Selecting a bank card services provider can be a daunting affair for any retailer, big or small. This guide will give an insight into how merchant processing services work, and how you can select the right provider for your business.
Merchant processing services or bank card services manage the process between your customer making a payment with a bank or credit card, and you receiving a deposit for the appropriate amount in your bank account. This is the basic service, although many providers include additional features such as added security measures or currency conversion.
This is a competitive market with many bank card services providers to choose from. This wide selection can make the research stage a little daunting, but overall will make it easier to find a service provider that fits with the needs of your business.
In order to reach an agreement with a bank card services provider, there will be a certain amount of information exchanged. Firstly, they may want to see any statements you have from an existing processor, or for new businesses, they will need sales projection figures. This helps them calculate how much using their service will cost you, and enables you to compare prices across service providers.
Next it’s your turn to ask the questions. Find out if they require you to sign a fixed term contract, and if so, what service level agreements are built into this. You don’t want to find yourself locked into a service provider that you quickly out grow as your business expands.
Bank card services providers will use different pricing strategies, which can make it difficult to compare projected costs.
Three tiered pricing was once the most popular method of fee calculation. Under this system every different payment card fell into one of three tiers, and a different fee was charged for each tier.
This system is gradually being replaced with interchange plus pricing. Using this method the bank card services provider charges you the actual cost associated with each transaction, then adds their own fee on top. This fee is usually a small fixed amount, for example £0.10, plus a percent of the value of the transaction.
Check for any limits to transaction size or frequency that would apply to your business. Also beware of any additional charges that may be applied if you exceed those limits.
When securing the services of a merchant processor be realistic about the size and frequency of the transactions your business handles. You should also discuss the range in values you experience. If you handle an unexpectedly large transaction, or high volume in the early days, you could run into trouble with your bank card services provider.
Before you begin researching the different service providers, make a complete list of the features and support you will need. Consider the following questions:
Will you need to handle mobile transactions?
Will you be taking overseas orders / requiring currency conversion?
Does your business take recurring payments?
What reporting requirements do you have?
Take Your Time
If you are launching a new business, maintaining momentum will help you hit your target start date. Choosing the right merchant processing service for your business needs is key not just to a successful launch, but also to the future of your business. Invest your time wisely in understanding your requirements, researching the options available to you, and establishing a good working relationship with a trustworthy service provider.