choice you make will fully depend on a few key factors that you consider important for your business. These may include:
The list goes on and takes a subjective turn with every different business owner. There are, however, some key elements that must be considered when trying to identify and choose the right merchant service provider. Here are the key factors that you should look for in a merchant service provider:
Look for a Merchant Service Provider Who Caters to Your Specific Business Needs
We cannot stress this enough! While it is logical that you would want to look at cost-effectiveness first and how much it would cost you to have their services installed at your establishment, the truth is that it doesn't matter how affordable or expensive they are. If they do not provide your business with what it needs, then they are not a good fit for you.
You need to ask yourself a few questions when looking for the right service provider:
Once you have identified the specific needs that apply to your business, you can use that list as a cross-reference to try and identify merchant service providers who specialize in providing credit card processing services to businesses with similar needs. Do not sign an agreement with a provider who would be making an exception for you. If providing you with specific services that cater to your particular business needs falls outside of their comfort zone then eventually, you will run into problems, and one of you will have to let the other go.
Look at the Kind of Contract They Are Offering
This is where most business owners go wrong! One of the most attractive sales pitches that can be put forth by a merchant service provider is the promise of low startup and monthly fees. Once you see this, you are sold and are ready to sign the contract. What you do not realize is that tucked somewhere within that contract is a set of terms and conditions that will make your life a nightmare going forward. You need to look and see if:
While the reality on the ground is that most merchant service providers will be quick to get you to sign a long-term contract with them that will last for years and has harsh termination fees, there are those who are willing to bend a little.
More and more service providers have started to listen to consumer complaints about these long-term contracts and are now considering offering a month-to-month contract or at least one that has an enforceable exit clause.
Look for a company that puts your needs first when it comes to the kind of contract they offer. You should never feel caged in when you sign with a merchant service provider.
Do Not Sign with Anyone Who Pushes Long-Term Equipment Leases
Traditionally, there are several bits of hardware that you will need to successfully accept credit card payment at your establishment. These are things such as:
While these might still be necessary today, consumer electronics such as iPhones and iPads are becoming viable payment processing options every day. However, if you find that these electronics just won't do, and you need specialized credit card processing equipment, then it is usually much cheaper to outrightly buy that equipment than to lease it.
There are some predatory merchant service provider who will try to entice you with the 'low monthly charges' when you lease the equipment as opposed to the often-hefty upfront payment for you to own the machines. Although the monthly lease charges might seem small to begin with, in the long run, they become costlier than simply buying the equipment you need. Plus, buying it means that you add to your business assets portfolio.
Look for a Merchant Service Provider with Excellent Customer Support
There really are no two ways about this: you need to find a merchant service provider who has excellent customer support. As we already mentioned, you are dealing with highly sensitive data and processes here. At any given time a customer might lodge a complaint against your company, and these often trigger what is known as a chargeback: when the merchant service provider has to give the client back their money by taking it out of your account at an additional fee.
Sometimes, however, some of these complaints really shouldn't trigger these chargebacks. Sometimes, you may find that it is the customer's fault and that you should not be charged at all. Sometimes even, you might quickly resolve the matter in-house with the client, and the merchant service provider needn’t be involved.
All this would only be possible if you have a service provider who is not only responsive but also has excellent customer service support. Whether you need an issue resolved or a card processing equipment repaired, any delay on your merchant service provider's end could only end up costing you money in lost revenue and man-hours. Find someone who is fast and very responsive.
Look for a Service Provider Who Is Registered
You need to find a registered merchant service provider. This means that they adhere to a certain set of regulatory rules set forth by the Government. These regulations are in place to protect both you and the service provider alike. Ask them if they are registered with MasterCard as well as Visa. You do not want to end up with a fly-by-night merchant service operator who is not only NOT regulated but who could also up and leave you hanging at any given time.
Look for Someone with a Proven Track Record in Your Particular Industry
Today, it is very easy to look up and learn about the kind of track record that any business has within the industry. All you have to do is check with the Better Business Bureau to see what kind of complaints any give service provider has listed. While it is normal for any business dealing with lots of customers to have some complaints lodged against them, it is also a red flag to have a multitude of complaints listed.
Furthermore, you need to read online reviews, check their social media pages and try calling them up to get a feel for how they deal with their customers. Trust it when we say that you will not be the exception. If they typically treat their customers badly or have a bad reputation at the Better Business Bureau, you can count on the fact that they will disappoint and treat you badly too.
Take your time to find a merchant service provider who has a good reputation, is a good match for your business needs and is affordable. Do not rush to sign any contracts just because they look financially appealing.