11 Myths Uncovered About Merchant Services
When someone hears the phrase Merchant Services, they don’t always know what it is. This concept has been widely spread in business, but the layperson can only guess what it is. Ironically enough, Merchant Services are involved in modern transactions, even if the average consumer tends to overlook this fact.
In reality, merchant services keep businesses afloat. It is a complex system of card processing from the consumer to the retailer, processed on a terminal that involves banks and credit card processors, particularly since there is a lot more happening behind the scenes than just a swipe of a card.
There are indeed a lot of myths swirling around merchant services, and it’s time to debunk some of them.
1. It All Happens In The Bank
People directly associate credit cards with banks, and rightly so—banks are the issuing authority of credit and debit cards. However, it does not necessarily follow that credit card processing should solely be done by banks. Truth be told, banks may charge ceiling-high fees.
Third-party companies offering merchant services are the better option when it comes to credit card processing, because they already have well-setup terminals and a stable network.
2. All Merchant Services Providers Are The Same
If a company offers merchant services, these are probably offered by another company elsewhere, right? This might be true in terms of the basics of processing, but the minute details involved would be different from one provider to another. Some services such as e-commerce solutions and loyalty programs are optional, and would mean more cost for the client.
3. Once I’m Under Contract, I Cannot Get Out
Merchant service providers will draft a contract with terms you have agreed upon, and it would usually indicate the length of time you would be in contract with them. You can get out of an agreement provided that another MSP may buy out the contract you made with your old provider.
4. Fees For Credit And Debit Cards Are The Same
Credit cards have higher risk than debit cards in theory. This also translates to higher rates for credit card processing than debit cards. Merchants have surety when customers pay debit, but then banks get higher cut of the fees when credit cards are used.
5. It’s Better To Choose A Company With Cheaper Rates
It’s always a good thing to be wise about your business expenditures, and paying less would mean more money to spend on other important things. Rates are a good factor to look on when choosing a company, but it’s not the only aspect to focus on. Hardware, software, customer support and upgrade services are some of the other things that can make the experience of transaction processing easier and safer for you.
6. Believe The Merchant Service Advertisements Because They Are Real
Well, this is not to say that believing in ads is smart. The processing company will list some of its best deals and fees, but in business, one moves their best foot forward. Ask questions and clarify doubts about any ads before choosing a company. It is wise to investigate the truth behind any offers they put in ads, just to make sure that no hidden fees and charges are lurking in the background.
7. Additional Charges Are Not Allowed
Contrary to popular belief, credit card processing companies can opt to downplay the Interchange rate and markup, which are fees that vary depending on the card used. Most merchant service providers will call this a specialized card rate that you don’t need to bother with, but it would be useful to keep this in mind: the more perks a card offers, the more expensive the rate.
8. A Processing Terminal Is Free
Since merchant services undergo a process, a terminal is needed to link the transaction between a customer’s bank and the merchant’s bank. Companies that offer no terminal fees usually mask the cost in other offers such as a 3-year contract or a hardware leasing fee.
9. There Are No Contract Early Termination Fees
Depending on the contract agreed upon, a merchant service provider may or may not indicate an early termination fee. Check with your service provider before going into an agreement, because this aspect is sometimes forgotten.
10. Debit Card Processing Fees Are Fixed
Debit card transactions are one of two scenarios: if the consumer enters their PIN, or if they simply sign their receipt. If PIN is involved the merchant pays lower fees for processing, while the latter means higher processing fee.
11. The More Transactions, The Higher The Cost
On the contrary, more transactions mean a lot of processing traffic, and therefore companies get a higher slice off these transactions. More transactions equal to lower rates.
Debunking myths surrounding merchant services is a good way to start evaluating whether you need one for your business or not. One outstanding merchant service provider, GB Payments, has been around since 2013 and serving merchants in the UK. No need to look around—GB Payments can help set your business up. Call us today!