What Type of Merchant Services Are Important in a Small Business?

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Merchant ServicesIt’s critical for business owners to understand the merchant services that are important in a small business. Without understanding these services and what they cost, a business owner could end up wasting thousands of dollars each year.

Merchant Services Explained

What are merchant services? Basically, they are a variety of financial services that businesses use to accept and process payments for products or services. Common merchant services include

  • POS (point of sales) systems
  • ACH (Automated Clearing House) transactions for check drafting
  • Credit card and debit card processing
  • Payment gateways

Although all businesses need some means of accepting and processing payment for goods and services, the type of business you run will determine which services you use. Sales volume and the type of billing used will also influence a small business’s use and payment for merchant services.

Merchant Services Your Business Needs

All four types of merchant services listed above are important for some small businesses. However, few small businesses will use all of them. Here’s a closer look:

POS Systems – These systems are generally used in retail settings and may also be used in restaurants or other food services. These systems are best for small businesses that sell products from a brick-and-mortar location, and most include a traditional cash register. A POS system tracks incoming sales and processes them by payment type. Some POS systems include credit and debit processing while others operate separately. ACH check drafting features may also be available on a POS system to allow small business owners to eliminate the danger of bad checks.

ACH Transactions – These transactions are automated bank drafts other than those processed with a card. This type of service is great for monthly billing as it allows customers to set up automatic billing for services that comes directly from a bank account at a designated time each month. ACH processing can also be used to process paper checks electronically at a cash register, eliminating the risk involved with accepting personal checks and carrying them to the bank for deposit.

Credit and Debit Card Processing – This is becoming one of the most common and necessary types of merchant services. Almost all small businesses need to be capable of processing credit cards. The innovative Square, launched by the inventor of Twitter in 2009, allows small business people of all sorts to process credit cards for a flat rate of 2.75 percent, according to Merchant Maverick. Businesses that do low volume or inconsistent volume will likely find this a great deal, especially when they can avoid monthly equipment costs. However, larger businesses or those with a consistently high number of monthly transactions should consider shopping around for the best rates on credit and debit card processing.

Payment Gateways  Payment Gateways are the POS systems of online sales. These newcomers to the realm of merchant services are online portals that allow businesses to accept payments from customers directly on a business website. Payment gateways encrypt sensitive information and allow for the secure transfer of information from customer to merchant. Naturally, this service is unnecessary for business that do not provide online sales but integral to ecommerce.

Related Resource: POS Systems

Merchant services are helpful to businesses of all types and sizes. The type, scope and size of a company will determine the merchant services that are important in a small business.

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