Merchant services are usually known by business owners as merely the transactions using credit or debit cards. Well, that’s not totally wrong but it simply misses the point about what merchant services are really about. How greatly it can impact the success of one’s business.
Stores who uses payments via debit card or credit card are using merchant services. Payment online and mobile can be done when they use merchant services. To have this realized, they need to get a reliable merchant services provider to create new platforms and technology.
Let’s start by comparing an ecommerce-based business to a body shop, pretty sure you can tell that both of these establishments has different need. And although both of these businesses needs security, an ecommerce business will need a more heightened security system than the body shop. Ecommerce businesses will need a virtual strategy for payment processing whereas being compared to a body shop which is more physical and will need an actual person processing the payment.
So how does it work, you ask? Merchant services provider needs to get the actual merchant to get an account with them. Once they set up an account, they can start accepting these payments.
The payment processor will serve as the clearing house for the credit card networks, banks, merchant and the customers. Once the card is swiped a message then is sent though the payment processor to let the bank confirm or decline the transaction. This makes sure the cardholder has enough funds to cover the expenses. If the bank decides to approve the transaction then the processor will pass the message through the merchant and give the receipt to the customer which they may sign (optional).
But if the bank declined the transaction, then the processor will need to notify the merchant so that they can inform the customer. So that the merchant can let the customer use a different form of payment.
After all the transactions have been made for that particular day, the merchant will then send the authorization codes to the payment processor. All of the authorization codes on that business day will then be sent to the banks. Doing this is very essential, it is known as batch settlement.
These sensitive financial date that is being handles by the merchant everyday is very prone to fraudulent activities, that is why they need a heightened security protocol to avoid it. Any merchant who does not strictly follow these guidelines will need to face a penalty or a fine. Not to mention they could lose their account for the merchant services which means they will no longer be able to process credit card or debit card payments. This can greatly impact their reputation.