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What exactly is merchant services?

Sales person inserting card into Clover Station

In a hyper-competitive business landscape, merchants can gain a decisive advantage by accepting as many forms of consumer payments as possible. The reality is the days of merchants who limit customer payment options are over. Now, credit and debit card payments, digital wallets and online payment options are surging. In this, the digital age, how can companies accept as many forms of payment as possible to maximize revenues opportunities?

Enter the merchant services account, which enables businesses to accept payments in multiple ways. Merchant services enables businesses to accept payments through all available forms, including brick and mortar locations, via mobile payments and via eCommerce engagement. Through a trusted merchant services provider, you can not only enable payments but also help ensure security and conduct business management seamlessly for your company.

Merchant accounts are the link between merchants (or business owners), customers who use credit or debit cards, and the banks that hold and distribute the funds. A merchant account is what allows credit card companies to pay a business after a payment is made or take back funds from fraudulent or disputed transactions.

Through payment processing systems offered by the merchant services provider, businesses have a secure way to handle payment transactions across all sales channels, from the storefront to the street to the web.

With a merchant services account, a business can:

Accept a range of payments. With a merchant services account, a business can accept a wide range of payment methods, beyond just credit and debit cards, digital walletsand online payments.

Accept payments anywhere. Accept payments in a wider range of locations – online, at the point of sale, or wherever business happens.

Strengthen data security processes. Merchant services providers also offer the payment processing tools needed by companies to more securely manage payment data, from initiation to settlement. Those tools may include payment gateways and point-of-sale systems, as well as other online merchant solutions.

Engage and accumulate more customers. By leveraging a smart point-of-sale (POS) system through a merchant services provider, you can obtain up-to-date and accurate information about your company—who your best customers are, how much money you have tied up in inventory and which employees are selling the most. The best POS solutions provides you with the analytics and business management tools to help you more effectively run and grow your business.

How payment processing works

To successfully manage the payment transaction process, the merchant and the merchant services provider work closely to ensure payment data is transmitted correctly and securely. That step-by-step process works in the following manner:

  • A cardholder swipes a card’s magnetic stripe, inserts its chip into a terminal or uses a mobile wallet to exchange data with a card reader. For eCommerce payments, the merchant submits the transaction to a payment processor, via a payment gateway (when customers enter their payment information into an online form, the behind-the-scenes technology that processes those payments is the payment gateway).

  • The payment processor sends the information through a payment network to the issuing bank to verify the card details and relays the information it receives back to the merchant (authorizing the payment).

  • The merchant batches and submits the transactions to the payment processor for settlement. The issuing bank bills the cardholder and pays the payment processor, and the payment processor pays the merchant.

Three tips when choosing a merchant provider

For merchants of all sizes, choosing the right merchant services provider is an important process. In general, merchants can find the best merchant services provider for their business by following some key guidelines. These tips should be at the top of your list:

Identify your unique needs and which merchant services provider can best meet them. Compatibility should be a priority for merchants when choosing a merchant services provider. Identify the merchant services provider that has the payment system capabilities to meet your company’s unique payment processing needs now, and also provide a growth path for meeting your growing requirements into the future.

Determine when you can access your funds. You want your money in your account as soon as possible. While many merchant services providers offer next-day funding, there may be restrictions or fees associated with the service, so be sure to get all the facts.

Evaluate the relationship you want. Assess how many vendors you want to handle your money and how many people you need to talk to when there are issues. Is it easier to have a banking and merchant services relationship with one institution where you can establish a trustworthy, consolidated relationship? How much time can you save by talking to one partner, rather than multiple?

The takeaway on merchant service providers

Choosing the right merchant services provider can be a game-changer for companies of all sizes. Doing so provides multiple benefits, including improved check out and streamlined business management, all of which gives you and your customers the best experience possible.

Reaching that goal means selecting the merchant services provider that meets your company’s unique needs, getting the right eCommerce and security solutions in place and doing it all within an acceptable cost range. That may seem like a tall order, but the upside from expanding your payment options in a solid and secure manner is significant – not just today, but for well into the future.

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