Merchant Services for Small Business

When it comes to small business merchant services, an entrepreneur has to consider several factors to provide premium services for their customers. At the top of the list is the range of payment options. As a small business owner, you need to balance the competition, cutting costs, and giving your clients the best service. 

For this, you’ll need merchant services for small businesses, which PaymentUSA is happy to offer. 

We understand you may not know how merchant services for small business operations work. We’ve got you. This article will provide relevant information. Here, you’ll learn why your enterprise needs a merchant account for small business, how to identify a good service provider, and what the cost implications are. 

However, if you don’t have enough time to grasp the basics, allow PaymentUSA’s tailored solutions to take care of your payment processing. Speak to one of our advisors to explore how to bring our globally respected solutions to your company.

Small Business Merchant Services

Merchant services cover everything around payment solutions for small businesses. Everything from software and hardware to processing credit and debit card payments is part of a small business merchant service for both online and brick-and-mortar stores. 

There are several types of payments that businesses can accept, but credit card payments are the most popular for many customers. According to statistics from the Bureau of Consumer Financial Protection, an estimated 66% of adults in the US owned a credit card by the end of 2018. 

This is why most of our solutions here at PaymentUSA are targeted at credit card merchants for small business accounts.

What is a Small Business Merchant Account?

A small business merchant account is a bank account type that allows enterprises to receive and process payments via various online means. Whether payments are made by bank card, ACH, or other methods, this account caters to your needs, providing you with a specialized package for your company. Merchant accounts for small businesses stand as an agreement between the enterprise, the payment processor, and the merchant bank. 

Once you activate your account, your payment processor becomes a bridge between the issuing (customer) and acquiring (your business) banks to process payments. Merchant service providers also allow you to receive payments via NFC mobile wallet, debit/credit cards, ACH, and other means. 

As you may know, credit card bills may not be paid until the customer settles them. With a small business merchant account, you don’t have to wait long, as the money is instantly available to you.

Why Your Small Business Needs Merchant Services

Many of our prospective partners ask why they need merchant services as a small business outlet. When any enterprise thinks of restructuring its operations, it is generally looking to improve customer experience. Here are the top reasons you should look to adopt merchant services.

Smooth transactions

One of the crucial benefits that a merchant account provides is ease of transactions. 

As you may expect, there are instances when technology throws up issues. Some of these circumstances could include failed card authorizations or other payment restrictions. 

It is the part of merchant service providers to look into common faults and provide quick solutions. They also ensure the same situation does not repeat in the future.

You can easily tap into a larger customer pool

Whatever the industry or type of business you operate, you can’t expect all your customers to have access to liquid cash throughout the month. This is why restricting your payments to cash could hamper your business since you’re driving potential customers away. 

A merchant account for small business can help you grow your customer base. It’s easy to attract more customers to your business when there are a lot of options to complete an order. This is one way to build a loyal army of customers. 

Whether you deal in high value or items that may require quick disposal, additional payment methods allow you to interact with customers who are not keen on carrying much cash around or can’t pay outright.

Thorough guidance and support

Merchant services for small businesses include step-by-step guidance on introducing multiple payment routes to your customers. The world of transactions is constantly changing, and you’ll need an up-to-date database and technical support to help you. 

Importantly, merchant services for small businesses provide customer support and assistance for people subscribing to merchant accounts for the first time. As well as guidance, advice will be given on implementing the various high-tech solutions to protect the business and increase client retention. 

Our customer support at PaymentUSA is available 24/7, so you can get help anytime and anywhere. Our dedicated and experienced agents are always around to give an immediate response, whatever the issue.

Efficiently manage your business finances

With the evolution of financial technology, you can easily integrate various types of merchant services for your small business. For instance, seamless integration of your point of sale (POS) and virtual terminals. However, the relevance of merchant services for small businesses does not end there. 

With top-end modern solutions designed for small businesses, all payment methods can be accessed from one control point. While this depends on the merchant services provider you choose, the latest features will be included in your package. 

You can also easily carry out data consolidation without much stress. There’s no longer a need to carry daily tasks to update your spreadsheets. You save hours and still keep your transaction information up to date. 

The relevance of online merchant accounts for small businesses ensures entrepreneurs can access top management tools and software to help them view all transactions in a single platform. You can even go further by separating transactions based on the payment mode your customers use. This is a great way to judge your business performance metrics down to granular detail. 

You may be lucky to find certain merchant service providers that allow you a smooth integration of your merchant account with your financial books. This way, you don’t have to do any manual updating of the records. Each transaction is automatically entered into the spreadsheet. Furthermore, you can see your inventory and business metrics in real-time. Additionally, you reduce the margin for human error that usually comes with manual data entry. 

Merchant services for small businesses provide all this and more

Retain existing customers and attract new ones

Customers are attracted to companies that offer unique services. A unique merchant services provider offers resources that allow you to provide tailor-made, real-time client support. 

