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Merchant services
Because of their emphasis on electronic data processing, merchant services are a close cousin of electronic services.
Banks and other financial institutions offer merchant services to help your business increase sales. Merchant services broaden the options your customers have to purchase your goods and services.
Electronic payments systems that process credit cards and debit cards are the most widely used form of merchant services.
With a typical debit card transaction, a customer swipes a card through a magnetic strip reader and enters a Personal Identification Number (PIN). Alternatively, a customer may enter the information online or via telephone. A data-processing company makes sure the customer has available funds and authorizes the transaction. In most cases, funds are credited to payee's account by the next day.
Merchant services convert customer sales to cash sooner than by creating accounts receivable and reduce time and effort you spend on collections. Customers are less likely to abandon transactions that have an efficient and secure means of payment.
With debit card payments, you also benefit from lower fees than those you may pay for processing of your credit card payments. Cardholders may pay fees on a debit card based on how often they use the card.
If you wish to accept credit card payments, keep in mind which credit cards you will accept. (Major card issuers include MasterCard, Visa, American Express, and Discover.) Fees will likely include a percentage of charges, or discount rate, and a small transactional fee.
Typically, the discount rate is between 2 and 3 percent of transactions and the transactional fee is between 1.5% and 2%. You may pay slightly less for transactions involving a swipe card than for transactions taken online or via phone or mail.
In addition to credit card and debit card processing, merchant services include payments systems that use electronic cash, point-of-sale (POS), check-acceptance, and stored-value card technology.
While you may favor some of these payments systems over others, they all share common goals: increasing your sales and turning those sales into cash flow as quickly as possible.
You should check with your financial institution on the availability of merchant services. While these services are not free, neither are they expensive. You may find the associated fees to be a small price to pay in exchange for the improved cash flow you experience.
Next Topic: Payment with credit cards
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