Choosing the Right Merchant Service Provider

Posted by PointOfSale POS on


In a world that has moved drastically towards cash-free transactions, the credit and debit card processor you select is an important decision. Matching with the right merchant services provider to your POS System will save your business both time and money.

We will start with understanding what merchant services and merchant accounts are.


Merchant Services

Simply put, Merchant services is the hardware, software, and services needed for a businesses to process credit or debit card transactions. Merchant Services Providers, also known as credit card processors or merchant account providers, are entities that provide a business with the ability to accept electronic payments.


Merchant Account

A merchant account is an account with your credit card processor that can be used to deposit funds received electronically from your customers. This account establishes the relationship with the provider. The merchant account is based on an agreement between your business, your bank, and your credit card processor for the settlement of electronic transactions accepted at your business. First deposited into your merchant account, the funds may be deposited into your bank account on a daily or weekly basis.

Unfortunately, this service is not free. It is imperative to understand what services you will be provided in return for your hard-earned money. Just like your business, Merchant Service Providers are not all the same and you will need to ask the right questions to find the provider that is a match for your company.

To select the right merchant services provider for your business, you will want to consider the following aspects:

  • Hardware
  • Pricing
  • Contract
  • Support


The Right Hardware

While options for credit and debit card terminals have become quite varied in recent years, wired credit card terminals are still the most commonly-used, and for good reason. They are reliable. You will not be left suddenly unable to process a sale should your internet connection fail. Furthermore, they are generally better able to support newer features such as contactless payments using Apple Pay, Samsung Pay, Android Pay, and others. Wireless terminals are ideal for businesses where you must go to the customer, such as many restaurants, plumbers and electricians. Generally more costly than wired terminals they have a distinct advantage in versatility of location.


The Right Price

It is imperative to understand all the fees you may be charged prior to signing a contract with a merchant services provider. While a low per transaction fee may entice you to choose a specific provider, other fees charged may actually render that provider noncompetitive. You should expect to be charged many of the following fees.

  • Account set up fee – Usually approximately $150.00, also called an application fee
  • Recurring monthly or annual fee – This can be considered an account maintenance fee, and is charged by almost all providers, and the cost should depend on what services you will be provided
  • Per transaction rate – Whether tiered or flat-rate, the processing rate is the percentage of a transaction that you’ll have to pay to your merchant account provider in exchange for processing the transaction.
  • Monthly minimum fee – If you fail to meet the minimum income via electronic payment, your provider may charge the difference. This is usually a small fee, but may effect the bottom line of smaller or seasonal companies. A landscaping company being charged $50.00 per month in the winter then their are no transactions may want to find a provider that does not include these obligations.
  • Early termination fee – Designed to discourage you from switching providers, ETFs are usually a significant sum. Consider this when selecting the duration of your merchant services agreement.
  • Charge-back fees - Hard to avoid, most merchant account providers will charge a fee around $20.00 per charge-back, whether it is returned merchandise, or fraud.


The Right Contract

Read the fine-print carefully when reviewing your service contract. Pay special attention to the term or the contract, early termination fees, as well as liquidated damages clauses. Furthermore, the contract should lay out all possible fees clearly and concisely. Ambiguity has no place in a contract.


The Right Support

Eventually things will inevitably go wrong, no matter the provider. Your credit card terminal may suddenly stop working, or unfamiliar fees may appear on your statement. You will want a service provider that is available and competent to find solutions and provide information without delay.

By carefully vetting potential payment processors you are protecting your business from costly fees and downtime. But what if your simply do not have the hours required to do the research? A trusted company such as can offer invaluable insight and advice. Understanding that this is a significant investment, has the expertise and experience to answer your questions and support you in this process.



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