Merchant Account Providers: Explained simply

by | Feb 2, 2023 | merchant account

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Companies that offer merchant services give people and businesses the equipment they need to accept credit cards, debit cards, and other types of electronic payments. The goods and services that merchant account providers supply to companies so that they can actually accept and process payments in a way that benefits both them and their clients. You are provided with the information and technology your company needs to run efficiently by a merchant services provider. The payment information your Merchant Services Provider gives you might teach you a lot about your company.

Also read: How to Get a Business Credit Card with an EIN Only

Merchant Account Providers: What is it?

Payment processors refer to their clients as “merchants” in this context. Businesses that take business credit cards payments from customers in-person, online, or over the phone are known as merchants, or customers. To make those firms run more efficiently, a merchant services provider offers products and systems.

These goods and services frequently work with the equipment you currently have for your business. For example, your payment provider might link up with your QuickBooks Online for reconciliation or a POS system for your retail store. Additionally, merchant service providers can offer inventory control, client management, and payment reporting.

Merchant Account Providers: Who is it?

A merchant stands in for an individual or business that transacts in goods or services. Retailers have the option of offline or online sales (sometimes called an eCommerce merchant). Today, the majority of businesses are both in-person and online.

Also read: What is a merchant account? Do you really need one?

Various Forms of Merchant Account Providers:

  • Internet retailer: An internet retailer is one who sells products.
  • Retailer: A businessperson who sells goods they have acquired from producers.
  • Wholesale merchant: Retail retailers buy products from wholesalers or manufacturers.
  • Affiliate merchant: Merchants who sell products through affiliate networks are known as affiliate merchants.
  • Direct-to-consumer (DTC) merchants: are those that sell products they have produced themselves to customers.

DTC merchants are now fairly widespread since there is a relatively low entry barrier for online product sales. The majority of DTC businesses continue to operate as wholesalers, selling their goods to merchants who subsequently pass those goods on to customers.

Merchant Account Providers: What is it?

If you’re searching merchant account providers then firstly you should know what is merchant services. A merchant account is a bank account that has been set up expressly for business use and allows businesses to accept and process payments. Keep in mind that a merchant account differs from a standard bank account. Most business entrepreneurs lack clarity regarding this fundamental premise.
With the help of a payment gateway, merchant services accounts enable businesses to accept credit and debit card transactions as well as other types of electronic payments from customers.

In addition to a variety of services, merchant account services frequently come with additional costs.
The majority of the time, the merchant is responsible for paying the transaction fees for the merchant account from payment processors, the credit card association, and the issuing bank.
In light of this, it may be more wise for the merchant to search for a solution that will lower the cost per transaction.
On the other hand, a low processing charge does not, over time, ensure dependable service and assistance.

Also read: Best Small businesses credit card processing

Merchant Account Providers & Merchant Service Provider: Difference

There are certain differences between merchant services and merchant account providers, despite the fact that the two businesses have a lot in common. The former refers to a company that offers a variety of services to merchants, such as payments, technology integrations, business services, etc. The former is a much broader term. Providers of merchant accounts often limit their assistance to setting up the type of bank account that allows businesses to accept credit and debit card payments, or the merchant account.
These phrases are frequently used interchangeably.

Merchant Service: How it works?

Companies that offer merchant services give people and businesses the equipment they need to accept credit cards, debit cards, and other types of electronic payments.

In the United States alone, there are thousands of merchant account providers.
Each organisation has its own tools, services, and costs, from ISOs and independent third-party merchant service providers like Square, Stripe, Paypal, and Stax to large banks operating their own merchant services (Bank of America, Wells Fargo, Chase Bank).
Each model will cost more or less depending on the size of your company.

Merchant Service Account: Easiness in opening

A merchant services account creates a professional connection between a business and a merchant services providers. By doing this, the company gains access to a variety of payment methods, including contactless payments like Apple Pay, debit and credit cards, eCommerce, and more.

You can do business with some payment processing firms without having a merchant account providers, like Square.

It can be dangerous to decide not to have a merchant services account. Payment processing companies like Square frequently take clients from higher-risk industries who wouldn’t typically be eligible for a merchant account.

The risk for the payment processor goes up as a result. You’re more likely to encounter an account hold for specific transactions if your company fits that description.

Your account may be terminated by the payment processor if they choose not to take on that increased risk, which will prevent you from accepting payments from clients.

Also read: Credit card processing and payment gateway

Merchant Services: Products

The various technologies accessible for payment processing make up the second crucial component of “merchant services,” which is what follows. the goods and services that merchant account providers supply to companies so that they can actually accept and process payments in a way that benefits both them and their clients.

Contactless Transactions

Credit and debit cards, Apple Pay, Android Pay, Google Pay, Fitbit Pay, and other products that utilise near field communication (NFC) or radio-frequency identification (RFID) all support contactless payments (RFID).

Mobile Transactions

Mobile payments are made using a mobile phone or other portable electronic device to purchase a good or service. With programmes like PayPal and Venmo, it is also possible to send money to friends and family using mobile payment technology.

