MERCHANT SERVICES

MERCHANT SERVICES

 

Hi, I’m James. This is Whiteboard Wednesday. There are two dogs barking outside right now, quite loudly, I think they’re having a competition as to who is the most annoying – it’s neck and neck.

Merchant services. Quick overview of how that works is: Your customers that are paying for products or goods from you – using their cash, debit, credit, etc. – are then sent to a middle man, the merchant service, who then acts as a holding company for that money from your customer, making sure everything’s okay. And once they’ve taken their fees, whatever it may be, their percentages, they send that on over to you, your bank, your financial institution, and it’s payday. Let’s celebrate.

But what kind of account types? Let’s go over some of those things, and things you should be looking for – for your own company when it comes to merchant services. So, with types, there are different types of accounts: there’s brick and mortar, there’s online, and obviously there’s a little bit of both – brick and mortar and online.

Now, it’s definitely advantageous for you and your company to make the most use of any kind of revenue that you can. So, if you have more of a retail front, obviously consider getting online. If you’re only online, look into if there’s any benefit of a retail store – this is not always the case, especially since everything is going online. A recent survey has shown that by the year 2017 over 75% of all transactions will be either online or through a card, whether that’s debit or credit, etc. Cash is not going away forever, but it’s definitely declining.

Let’s move on to accounts; the type of merchant service accounts. And these all can be specialized, or they can also work in together for an overall package for your company. So you have the MOTO account – which is not as popular as it used to be – which is the money order or the telephone order. Now, these are not, like I said, as common, but they still are necessary – especially for online businesses – for people that still want to call in. You also have the retail front, and you also have, again, online. The best is probably to incorporate all of these, but this will vary with your business and your industry, and your customer base – who you’re selling to.

Now some things to consider with those merchant services obviously is the cost; what kinds of fees do they have, a lot of times there’s an approval process before you can even use that provider. What kind of equipment do they provide? If you’re a retail store, do they have some type of card swipe, do they have other types of equipment that your company – specific to you – may need? And then services; what is this company’s reputation like? I mean this is just basic, no-duh kind of stuff, but you’d be surprised how many people just hop right in.

Now, since we’re talking about that, we need to get to the read part of the merchant services. Believe it or not, some of these have incredibly long contracts, a lot of legalese, and this is where the terms and conditions come into place. Don’t let that wall of agreement text stop you from reading through it, or just sign it. Because buried within that you may have volume commitments – how much you’re guaranteeing that you’ll use that service or what percentage you’ll be able to commit to monthly, quarterly – whatever the agreement is, know what that is before you’re getting in. Early termination fees – know what those are. If they exist, if they’re a percentage, this is stuff you need to know. And finally hidden fees. What kind of processing fees do they have? Are there special allocation fees? Do they have an increasing rate? All of this stuff should be known by you before you sign any paperwork.

And then finally, time. This is one that, when you think about merchant services, you don’t take into account often enough. So let’s say as an example, we have our mail order, plus we’re using some online. Now, all of that needs to also then go into the books, each of these taking time to enter that information, then, on top of that, you also have to enter in the information for whether it’s a production process, a distribution process, the products sold, etc. All of this is information that has to be gathered and that has to be put down, taken care of, and ready to reference again when you will need it. So, that can lead to mucho time, which is a really fancy way of saying don’t waste your day.

What if you had just one system, where it could take in all of your merchant service accounts, all of your production process and that information, and then sync that and import that into your financials – into your QuickBooks accounts. Boom, one package, it’s all done. All of that time added up is now in one easy spot so that it all correlates. Well, that’s Fishbowl.

So remember, when thinking about merchant services, read, consider your options, look at the types of accounts that will best serve you and where you can possibly expand, and look at the types of business that you’re trying to carry out – so in the end, this arrow coming out of the merchant service can be the least amount possible while giving your customers the most options and bang for their buck.

That’s this Whiteboard Wednesday. And as those dogs continue to bark I remind you, make sure to spay or neuter your pets. Thanks.

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