What you need to know about Merchant Services - NeelPro System Pvt. Ltd.

Merchant services are the a kind of economic services provided by the finance industry that takes up under a wide range of businesses including managing of money, credit and debit cards companies, unions  etc. of the same kind. In the specific terms, it only refers to business that deals with transaction of money through card payments via a secured and encrypted channel. Generally, the term Merchant Services includes the following:

• Credit and debit cards payment processing: It is the most commonly used Merchant service. It uses the customer’s debit/credit card for the payment of services via a secured encrypted network channel.
• Check guarantee and check conversion services:  This services ensures the receiving of funds and getting the check converted into electronic form for direct deposition into the specified account. It reduces the man power required in the processing of any check payment.
•  Automated Clearing House check drafting and payment services: It facilitates interbank high volume electronic transactions which are of periodic nature.
• Gift card and loyalty programs: It refers to the loyalty schemes and methods to promote the customer usage of cards such as reward points or club card etc. Gift card is a prepaid card issued by the retailer to be used as an alternative for cash at any store.
• Payment gateway: It is the service that authorizes card payment or direct payments in e- business.
• Merchant cash advances: Merchant cash advance companies provide funds to businesses in exchange for a percentage of the businesses' daily credit card income, directly from the processor that clears and settles the credit card payment.
• Online transaction processing: It facilitates and manages transaction-oriented applications, typically for data entry and retrieval of transaction process.
•  Point of sale (POS) systems: At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice and indicate the options for the customer to make payment.
• Electronic benefits transfer programs: It allows the state welfare department to issue their benefits via a magnetic striped or smart card.

These are all the services that come under the umbrella of merchant services.  Merchant service providers typically require the merchant to have a merchant account with the provider, either directly or through a referral partner, such as banks or B2B service companies. A merchant account is a type of bank account that allows various forms of payment especially credit/debit card payments.

The merchant must receive an approval from the card issuing bank authorizing the transaction in order to process the sale. The authorization process is designed to protect the merchant from the use of fraudulent cards, as well as prevent transactions being approved for cardholders who are over their credit limit or have not paid their bills.

In providing the merchant services, fee is charged to the merchant. The discount fee that a merchant is charged depends of several factors including the type of Business Risk presented, retail or Internet Merchant, Credit Card present or not.