For example, credit card merchant services for small businesses help owners to know what to do if a credit card transaction is declined. You can professionally provide assistance in tracking the root of the problem and offering solutions, helping ensure your existing customers remain devoted to your business. In addition, because customer referrals are the best marketing method, you can attract new clients just by your existing customers narrating their experiences.

Data security

One common feature of reputable merchant services for small businesses is security. As with all business activities, data breaches, chargebacks, and fraudulent activities do happen. Whatever the value of your product or service, these incidents should be expected. 

But with a merchant account for small business, it is easier to prevent such incidents. These services use the best security protocols and optimal business practices to protect personal and financial information. This includes access to Payment Card Industry Data Security Standard (PCI DSS) structures. 

This is one huge advantage that most small-scale business owners need to prove to their customers that they are invested in customer service and protection. Businesses are built on trust, and how you handle payments tells your customers all they need to know. 

Cut down on costs and increase revenue

Online merchant accounts for small businesses have a unique objective: save costs and build revenue. There are several ways this service can enhance your profits while ensuring your customers get quality support for payments.

First, when you select a small business merchant account with multi-payment options, you’re sure to cut down on costs. This means reducing how much you pay in transaction or subscription fees to different providers. Everything is under one account, so you can scale your business and minimize expenditure. 

Top merchant services like those provided by PaymentUSA allow you to optimize your workers’ schedules and assign tasks that fit their proficiency. Hence, you get the best out of your staff and increase productivity. 

Besides, in an age with increasing business costs, PaymentUSA’s small business merchant services come with a unique payment plan allowing you access to quality tools without high fees. You no longer have to budget a fortune for a merchant account provider that is reputable, dependable, and credible.

Cost of Setting Up a Merchant Account for Small Business

There are always expenses when setting up a merchant account. If not taken seriously, they could eat into your profits, making accepting payments other than cash expensive. 

Some merchant service providers even attach hidden fees which are not revealed during the sales process. 

There is no general standard for fees, although some rates are more common than others. Reputable providers like PaymentUSA prefer to stay within the range of industry standards, while others set fees however they see fit. 

Let’s look at some of the fees you’ll come across.

Setup fees

All providers charge their merchants a one-time fee for setting up their merchant accounts. However, many firms prefer to use a quote-based pricing formula for this charge. Hence, you may need to get a quote on what the setup fee will be for your business. Most providers calculate this quote based on a business’s sales volume. 

This amount could also factor in the cost of setting up hardware tools, for instance, a POS terminal. The actual POS machine might be charged separately, though.

Maintenance fees

Many providers charge a recurring billing payment to maintain your merchant account. Payment is usually due at month’s end of the month. It is also known as a statement, account, or monthly fee.

Transaction processing fees

This is usually charged each time you carry out a transaction. It is the most complicated of all the fees since there are several forms and different parties involved in managing payments for a merchant account small business operation. In the case of credit card merchant services for small businesses, card processors, card issuers, and card network networks all get a part of the fee. 

The amount that will enter your merchant account and be available for you after a successful transaction won’t be the entire amount that the customer paid. The middlemen will extract their commission before the final amount hits your account. 

There are three ways processing fees for small business merchant accounts are structured. 

  • Flat-rate transaction charges: all payment modes incur the same fees. When it comes to card payments, the costs are the same irrespective of network or issuer. Depending on which merchant services provider you partner with, this amount could be 2.4%-2.75%. The fee could also be different depending on how you complete your transactions (either a credit card reader or virtual terminal). 
  • Interchange and transaction fees: this is the most transparent form of processing fee billing. It consists of the amount all middlemen use to process payments (known as wholesale charges) and the merchant account fees (usually referred to as markup costs). You can see exactly what each transaction costs, as it is clearly stated in a monthly statement. 
  • Tiered transaction fees: This type of billing separates processing fees into three main tiers – qualified, mid-qualified, and non-qualified. Your business can be placed into any of the classes depending on a risk assessment. Qualified transactions carry the lowest processing fees and involve cash or in-person payment, physical bank card, and/or same-day batch payment. Transactions that come with a delayed settlement or the details that have to be keyed in are classified as mid-qualified. Non-qualified typically revolved around non-settled transactions. This processing fee type is more complicated than the others, so we recommend settling for the transparent option before migrating to tiered transaction fees. 

Incidental fees

Incidental fees are an occasional charge you must pay if a specific incident occurs on your account. Usually, they are charged once for a particular incident. Here’s a list of the most common incidental fees you would find.

- Refund fees

When you refund a client who made a payment via credit or debit card, your processor may issue a refund fee. 

The policy varies between payment processors, so you need to make sure of what the procedure looks like with your merchant services provider before filing an application for a merchant account.

- Chargeback fees

This is commonly referred to as the chargeback investigation fee. This comes up when a customer files for a chargeback against your business with their issuing bank.

The fees vary from $15-$25 per chargeback application. However, some merchant services providers may return this amount to your account if you prevail during the investigation.

