Imagine a morning in the life of a busy coffee shop owner:
Beep … beep … beep, an alarm blares from your phone.
A morning person through and through, you’re up early, already mentally checking off the tasks ahead — you have to be ready to brew the perfect cup of joe for your customers! The hum of espresso makers greet you as you walk in, the familiar scent of ground beans filling the air. You prep the cups and stirrers, check the inventory. You make sure your cash register systems and payment terminals are working properly — those are just as important as your coffee-related equipment.
The morning crowd arrives, and it starts out smooth, but soon you notice the line has slowed. You spot a regular looking panicked as he tries to buy his usual iced coffee and bagel with strawberry cream cheese. He’s frantically patting his pockets, and it hits you — he’s forgotten his wallet. You can tell he’s stressed, not just from the missing money, but also from the worry (and embarrassment) of holding up the line.
This is where your investment in the right merchant services pays off.
With a smile, you step in and say, “No worries. We accept mobile wallet payments.” Relief washes over him as he grabs his phone and quickly taps it on the payment terminal. Crisis averted. He enjoys his coffee and bagel, and you don’t lose a sale!
For moments like these — and countless others — having a reliable and flexible payment system is essential. It’s not just about saving a sale; it’s about keeping your customers happy and coming back. Let’s explore what merchant services are exactly, and how they can help your business thrive, no matter what the day throws at you.
What are ‘Merchant Services’?
Merchant services are the payment-related support services and equipment that facilitate transactions between businesses and customers.
Examples of common merchant services include:
- Card processing: This involves accepting and processing payments made with credit or debit cards.
- Payment gateways: These are online platforms that securely handle credit card transactions for e-commerce businesses.
- Point-of-sale systems: POS systems are used to process payments, track inventory and manage sales data.
- Mobile payment processing: This enables businesses to accept payments through mobile devices, such as smartphones, smartwatches and tablets.
- Check processing: This involves accepting and processing checks as a form of payment.
- Gift card processing: This allows businesses to sell and redeem gift cards.
Banks typically offer these types of services to businesses, tailoring them to meet the specific needs of each merchant.
Why Are Merchant Services Important? 4 Reasons.
Merchant services play a crucial role in modern business operations, offering several key benefits that enhance both efficiency and the customer experience:
- Convenience: Offering a variety of payment options, such as credit cards, debit cards, mobile wallets and contactless payments, makes it easier for customers to pay and reduces the likelihood of lost sales (like the sale of a coffee and bagel to a customer who had forgotten his wallet!).
- Security: Modern payment technologies come with enhanced security features, protecting businesses and customers from fraud and unauthorized transactions.
- Speed: Efficient payment solutions streamline processes, allowing businesses to serve more customers quickly and increase sales.
- Adaptability: As payment technologies evolve, businesses that embrace these innovations can stay competitive and meet the expectations of their customers.
As technology has advanced, merchant services have evolved significantly. For instance, traditional point-of-sale (POS) terminals, which were once clunky and cumbersome, have transformed into sleek, efficient devices that integrate seamlessly with various modern payment methods.
These innovations aren’t just about keeping up with the times; they’re about making life easier and more efficient for you, as a business owner, and your customers.
3 Key Questions About Merchant Services
When discussing merchant services with businesses, three main questions often arise:
1. What payment methods should I get for my business?
This is a great question because choosing the right payment methods is crucial for a seamless customer experience and for maximizing your business’s revenue potential.
Put your customers first. What payment methods do they prefer? Are they primarily cash-based, or do they use credit/debit cards or digital wallets, such as Apple Pay, Google Pay and others.
Next, evaluate your industry. While some industries, like retail or hospitality, may have specific payment method requirements, many businesses have flexibility in their options. For instance, you might have noticed some restaurants have begun offering QR code payments for table service, providing a convenient and contactless option for customers.
Finally, think about your location. If your business is in a suburban area, for example, you might want to offer a variety of payment options to cater to both residents and commuters. If your business has a strong online presence, you may need to consider accepting payments through your website or mobile app.
2. How quickly can I access my funds?
The speed at which you receive your funds is crucial for maintaining healthy cash flow. Here are your options:
- Two-Day Funding: This is the most popular option and is usually offered by most every merchant service provider. After closing out your transactions (batching), funds are typically available in your account two business days later. If you close out on Monday, funds will be available by Wednesday.
- Next-Day Funding: If your transactions are batched before a specific cutoff time, funds can be available the next business day. This is often offered as an additional feature to standard merchant services.
3. What are the associated costs?
Merchant services come with different pricing structures. Two of the most common are:
- Flat Rate Pricing: This model charges a set percentage for each transaction. While it offers predictability, it may be calculated using higher interchange rates, potentially leading to higher overall costs depending on your industry and customer base.
- Cost Plus Pricing: You pay the actual interchange cost for each transaction plus the merchant provider’s fee. This model can be more cost-effective but may result in variable costs based on the type of card used, with total charges only clear once your statement arrives.
One emerging trend in merchant services is the increasing use of surcharging. This practice allows businesses to pass on a portion of their credit card processing fees to customers. However, you must follow specific rules and regulations when implementing surcharging.
Final Thoughts
Today’s payment solutions are designed with flexibility and ease in mind. Whether you need to accept a range of payment types, prefer faster funding options or are looking for a pricing structure that suits your business, modern merchant services offer a variety of choices to meet those needs. And it doesn’t have to be complicated. The key is finding a partner who simplifies the process and provides a solution tailored to your specific needs.
By choosing a provider that offers personalized support and adaptable solutions, you can streamline your payment processes, enhance customer satisfaction and keep your business running smoothly. Remember the coffee shop owner who was able to save a sale and keep a customer happy by offering mobile payments?
At Bank of Utah, our merchant services specialists are available to answer any questions and provide more information on how our solutions can best meet your needs. Reach out today to see how we can help simplify your payment processes and support your business goals.
Phillip Reineke is a Merchant Services Relationship Specialist at Bank of Utah, where he’s spent the past three years dedicated to helping customers find the best solutions to their challenges. When he's not at work, he embraces Utah’s amazing outdoors through camping and hiking.
