How to choose a merchant services provider

All businesses need to accept some form of payment for the goods or services they sell. To do this, they need merchant services, which forms the behind-the-scenes link between the business owner, customers who pay with credit or debit cards, and the banks that hold and distribute the funds. It’s what allows card companies to transfer funds securely and seamlessly to the business after a transaction is made and take back funds from fraudulent or disputed sales. “Ultimately merchant services is what allows a business owner to focus on satisfying their customers and not worry about how they pay,” says Abbe Conrad, payments network executive at Bank of America. 

These days, it’s more important than ever that your merchant services provider allows your business to accept multiple forms of electronic payment, which might include debit or credit cards or online payments, digital wallets and other forms of contactless payments. In addition, your merchant services provider should offer services that cater to your industry or marketplace. 

Here’s what to consider when choosing the provider that best meets your needs.

Point of sale (POS) hardware and accessories

Not long ago, many small businesses operated with a single cash register. Now, depending on which POS system you choose, hardware options might include a computer, handheld terminal or other digital device that runs your POS software, and various types of card readers, plus accessories such as bar code readers, receipt printers and cash drawers. Think about how you plan to take payments — at a single counter or at various locations in a retail store? Do you want to be able to receive payments on the go? Should customers be able to scan purchases by themselves? “Especially in today’s hypercompetitive landscape, it’s essential that the merchant services provider you select can satisfy the particular needs of your business and customers,” says Jonathan Sepulveda, product executive for Merchant Services at Bank of America. 

POS software

Modern POS software can go far beyond simply accepting payments. “The best POS software can provide you with the analytics and business management tools to help you more effectively run and grow your business,” Sepulveda says. You may also want to consider a solution that integrates with your current apps and software, such as accounting or customer relationship management. Note which software solutions are important to your business and make sure the merchant services provider offers them with clear and easy-to-understand pricing plans. 

Industry-specific services

You may want to consider a POS solution that offers features that are specific to your business. A restaurant, for example, might want to offer curbside pickup and/or kiosks for customers to place orders. Or if your customers sign up for subscriptions, you may need a recurring billing solution that will safely hold their account information on file and automatically process payments on the schedule you set. And, if most of your business is done via an online storefront, a virtual terminal that you can use for the occasional in-person transaction may be enough.

E-commerce

If you want to offer online shopping — or if you don’t have a brick-and-mortar presence at all — you’ll need an e-commerce solution. Does the merchant services provider’s solution easily integrate into your existing website? Does it work with your mobile app, if any? Are there extra costs for e-commerce transactions? What kind of shopping cart tools and security features are offered? When looking at options, consider your technical abilities and how much customization you need. 

One-time and recurring costs

Most merchant services providers charge a one-time purchase price for hardware and monthly fees for software, plus per-transaction processing fees, which may vary depending on whether you sign up for an annual or monthly plan and what features you select. You may pay more to use the software on multiple registers, for example, or if you have a large inventory to catalog and track. 

When it comes to payment processing fees, many providers allow you to choose between different pricing plans, such as a flat-rate cost for each transaction, or a tiered structure, where you pay different fees based on the size or type of transaction. In all cases, the prices should be clear and simple to understand so you can easily compare between providers.

The level of customer support available

Before selecting a merchant services provider, make sure you’re clear on its customer service hours and level of support available. A good place to start is to look at online forums to find out what other small business owners are saying about their providers’ ability to troubleshoot. “If something’s not working, you want to call someone quickly and have it fixed, not just get into an online chat,” says Conrad.

The speed of the payment settlement

Cash flow is a major concern for many small business owners. If getting funds into your account quickly is a concern, keep in mind that while many merchant services providers offer next-day or same-day funding, there may be restrictions or fees associated with that service. 

What your current financial providers offer

It might be easier to have a banking and merchant services relationship with one institution where you can establish a trustworthy, consolidated relationship and see all your accounts in one place — or your needs may be better met with multiple providers. 

Your long-term business plans

While it may be tempting to go with the most cost-effective solution that meets your needs today, keep in mind that a merchant services solution is a long-term investment in your business. “Your needs may be simple now, but they’ll get more complex as you grow, so make sure your provider can scale,” says Conrad.