Credit cards were in use since the 1920s. During that time, hotel chains and oil companies started issuing credit cards to customers to purchase at various brick and mortar openings. Now, the majority of credit card dealings has shifted online. Moreover, a single card dealing needs a complicated web of encryption software and payment processors to authorize transactions that are performed around the globe- that is less than it took you to recite this sentence.
Merchant service providers or MSPs facilitate the steps involved in the debit card transaction process. They are the main players of any business. However, there are numerous Merchant Service Providers today. It is challenging to check all of them and also their conditions of service agreements. The profits are eaten away due to high processing fees. Bad security has chances to put customer’s information at risk.
Guidelines for selecting and identifying merchant service providers
What is meant by a merchant service provider?
MSP or merchant service provider is any business that is utilized by merchants to practice payments other than cheque or cash. Some examples are debit cards, credit cards, ACH payments. Merchant service providers are divided into three types:
- PGPs or Payment Gateway Providers
- PSGs or Payment Service Providers
- MAPs or Merchant Account Providers
Payment Gateway Providers (PGPs)
A PGP associate website to merchant account and processing network. Online payment entry is similar to the virtual card machine. The customers input their payment credentials instead of inserting or swiping their credit cards. The main function of the payment gateway is to safely transfer payment information through the transaction process. A payment gateway is popular for its security and it reassures customers information are safe.
Payment Service Providers (PSPs)
PSPs associate merchants to the electronic business system which they can accept debit and credit card payments. They remain as large companies and function massive aggregated accounts. Some popular PSPs like Square and Paypal provide accounts that are simple to obtain but are easily terminated or frozen. PSPs have little barriers to pass that put them at high chances of abuse and fraud. Therefore, the dissolution conditions of service contracts are more stringent. Some pros of using PSP are easy setup, no monthly fees, and other added merchant benefits.
Merchant Account Providers (MAPs)
One of the main services by MAPs is it provides store owners a merchant account. The merchant accounts grips funds in midpoint when authorization is completed, credit limits are analyzed and payments are administered. Once the transaction is completed, the funds from the merchant account will be transferred to the business account. It usually takes about a few days.
Various merchant service providers who are also merchant account providers include payment gateways, payment processors or banks. If you own brick and mortar outlet with plans to sell online, you need to use your existing merchant account for performing online transactions. Some major MAPs contain credit card processing along with merchant account agreements.
Merchant account services provide different account types, transfer times and processing volumes. You need to examine the fee structures, processing volume and fund transfer times while selecting for your business.
