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Finding the Right Merchant Services for Your Business

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Since a majority of people prefer to pay for things by card instead of cash, you’ll want to make sure your business accepts credit and debit cards. Whether you accept payments in person, online, or over the phone, it’s important to easily accept every brand and type of credit and debit card your customers present.

But credit and debit cards don’t process themselves, which is where merchant services come in.

Merchant services provide a merchant account, which works as a behind-the-scenes intermediary between a customers’ bank or credit accounts and your business’s bank account by withdrawing funds from the customer’s account and depositing them directly into your business’s checking account, effectively allowing your business to accept credit and debit cards in person and online.

So how do you figure out if your business really needs a merchant services account in order to process electronic payments and which system would be best?

Start by asking yourself these questions:

  • Do you plan to accept credit cards online, at a countertop checkout station in a brick-and-mortar store, or do you prefer a mobile credit card processing solution that uses a smartphone and a card reader?
  • Or do you want to accept payments multiple ways?
  • Do you accept check payments from your customers?

Options for Accepting Card Transactions for Your Business

Point-of-Sale (POS) System

If your business has a physical location, and you want to connect your sales transaction system to an accounting or inventory software, then a Point-of-Sale (POS) system is a great solution for your business. It’s a complete checkout station that usually includes software, a tablet or touchscreen, a card reader, a cash drawer and a receipt printer.

Mobile Card Reader

If you want to accept credit and debit cards for freelance work, if your business location is mobile or isn’t yet official, a portable mobile card reader device might be a better option as you use it with a smartphone or tablet and a credit card payment app by plugging it into the headphone jack, lightning connector, or connecting via Bluetooth.

Payment Gateway Technology

If you want to accept credit cards online as an e-commerce because you sell goods or services through your website, you need payment gateway technology that connects to your site, which most credit card processors can help set you up with.

Protection from Fraud and Speed Up Sales

Accepting credit and debit cards can expose your business to fraud, but if you get a card reader that can accept EMV chip cards as well, it will protect you from point-of-sale fraud and enable you to skip the signature authentication, which can speed up the checkout process. Additionally, be sure that your card reader is equipped with NFC technology that allows you to accept mobile wallet payments like Google Pay and Apple Pay, expanding your sales capabilities.

Remote Deposit Check Scanner

If you own a business that must be able to accept both card payments and check payments, such as lawyers, dentists, accountant, medical offices, or homeowners associations, then consider adding a Remote Deposit Check Scanner that will enable your business to deposit checks from your office and directly into your business account online, without having to go into a branch. This will compliment your merchant services solution by securely depositing all your sales income through encrypted online services and getting next day funds availability for most deposits.

How Does Merchant Services Pricing Work?

The pricing structures for merchant services can be a little confusing for businesses. Here are the most common pricing models for small businesses with some examples.

Fixed Per-Transaction Rate

This option comes without any additional fees. Every time you swipe a debit or credit card, the processor might take 3% of the value of that transaction. This is best for businesses with low sales volume or small-ticket items.

Interchange-Plus Pricing Model

This option charges a business the credit card company’s processing fee plus the merchant account provider’s markup. For example, an interchange-plus pricing structure might appear as 2.75% + $0.10 per transaction. The 10 cents in this example is the processor’s markup, while the 2.75% is the interchange rate.

Tiered Pricing Model

This option offers several different rates depending on the type of transaction. It breaks down transactions into three categories; qualified, non-qualified and mid-qualified transactions.

Qualified transactions receive the most advantageous rate and generally require a card-present transaction (in-person) at the point of sale.

Non-qualified transactions are the most expensive and are usually transactions accepted over the phone with a keyed-in credit card number.

Mid-qualified transactions could include keyed-in card numbers with the use of an address verification service (AVS) to verify the cardholder’s address for added security.

Additional Fees May Apply

Keep in mind that additional fees might occur when setting up a merchant services account, like account set-up or application fees, monthly or annual fees, early termination fees, or chargebacks.

You’ll want to make sure you read the contract details carefully so you can determine the right pricing model for you. For example, buying the hardware (credit card processing equipment) upfront instead of leasing it monthly, which can save you hundreds of dollars in the long run.

How to Get a Merchant Services Account

To get a merchant account, a business must apply and be approved. It will be necessary to have your financial documents in order when applying to leverage the best possible terms of approval.

Explore Your Options

Learn more about how HOMEBANK can help you with your merchant services needs. Let us help you achieve your business dreams by making an appointment to speak with a banker about your business banking needs or call us toll free at (855) 577-2001.