Home Finance Merchant Services: Frequently Asked Questions

Merchant Services: Frequently Asked Questions


Credit and debit card processing is one of the vital parts of your business. It can be exciting when your business successfully receives payments from the consumers. Whether you are a small business owner or a large business owner, the thrill of satisfying the needs of consumers is unparalleled.

If your customers appreciate the payment channels that you are using, it means your payment processor is doing a great job. However, if they find the payment processing of your business annoying, then there might be a problem with your merchant services provider.

Payment processing is an important part of a business. Some merchants are not fully aware of how merchant services work. However, this knowledge is essential. It plays a huge role when it comes to generating a steady stream of income.

In this article, you will learn about some of the frequently asked questions regarding merchant services. The answers to these questions will help you to determine the best suitable merchant service provider for your business.

What is the Meaning of Merchant Account?

In simple words, a merchant account means a unique bank account opened by a business owner under a payment processing company. The primary purpose of this account is to clear customer transactions. After that, the funds are transferred to the owner’s business account.

All the transactions at a grocery store, mobile terminals, E-commerce platforms, etc., are processed and fulfilled by merchant account providers.

Why Do You Need a Merchant Account? 

Do you know about aggregate payment processors like PayPal, Stripe, and others? These companies are best known for aggregating the transactions of thousands of individuals and businesses. The processing is done through the company’s merchant account.

Aggregate payment processors may be convenient. But, in case of any irregularities, they cut off the connections and terminate the proceedings. It happens because they want to cut off ties with your business instead of figuring out a solution.

That’s why having a merchant account is essential. A merchant account makes sure that there are no processing interruptions and risks to your business.

How Does Processing of Credit Card Payments Work?

As soon as the customer enters the credit card information, the data transmitted through a secure gateway of payment. A direct connection is established with the payment processing company. The data of the cardholder helps in determining if he/she has funds available for the transaction.

After collecting this report, the payment processing company transmits it to the company of credit card. Further, a network of data is established. The funds from the customer’s account are deducted and then deposited into the checking account.

During this process, if anything goes wrong, the payment processing company or person is held responsible for the transaction money involved. That’s why proper documentation is required before starting payment processing.

Do I Have to Sign a Contract with Merchant Service Provider?

It is one of the most important questions. Usually, contracts are made to handcuff the signee. The moment you sign the contract, you have to accept the fees and service of the merchant account provider. It doesn’t matter if it is frustrating, but you have to accept it because the contract has been signed.

A merchant account provider, who is reliable and transparent, does not lock anybody into a contract. They give their customers the power to decide what type of service they want. Reliable payment processing services providers allow their customers to choose the services they need. That way, there is no need to sign any contract.

What Level Of Security Will Merchant Provider Offer to My Business?

As we already know that cybercriminals are causing frauds and data breaches, security has become a real concern for businesses. Every business owner wants to provide a risk-free and reliable service to its customers. That is why every business owner should ask questions related to the security level of merchant services before signing. If you have a business, then ask questions such as:

  • Do you provide a PCI-compliant system?
  • Do you offer protection against fraud?
  • What is your track record against security issues?

What Type of Fees Does Merchant Service Providers Charge?

It doesn’t matter what type of payment processing solutions you select, you are required to fulfill the costs associated with them. Here are some of these costs:

  • Monthly Fee
  • Setup Fee
  • Credit/Debit Card Processing Cost
  • Transaction Fee
  • Cross-border Fee
  • Equipment Fee

Every merchant account provider works according to the same procedures. However, it doesn’t mean that every one of them has the same quality of services.

Some might be better in mobile payment processing while some in payments gateway or additional support. Due to this difference in quality, their service fees also differ from each other. It all depends upon the level of service they provide.

Often acquiring banks charge merchants service fees along with the card network processing fee. However, modern merchant account providers offer reduced charges including service fees.

Therefore, these factors can help you differentiating overall expenses and selecting merchant services. These factors are essential and worth paying attention to while working with a payment solution provider.

The Bottom Line

The above frequently asked questions are crucial, and you must ask them before getting a merchant account. These questions will protect you from unexpected surprises such as unknown fees, hidden charges, and unreliable customer service teams. Always ask questions related to:

  • Processing fee
  • Additional charges customer Service
  • Mobile Payment Service
  • EMV-compliance

Before opening a merchant account, select a reliable and reputable merchant services provider company not just for the sake of your business but also for the customers.


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