Understanding Merchant Services

Merchant Services encompasses a variety of payment acceptance methods for retailers.  The primary, being credit card acceptance, is most often associated with the industry.  Merchant services can also be check acceptance and warranty, gift cards, online payments and dial-pay.

 Why should my business accept credit cards?

[tweetmeme]Credit card acceptance is a time-tested, proven form of payment worldwide.  As a retailer, you need to offer your customers as many ways as possible to pay you.  With the increase in debit cards skyrocketing nationwide, consumers are finding cash as more of an inconvenience.  A customer with a debit or credit card is more likely to purchase additional products and services, because they have quick and easy access to additional funds.

 Application Process For Business Owners

 Similar to applying for a small business credit card, merchant services is underwritten as a line of credit.  Your business accepts credit cards that your provider assumes are valid and not fraudulent.  In the event that a card is not legitimate, the provider stands to lose that money, providing that the merchant is no longer in business or has opened a fictitious account.  In the small business world, the owner’s credit is taken into consideration when deciding whether or not to approve the merchant account.

 Read the Fine Print

 Just like any other industry, there will always be bad companies and dishonest people.  The merchant services industry is no different.  Read what you are signing and take your time.  Industry standard is a three year contract with an early termination fee.  Additionally, if you are going to make a decision to purchase or lease your credit card equipment, make sure you understand the benefits and drawbacks of each option prior to making a decision. 

 Choosing a Provider or Changing Your Current Provider

 If a representative comes in off the street, was not referred by someone you know, or is with a company that you have never heard of, be cautious.  There are thousands of ISO’s (independent sales organizations) that act as resellers for large processing companies.  They are nothing more than middlemen, who will end up costing you more in the long run.  If you are shopping around for a new provider, speak to a representative who can give you a statement analysis and not vague generalities about home much money you will save by going with them.

By following these simple guidelines, you will generate additional revenue, save money and increase customer satisfaction.

Contributed by Mike Gianfrancesco, Gianfrancesco is an Assistant Vice President and  Senior Merchant Specialist for Bank of America, Small Business Merchant Services. He can be reached at – Office: 312-992-4538 Mobile: 312-371-6027 Fax:  312-453-6161 or michael.gianfrancesco@bankofamericamerchant.com.