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The Foreign Language of Merchant Services
Ever feel like the payment processing industry speaks a language that only accountants understand?
You’re not alone. Between the alphabet soup of acronyms (PCI? DSS? ACH? Don’t get us started!), the endless dance with vendors, and so much fine print you could wallpaper a mansion, it’s enough to make any business owner throw their hands up in exasperation.
But fret no more, weary merchant! You’ve found the right place. Seamless and secure credit card processing is crucial for any business. But behind the simple swipe of your customer’s card lies a complex web of vendors working together to ensure every transaction runs smoothly. Understanding the basics behind each swipe is the first step towards demystifying the vast and complicated merchant processing ecosystem. This task can be daunting, especially for businesses venturing into merchant services for the first time. Thankfully, your team at Evolve Payment has you covered.
In this article, we’re untangling the web of merchant processing by discussing the key players involved. We’ll also explain how a well-connected and trustworthy merchant services partner can be a game-changer for providing clarity in this hard-to-understand industry.
What are merchant services?
Merchant services are every solution you need to accept payments from your customers. Virtually any service that touches your merchant account is included in “merchant services.” Everything from dual pricing programs to Quickbooks integrations counts as a merchant service, not to mention credit card processing, loyalty programs, and gift cards.
What is merchant processing?
Merchant processing is how your business handles card transactions. More specifically, the OCC labels a merchant processing activity as: “the settlement of credit and debit card payment transactions by banks for merchants through various card associations.”
Untangling the Web of Merchant Processing
While the exact number of vendors can vary depending on the chosen solution, here’s a breakdown of the key merchant processing players involved after every swipe of your customer’s card.
Merchant Service Providers (MSPs)
Your merchant service provider (MSP) is your dedicated point of contact for anything payment-related. Acting as your primary partner and resource, the MSP simplifies merchant processing by ensuring every other key player is cooperating and working at peak efficiency.
If you ever run into a problem and are not quite sure where to turn, your MSP can either answer the question or refer you to the right person. They will set up your account, provide the optimal hardware/software mix, and periodically review your accounts receivable to find cost-saving opportunities. An MSP is the buffer between your business and the payment industry. They handle communication between you and other service providers while guaranteeing that no unnecessary headaches are caused along the way.
Gateway Providers
Gateway providers act as tech-savvy middlemen, ensuring smooth communication between your payment processor, ERP solution, and accounting software. Gateways securely pass sensitive customer data from your website or point-of-sale (POS) system to your payment processor.
Although it might seem like a small piece of the puzzle, gateways ensure your customer’s data gets processed correctly and securely by encrypting, tokenizing, and converting payment data into a format your payment processor understands. Gateways also help you streamline your system by consolidating different payment channels into a single platform via integrations with your other tools.
Payment Processors
Your payment processor is a hidden workhorse that authorizes and settles transactions behind the scenes. Think of payment processors as air traffic controllers directing planes toward the proper runway at the correct cadence. Payment processors take the encrypted payment information from the gateway and exchange it with the card networks and banks. You will often see the payment processor when signing the closing documents, but you rarely interact with them as a company. That’s where your merchant service provider steps in!
Major Card Networks
Card networks are large companies responsible for setting fees and security standards for credit cards. Visa, Mastercard, Discover, and American Express are all examples of major card networks that act as stewards for the entire credit card payment ecosystem. Much like how roads have speed limits and toll booths to regulate traffic and pay for road maintenance, the major card brands perform a similar role in credit card processing. They govern the rules and regulations for card transactions and set interchange fees (fees paid between banks for each transaction).
You will see the term “PCI,” which stands for Payment Card Industry. It’s a coalition of card brands that regulates the industry to ensure everyone plays by the same rules. Collaboration is essential in this industry to fight fraud and protect every stakeholder, from customers to banks.
Issuing Banks & Acquiring Banks
When your customer uses their credit card to pay you, two banks get involved: the issuing bank and the acquiring bank. These banks range in size from large international institutions to local community banks.
The issuing bank gets its name because it issued the credit card to your customer. Issuing banks play the role of a chaperone for your customer by double-checking that they have enough money in their bank account to complete the transaction and pay you in full.
If your customer’s bank account has enough funds, the issuing bank will authorize the payment and send the funds to your acquiring bank via your payment processor. This is your bank, the bank that’s responsible for your merchant account. Think of the acquiring bank as one that acquires the funds from the issuing bank and deposits it into your account, closing the loop and completing the process!
Finding a Guiding Hand in Merchant Processing
Navigating this multi-vendor landscape can be overwhelming, especially with varying fees, contracts, and security protocols to consider. This is where a reliable MSP like Evolve Payment comes in. Sometimes, things can go wrong in your merchant account that affects your accounts receivable. When something negatively impacts your cash flow, and you need to troubleshoot, who do you call first? Your gateway, bank, processor, or someone else? Chances are, whoever you choose will put you on an extended hold, force you to submit a support ticket online, or tell you to call a different entity further down/up the stream.
After all this time spent listening to distorted elevator music and automated messages telling you how much your time is valued, the answer you get is likely convoluted or something along the lines of “We’ll get back to you on that.” Wouldn’t it be nice to have somebody in your corner who listens to your problems, understands them, and gets in touch with the right people to resolve them? That’s where your merchant service provider comes in.
Your Trusted Merchant Services Provider
A good merchant partner should simplify merchant services. They should act as a translator that decodes the technical jargon of the merchant processing industry so you can make the right decisions. Evolve Payment’s mission is to act as your single point of contact, simplifying the process by:
- Streamlining Communication: We say the right things to the correct vendors so the job gets done on your terms. Whether it’s setup or ongoing technical support, we get in front of the right people and make it happen.
- Providing Tailored Solutions: We analyze your business needs and recommend the most suitable processing solution based on transaction volume, industry type, budget, and more. You get all of this without paying exorbitant premiums that often come with “custom” solutions.
- Offering Competitive Rates & Transparency: We negotiate on your behalf to secure the best possible rates and ensure 100% transparency in fee structures by conducting our 30/60/90-day transactions. Our diverse network of partners gives us the necessary bargaining power to get the best deals possible for your business.
- Prioritizing Security & Compliance: We prioritize the security of your transactions and guide you through adhering to PCI (Payment Card Industry) Data Security Standards.
Ditch the Decoder Ring & Vendor Rolodex
At Evolve Payment, we translate the complexities of the payment processing universe into plain English. We’ll be your one-stop shop, guiding you through the maze of acquiring banks, processors, software, hardware, integrations, merchant statements, and everything in between. Our job is to find the best rates available to your business and negotiate to make them even better. The result is transactions that are as seamless as getting in touch with our team is.
So, ditch the headaches and focus on what you do best–running a thriving business. Let Evolve Payment handle the rest because we speak fluent merchant services.
Book a time to chat with Don, our merchant expert, and learn how Evolve Payment can simplify merchant services and drive real change to your bottom line.