With more and more people leaving their cash at home and using credit cards to pay for goods and services, the need for merchant processors grows stronger.
If you aren’t familiar with what a merchant processor does, the simple definition is that they allow you to process credit card payments from your customers in a quick and secure manner. These days, almost every business needs a merchant processor. Here’s how these processors work and how to find the right one for your needs.
What Does a Merchant Processor Do?
A merchant processor is sort of the middleman between your business and the customer’s credit card company. Once you accept a credit card payment, the merchant processor will pass on the transaction data to the credit card interchange. This data is then sent to the customer’s bank, and they can either approve or decline it. If the transaction is approved, your merchant processor will deposit the funds from this transaction into your merchant account. After a short waiting period, your bank will make these funds available in your business banking account.
How to Choose a Merchant Processor
Though all merchant service providers process credit card payments, their additional services can vary a lot. Here are some key features that you may want to consider:
• Payment structure: Different merchant processors offer different pricing models. The four most popular models are flat-rate, tiered, subscription, and interchange-plus. Some help SMBs save on costs, while others are better for large businesses.
• Security: Ideally, your merchant processor of choice should protect your data by using end-to-end encryption. They should also adhere to EMV compliance regulations, which will prevent fines down the line.
• Customer support: Want to make sure that your merchant processor will provide help when you need it? Consider the working time and availability of their customer support team. Also, check out their BBB ratings to determine the quality of the support.
• PCI compliance: PCI standards impact any retailer that accepts, stores, or transmits customer data. Some merchant processors include PCI compliance in their monthly fee, and others charge for it as an add-on.
Questions to Ask Your Merchant Processor
Other than getting acquainted with the features a merchant processor offers, consider asking your potential service providers the following questions:
• How long are your contracts? Merchant account service contracts often include three-year terms that automatically renew after a year or two. That said, you may be better off asking for month-to-month terms without early termination fees.
• What payment services do you support? Almost all merchant processors support EMV and in-person magstripe. Not as many support NFC payments, as this technology is relatively new.
• How long have you been in business? The longer a company has existed, the more likely it is they’ll have enough experience to capably serve your processing needs.
• Can you provide client references? Even in this digital era, there’s no better way to check a company’s credentials than through word-of-mouth. Ask your potential providers for references, then reach out to these businesses to confirm the provider’s capabilities.