Overview of the Merchant Services Sectors
The merchant services sectors consist of a spectrum of expert providers committed to providing electronic payment processing methods and systems for business users. The financial services industries have seen a tremendous increase in the use of digital money which has given rise to a worldwide demise of cheques and cash. This demise has also been exaggerated by the growth in the use of debit and credit cards, as well as a movement from high street shopping to telephone buying and e-commerce. Many countries are phasing out the use of cheques as they involve labour-intensive and time-consuming banking process. Companies that need to accept debit or credit cards must have a valid merchant account. A new merchant account is typically authorised by a bank or other financial authority (such as a merchant service provider). They provide 'payment gateways' for millions of companies.
At the core of these gateway facilities is the approval of the payment transaction between a website, or via a phone order, or face-to-face, and the authorising or 'issuing bank' and the customer. The number one priority is to steer clear of fraudulent purchases. This is broadly achieved by verifying the identity of the cardholder present, and along with automatically ensuring the customer has credit available on the card to make the purchase. The response back to the payment processor used by the merchant acquiring bank is relatively immediate.
Merchant service providers have strict due diligence procedures in the merchant application process. These ensure a new retailer or other business is a bone fide registered company. It may also check transparency levels and operating policies with regard to customer service and complaints procedures. Retailers whose application is accepted and approved may be issued with an encrypted (SSL) connection for online transactions. Similarly, retailers may be issued with physical electronic point of sale (EPOS) equipment. These devices aid face-to-face acceptance of debit and credit cards (subject to strict credit limits and trading conditions). Financial institutions control and oversee the security and efficiency of the electronic payment industry. The security procedures of well-known 'bureau service' providers help to reinforce confidence of consumers and business customers alike.
In return for providing a secure platform upon which to trade, these bureaux providers take a small percentage on each purchase. Most will also levy other variable, fixed and one-off fees (such as charge backs, fraud occurrences and an annual administration fee), to retailers and other business customers. Many smaller retailers often complain these charges impede upon their already slender gross margins. Likewise, small firms that want to export and accept payments from foreign countries should be aware that transaction charges may differ by country. Electronic bureau providers have long experience in the volume and cost of overseas fraudulent transactions and set their charges by country accordingly.
Small firms rely heavily upon merchant services facilities as shoppers expect to be able to use most forms of electronic credit and currency. Small and medium-sized enterprises (SME's) who do not have a merchant account cannot legally accept credit cards and other forms of electronic money. New and innovative solutions are also available such as electronic cheque payment solutions. Intense competition means disloyal customers are quite prepared to buy elsewhere if it means they can use the credit facilities on offer an alternative supplier and at a better percentage rate.
There are many types of merchant service suppliers focused on special types of vertical markets. For example, specialist medical billing systems facilitate the billing cycles between healthcare providers and insurance companies. These operate predominantly in the United States and other countries where medical care is chargeable. The privacy and sensitivity of patient medical records dictates high levels of security during the electronic data interchange. Medical billing systems are also used by insurance companies. These systems help to process claims and authenticate the eligibility of patients costs against the policy terms and conditions.
Another example of a specialist form of merchant service is an escrow service. Escrow agents are neutral third parties that help facilitate large transactions between buyers and sellers. The service involves the agent taking charge over the asset (whether it is electronic money or property) into their custody until the conditions of the escrow service are confirmed by both parties. At which point the asset can be released, or money transferred.
With so many expert suppliers of merchant services, the use of online business directory is a straightforward method of getting more information out about each potential supplier. Check out details of services through online business listings. Click through from the directory to the merchants service own website in order to find transaction costs and due diligence procedures.