One of the main indicators of a great, booming, and commercially viable business, as checked by potential investors, is the number of players actively involved in that market segment. In the merchant services industry, the scene is so active and almost saturated that merchants no longer felt the need to fear that a certain company will monopolize the industry, which sometimes leads to underwhelming services that are left unchecked.
But why is it such a booming industry? To start off, let’s backtrack a bit and talk about what merchant services are. Briefly, merchant services refer to a range of financial services for business, with more focus on accepting and processing electronic payments. As the term implies, merchant services also include the behind-the-scenes process that allows merchants to accept payments, the service providers they work with, and the hardware and software needed to run the entire process.
For this to run, merchants first needed to set up their own merchant accounts so they can start accepting payments. They can do this by directly working with acquiring banks, which primarily serve a back-end role in facilitating the exchange of funds between card-issuing banks and merchants. Acquiring banks also rely on third-party sales organizations, also called acquirers, to sell the accounts and offer customer service.
There is another option that merchants can explore if they do not set up accounts directly through their acquiring banks, and this is through working with merchant service providers or MSPs. Merchant service providers are not payment brands, but they are involved in the processing, storage and/or transmission of cardholder data on behalf of the merchant. MSPs may also provide services that control or impact the security of cardholder data.
One of the reasons merchants go for merchant service providers than with banks is that while choosing banks to be their processors would seem convenient, their services will turn out to be more expensive than what MSPs offer. On an average, bank fees are usually at least 100 basis points or 1% higher than that of merchant service providers, as revealed by Entrepreneur magazine. MSPs have created such a game-changing impact on the way merchants operate that they have taken a more integral role in ensuring their success.
Choosing the best MSP for your business
Merchant service providers have now become the key to a merchant’s completion of transactions that UK-based online publication Techradar already released their review on the best merchant service providers of 2020. Since they play a very crucial role in the success of a merchant’s entire business operations, it is even more important for a merchant to choose the best MSP for their business.
Now, the next question would be: how do you choose the best providers of these merchant services that will work best with your business? We’ve broken down these important tips to help you come up with the best fit:
- The MSP is not a one-trick pony. While it is important that your merchant service provider can provide exactly what you need, it can be limiting if that is all it can offer. You have to consider your own business growth; with such a dynamic market, your needs will continue to change and you need a partner that can easily adapt to these changes. You can determine this by checking if your MSP can offer both online and offline transactions and can accommodate both small tickets and large transactions. After all, payment processing does not just mean credit and debit cards. You also have eCHecks and ACH, online payments, and point-of-sale systems. There are also other services that you can capitalize on such as gift cards, rewards programs, and surcharging. Check if your MSP can easily provide this on top of what you need, or come up with a customized plan that both addresses your current and foreseen needs.
- The MSP offers stellar customer support. Merchant services are not all about payment solutions, it is also ensuring that these solutions continue to perform well. This is especially important if you are a merchant engaging in ecommerce, where no business hours are observed since people are buying at any time that they want. When a certain hardware or software suddenly encounters a glitch, you need to make sure that your merchant service provider can perform troubleshooting right away to prevent loss of any potential income. Check if the MSP you are leaning towards offer both 24/7 and live support so any concerns can be addressed ASAP.
- The MSP has a proven track record. One of the ways to easily check this is to count the number of years it has operated. This is not to discount the up-and-coming MSPs, but if a certain MSP is still running successfully for that long in spite of the presence of its competitors, then it really is an expert on merchant services. This is also an indicator that your MSP knows how to run its business sustainably. Another indicator is the number of testimonials, positive reviews, and recommendations you can get from the MSP. If the MSP has a following of very satisfied clients that can vouch for its service, then it must have really done something right for them.
- The MSP has reasonable pricing plans. Remember the Square price increase that really hit small business owners this year? This is just to prove that sometimes, the cheapest offer is not the best or most sustainable one. When choosing a provider, check if it offers a variety of plans and if is transparent about what services and fees go in each of these plans. You might suddenly be shocked that even if you find your MSP’s pricing plan to fit your budget, it has a hefty cancellation fee when you decided to no longer work with them. When choosing a pricing plan, base it on these three variables: value, volume, and credit card types.
- The MSP follows a set of standards for security. As a merchant, your first priority are your customers who you need to keep to earn more profit. You have to ensure that any sensitive information they provide you remains confidential and protected so you can also earn their patronage and trust. To achieve this, your MSP must be PCI compliant and must help you become PCI compliant. It must also offer fraud protection services like EMV-enabled payments for added security.
Overall, there really is no merchant services provider that is a one-size-fits-all. However, there are MSPs that can easily adjust and meet the above listed non-negotiable requirements so they can be the best fit and provide the best offer for your investment.
At Agapay, we take the needs of our merchants seriously and offer products and merchant services you will need to help grow your business. To know how we can assist you by assessing what packages would best suit you, call us at 800 644 3909 or reach any of us here.