Thursday, February 11, 2010
Understanding Merchant services
Posted on 9:58 AM by programlover
Understanding Merchant services by DataInformationcenter
in Accounting (submitted 2010-02-10)
0
votes
vote
As a typical business term used in the US, Merchant Services describes those institutions offering a diverse range of financial services to businesses.
The most common of these services is providing a merchant account to a business or facilities like credit card processing. Usually there is a nominal monthly charge and a transactional fee. Often times a merchant services company will give a slightly lowered cost to a client who applies for both - a merchant account and card processing services from them.
The sheer convenience of using credit cards has really changed the way customers do their shopping. Business owners have cognizant of this and wish to provide their customers with the smoothest possible shopping experience. This means introducing newer ways and means of easing their shopping experience. Merchant service companies are proving to be rather helpful as they provide services like:-
1. Processing payments of Credit & Debit Cards
2. Provision of Payment gateways
3. Clearance of cheques and drafts
4. Direct mail and/or Email marketing
5. Cheque guarantees and related conversion services
Credit card processing is of course the most commonly used service by most businesses. How it works is that the merchant services provider has a contract with the business for facilitating transactions on credit and debit cards as well as processing their payments. Credit card processing rates could either be a flat fee or a percentage of the total amount of all transactions done in the contract period. Sometimes it could be combination of both. Merchant services will also provide the business with point of sale terminals or credit card processing machines on rent.
Another form of credit card transaction is when you have store-specific cards. Typically two types of cards are issued by a store to a consumer. One is a gift card where a customer purchases store credit for which a card is issued to the value desired. The other card is a store branded credit card. Here the department store or retail chain partners with a credit provider and the use of this card in the partnered store or retail chain will extend benefits to clients like discounts or even free stuff.
The most common of these services is providing a merchant account to a business or facilities like credit card processing. Usually there is a nominal monthly charge and a transactional fee. Often times a merchant services company will give a slightly lowered cost to a client who applies for both - a merchant account and card processing services from them.
The sheer convenience of using credit cards has really changed the way customers do their shopping. Business owners have cognizant of this and wish to provide their customers with the smoothest possible shopping experience. This means introducing newer ways and means of easing their shopping experience. Merchant service companies are proving to be rather helpful as they provide services like:-
1. Processing payments of Credit & Debit Cards
2. Provision of Payment gateways
3. Clearance of cheques and drafts
4. Direct mail and/or Email marketing
5. Cheque guarantees and related conversion services
Credit card processing is of course the most commonly used service by most businesses. How it works is that the merchant services provider has a contract with the business for facilitating transactions on credit and debit cards as well as processing their payments. Credit card processing rates could either be a flat fee or a percentage of the total amount of all transactions done in the contract period. Sometimes it could be combination of both. Merchant services will also provide the business with point of sale terminals or credit card processing machines on rent.
Another form of credit card transaction is when you have store-specific cards. Typically two types of cards are issued by a store to a consumer. One is a gift card where a customer purchases store credit for which a card is issued to the value desired. The other card is a store branded credit card. Here the department store or retail chain partners with a credit provider and the use of this card in the partnered store or retail chain will extend benefits to clients like discounts or even free stuff.
