Frequently Asked Questions about Merchant Services
Considering how cashless transactions are becoming more and more common, it’s very unusual for a retail business (or, in fact, any kind of commercial business) to be caught without the means to process a credit card. Merchant services are required to be able to honor credit card payments. While the credit card processing industry has been around for several years, many people still do not fully understand how it works. Here are some frequently asked questions about merchant services so one can fully understand how the procedure works:
Who can offer merchant services to businesses? Financial institutions such as banks offer this service, although their stringent requirements will not allow just anyone to qualify for it. For those who do not qualify for this merchant service, they can get it through third party providers and ISOs (or Independent Sales Organizations).
What is a merchant account and is it required to get merchant services? The merchant account allows an individual to process credit card transactions. In a way, it’s like a bank account. But since the account is usually connected to the bank or any financial institution, those who get their processing services from third party providers do not get a merchant account. Therefore, a merchant account is not entirely necessary to process credit cards, but only because the third party processor has the account of the retailer or business owner.
What are the fees involved in this service? There are a number of fees that should be paid. These fees can be classified into three: one-time payment fees, monthly fees and transactional fees. Of the three, transactional fees are the most numerous. As the term implies, this kind of fee is charged for every credit card transaction. Monthly fees are fixed fees that should be paid regardless of the sales of the store or the business.
Can small businesses use merchant services? Should they? Via ISOs and third party processors, small businesses can easily get a merchant account suited to their needs. Whether they should, however, depends on their average sales and if it could cover the fees required for the services. Generally, however, those who honor credit cards as a form of payment are proven to get a boost in their sales.