How to Choose a Merchant Service Provider and 7 Questions to Ask

Global online sales reached almost $5 trillion in 2021 and are expected to grow by over 56% by 2026 and exceed $8 trillion. Is your business looking to accept electronic payments? You’ll need a merchant service provider with experience in your industry who can handle payments securely and timely.

Here are 7 questions to ask before you choose a merchant service provider for your online payments.

1. Does the Merchant Service Provider Offer Customer Support?

Customer service is a critical factor when choosing a merchant service provider. You will need to be able to get in touch with of someone in customer support if you have difficulties with your equipment or questions about the process.

Ask about the types of support provided by the company. Most companies offer some level of customer support, but it can vary greatly.

If you own a business, like a restaurant, that operates after normal business hours, you will need to be able to reach customer support at all hours should a problem arise.

Does this merchant service provider offer 24/7 support? Issues can pop up anytime day or night and when they do, you will want to make sure you can reach the customer support team.

Some merchant account providers also offer 24/7 email or live online chat support too. Make sure you are familiar with all the ways you can reach your merchant services customer support team.

Read references and reviews online to make sure current customers are satisfied with the company’s customer support.

2. What are the Merchant Service Provider’s Fees?

Some companies offer point-of-sale terminals and other equipment that can be purchased or leased. Both options come with their pros and cons. Be sure to ask about fees in changing or upgrading equipment later on.

Pricing for merchant services can be complex and confusing. Make sure you understand the merchant service fees of each company that you speak with.

There are two main pricing models: tiered pricing and interchange-plus pricing. Within these two systems, there are even more options to choose from.

There are often different rates for different types of cards. These fees are generally driven by the card associations.

There may be other types of fees associated with your merchant service provider. Cancellation fees are pretty standard throughout the industry. Make sure you understand all the charges that you could be charged to avoid unwanted surprises on your bill.

Also, ask about protection from fraud. Some merchant service providers can help protect your payments from fraud. Extra security services that the company offers such as encryption and fraud management can help reduce your risk of fraud and might be worth paying a little extra in fees.

3. Can the Merchant Service Provider Process Online and In Person Payments? 

If you are a brick-and-mortar business that also has an e-commerce platform, you will need a merchant service provider that can process both online and in person payments.

If you are only selling in person via a brick-and-mortar business, depending on your industry, you should consider expanding to offer online sales as well.

As you expand your business you don’t want to have to switch merchant providers because they do not offer all the services you require. Choose a merchant service provider who can help you take your retail business online while still having the ability to process in person payments.

4. Is the Merchants Service Provider’s System PCI DSS-Compliant?  

Payment Card Industry Data Security Standard, or PCI DSS, establishes the basic security procedure that safeguards your customers payment information when they use their credit or debit card.

If your business processes, stores, or transmits customers credit and debit card information, your business must prove that it does so in a way that meets the PCI DSS requirements for security.

Your merchant services provider will help your business remain PCI DSS-compliant. Be sure to ask them about this capability.

5. How Long Does It Take the Merchant Service Provider to Process Funds?

Businesses need to have a predictable cash flow to be successful. It is important to know how much time it takes for a merchant who accepts credit cards and debit cards as payment to have the funds deposited into their bank account.

There is no right or wrong answer here. Every merchant services company works a little differently, but you will want to know what that process looks like prior to making a decision on who to use.

Typically, merchant services providers can take anywhere from 24 hours to three days to process the payment. After payment is made, it has to go through several steps before it finally reaches your bank account.

Knowing how long you have to wait for payments to appear in your bank account can help business owners get an accurate accounting of their cash on hand and overall cash flow projections.

6. What are the Terms of the Contract?

Most merchant service providers use contracts with businesses they process payments for. These contracts determine the length of time the two parties will work together.

If your business is just starting out, a shorter contract length is your best option. Once you feel comfortable with the merchant services provider, you can look into signing a longer contract which may lower your overall fees.

A shorter contract doesn’t back you up against the wall for too long just in case you decide you want to switch to a different merchant services provider. Also, ask about fees associated with canceling your contract early. These fees are pretty standard, but you will want to know what they are beforehand.

7. Is Their Payment Processing Compatible with Our Current System?

Finally, you need to ask the merchant service provider if their processing technology is compatible with your existing hardware or software. Many merchant service companies use their own proprietary payment systems that could clash with your existing hardware or software.

The same is true with brick-and-mortar stores. Make sure your existing payment terminals will work with your new merchant service provider before you sign the contract.

The Best Merchant Service Provider for Your Business

As a business owner, you have many choices for merchant service providers. Let each one of them earn your business by telling you what they have to offer. You don’t have to settle for a payment company that doesn’t provide the service that you are looking for.

Your FundingTree can make processing credit or debit cards easy. Simply fill out this quick online form to give us some details about your business and we will reach out to you with offers from merchant service providers for you to review.