Credit card terminals

An electronic device known as a credit card terminal, also known as an electronic data capture terminal or EDC terminal, enables retailers to accept credit cards and allows customers to swipe, dip, or tap their credit or debit card to make a payment.


eCommerce refers to the electronic purchase or sale of goods through online stores or the Internet. When receiving payments in person is not an option, eCommerce solutions can fill the gap, allowing you to accept credit cards and debit cards online and create a personalised web store.

Remote terminals

A virtual terminal is a piece of software that shops can use to collect payments from payment cards, notably credit cards, without needing the cards to be physically present.

Also read: Best 5 payment gateways for small businesses 2023

Point-of-Sale (POS) System

The spot where your consumer pays for goods or services at your store is known as the point of sale, or POS. Simply explained, a point of sale transaction is completed each time a customer makes a purchase at your store.

Payment Gateway

You can accept and process secure credit card payments online with the help of a payment gateway, which is a piece of software that integrates with your website or online business. A credit card terminal is replaced by the payment gateway.

MSP: Payment processing

A merchant account providers acts as a go-between for banks, your company, and your clients. This enables you to accept your clients’ preferred method of payment with assurance. You can count on this money to reach your bank account safely when you use a Merchant Services Provider.

The Merchant Services Provider transfers the customer’s funds to your bank account when they swipe a card. Within 48 hours, the money should show up in your bank account. Many companies are eligible for next-day funding and can receive payments even sooner.

You can buy or rent credit card terminals and mobile swipes from your merchant services provider. They will seamlessly integrate with your eCommerce store if you run an online business. With virtual terminals, you may take online payments.

You can enter payments over the phone or accept payments online using virtual terminals. You can get assistance from your merchant services provider in choosing the best payment processing solutions for your company.

MSP: Payment security

For organisations handling credit card payments, internet payments, and maintaining card number storage, payment security is essential. Accepting money today can potentially include a lot of hazards. According to one research, credit card fraud cost businesses close to $25 billion in 2016. A Merchant Service Provider can assist you and your clients in conducting business transactions safely and securely through Payment Security.

You may assure PCI compliance with the aid of your merchant account providers. This indicates that the names and card numbers of cardholders that your company stores are safe. Businesses should take preventative measures to safeguard data by adopting strong passwords and routinely upgrading their antivirus software.

On the payment side of your organisation, your merchant account providers will keep PCI compliance. This involves tokenizing payment data and safeguarding your company by putting in place fraud prevention measures. Find out more about the payment protection offered by Stax.

Also read: Best offshore high risk merchant account providers

MSP: What to look for?

Make sure to notice the prices of potential merchant account providers. You may need to keep in mind the following fees depending on the type of services you require.

  • Setup Fee
  • Equipment Fee
  • Monthly Fee/Service Fee
  • Transaction Fee
  • Credit Card Processor Fee

Payment Processing: Pricing

Flat Rate

A defined percentage based on a fee for processing payments, the flat rate is appropriate for startups and small retail firms with low sales volumes. This price structure is the most user-friendly and quick to set up.

Interchange-Plus Pricing: For each card type, whether it be CNP or Card Present transactions, each credit card issuer, such as Mastercard and Visa, has distinct interchange fees. The processor adds a markup to the interchange and deducts a percentage from each sale when using the interchange-plus pricing structure.

Direct Interchange

In the case of a direct interchange fee, the merchant imposes a flat monthly fee without any associated percentage rate. It’s not ideal for small companies with modest sales volumes.

Tiered Rates

To distinguish each card type, tiered rates are arranged in several groups (Visa, Mastercard, Discover). For small to medium-sized firms, it’s not the most practical. This is not the best option for B2C transactions because the costs vary.

~ Also watch for some additional charges:

  • Account fees
  • Minimum processing fee
  • Statement fee
  • Account setup fee
  • Cancellation fee
  • Chargeback fees
  • NSF fee
  • Early Termination fee
Also read: How to set-up credit card for small businesses?

MSP: Customer service is very crucial

Make careful to investigate a merchant account providers customer assistance options. There are many moving elements in payment processing, therefore technical problems could happen.
You want an experienced partner who will have your back in these situations and can make sure that everything goes without a hitch.

Examine a provider’s customer service abilities before choosing them. Is support offered round-the-clock? What methods or platforms can you use to get the information you need? What are other businesspeople saying?

You can determine a provider’s dependability in terms of customer service by looking at the responses to these questions.

Also read: Top payment processing companies for small businesses!

MSP: Bottom-line

Stax, one of the top firms for merchant services in 2020, has revolutionized the payments sector with our subscription-based pricing structure. Stax is a merchant service provider with a subscription-based business model that incorporates complete transparency. All retailers have access to 0% markup, no-contract, no-hidden-fee direct cost payment processing.

We think that business owners like you should have access to all of this valuable information. You can learn more and develop the ability to think strategically, which will benefit your company.
We created Stax, our all-in-one payment platform, for that reason. With Stax, you can gather invoices in one location, track payments, and make payment connections. Additionally, you may always read in-depth information about the state of your company.

To get the best merchant account services contact us at Your Merchant Services Rep!