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February 23, 2012
Merchant Services – All You Need To Know By Eva Grzybek
The term merchant services covers all the facilities which allow businesses and individuals to perform credit card processing online.
These facilities are usually delivered by either banks or independent payment service providers (PSP). Some banks offer the full spectrum of merchant services, but many work with PSP’s instead.
The two main merchant services are:
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- Internet Merchant Account (IMA) – this is a special type of bank account which is compulsory for anyone who wants to process online payments. Having just a business account is not sufficient for such ventures. When money is taken from a shoppers debit or credit card it first goes into the merchants IMA before being settled into his/her regular account. The main reason for this is that banks want to make sure that in case the cardholder issues a chargeback or asks for a refund then they are not out of pocket. Instead they agree with the merchant the length of the settlement period. Security is certainly the main reason for the existence of merchant accounts.
- Payment Gateway – this is a service which allows merchants to process card payments through a website. Certain banks offer their own payment gateway, while most cooperate with PSP’s who specialise in this area. The provider of a payment gateway also delivers a general payment page for those merchants who do not want to process payments through their own servers. They are also responsible for ensuring that the connection between the merchant and their gateway is secure and, if required, that any cardholder details are stored safely too.
- Security – providers of payment gateways also offer their merchants some sort of security tools to help them eradicate fraud. Some use widely available software, such as 3D Secure (a scheme supported by Visa, MasterCard and Amex which allows customers to set up an additional password on their payment cards). Some however have also developed their own software.
Anyone looking for online payment solutions can either enquire at their bank or contact a payment provider which will be able to deliver all of the facilities described. Because of fraud risk certain individuals or companies may not be allowed to process online payments. A lot depends on your credit ratings as well your business model. You should however not get discouraged if one bank or PSP turns you down for one of those reasons, as another one may be more than happy to assist you.
Merchant services are provided by countless organisations and each of them will deliver a slightly different level of service, so it is important to shop around and find one most suitable for you and your venture.
PayPoint.net – We help businesses accept visa payments online.
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