- Gateway fee

A gateway fee becomes necessary if you decide to accept credit card payments online. Usually, it is restricted to online merchant accounts for small businesses. Online stores will need a payment gateway since it encrypts all card information as it is uploaded to the payment processor. 

The rate varies between different processors. While some charge a monthly fee of about $10, others break it to a per-transaction charge of $0.10 to $0.25.

- Batch fees

A majority of providers issue a small fee when your company submits a number of transactions for processing at the same time. 

Batch fees are the lowest among the charges for online merchant accounts for small businesses. A merchant may have to pay $0.10 for each transaction. If care is not taken, these fees can pile up quickly. However, the good news is many providers have scrapped batch fees.

- Address verification fees (AVS)

The AVS fee covers the efforts to confirm a client’s billing address submitted during checkout. If your provider charges AVS fees, they are usually around $0.10 each. 

While this is optionally charged by a merchant services provider, address verification fees fraud is common with card-not-present transactions. Hence, it is a justifiable fee.

- PCI compliance fees

When you partner with a reputable merchant services provider, you must be PCI-compliant. This means your business adheres to the guidelines set by the Payment Card Industry (PCI) Data Security Standard, which aims to protect small business merchants from fraud and data breaches. 

Several processors charge this amount to help you complete questionnaires, showing you meet the compliance demands. Some processing partners send reminders yearly via email or phone call. Usually, this costs about $99 every year.

- PCI non-compliance fees

PCI non-compliance fees are charged monthly for accounts that do not meet the standards of PCI guidelines. Some service providers add it to your bill at month end without helping your business become compliant. 

You should take time to read every monthly statement sent to you and immediately reach out to your provider if you suspect foul play. Usually, the charge is around $20 to $60 per month until your PCI compliance issues are corrected.

What Rates are Acceptable With Merchant Accounts for Small Businesses?

When it comes to knowing which fees are appropriate for your business, there is no right or wrong answer. It depends on a number of factors. Among them is the industry you are in, the business’s risk level, and the business type (whether walk-in or online). 

You should also know that some providers include hidden fees in their merchant accounts. 

“Hidden” here means these fees were not discussed, or the salesperson did not reveal them when the account was set up. Here are some of the rates that are not common for merchant accounts for small businesses. If you see them, draw the attention of your provider to them immediately.

Account setup or application

While it is no longer common, a provider may want to charge you this one-time fee. They usually divide it into two phases: the first is processing your application and the second for when it is approved. 

Providers that charge an account opening fee should be avoided. It is possible that they may add other kinds of charges to your account once it is active. An exception is with high-risk merchants. This account type has an intense application process which may involve an account setup charge. 

Annual fees

The annual fee is related to your monthly account maintenance charge. Providers that include it in the list of charges often place a high figure on it. They claim it is necessary to cover the cost of software and hardware essentials for your account. 

If you do further investigation, it may be only a ‘junk’ amount that represents no real value for your business. The annual fees can be hundreds of dollars, which can significantly affect your revenue. 

Small business merchant services that include an annual fee may not have the best interests of your company at heart. It’s best to state you don’t want them or avoid these providers altogether.

Early termination fees

Another rate you should not be paying is early termination fees. Usually, this fee is applied when you sign a long-term contract and want to shut it down before the expiration of your agreement. It can run into hundreds of dollars.

While modern-day providers like PaymentUSA do not include early termination fees in their long-term agreements, some traditional providers still include them as standard.

Getting Merchant Services for Small Business

Now that you know you need merchant services for your small business, it is necessary to map out a strategy for the entire process. Let’s look at the steps we recommend.

Determine your credit card processing needs

The optimal merchant services for small business depends on the company’s demands. For instance, if you operate a walk-in store you need to determine if you want to accept credit and debit card payments. 

You also need to think about the location of your customers. If a majority of your clients are based in the U.S, it makes sense to focus on credit cards. If you decide to go global, a study of card networks should be enough to tell you how to proceed.

Research the merchant service provider market

Now that you understand what your needs are, the next step is evaluating which providers are available.You can do this by sending requests for quotes to different providers. 

Build your website

Part of the requirements that you may have to meet is building a tangible website that meets specific guidelines. For example, certain card networks have requirements you need to fulfill first. Here’s an example from VISA:

  • A detailed description of all goods and services available for sale. This includes the tiniest details, like the voltage required for optimal performance of electrical products. 
  • Comprehensive customer support information.
  • A general overview of cancellation and refund policies. 
  • Delivery information. 
  • The registered location of your business.

Also, information on how the customer’s card details will be protected and what card security is in place should be stated.

Relevant documentation

Opening a merchant account requires a number of documents. For that, you’ll need an employee identification number or social security number if you’re applying as a sole proprietor. In addition, a business license will be required. Many providers need you to provide a statement showing the volume of transactions. It should include the number of refunds and cashbacks you process over a period. 

File an application

Many providers allow you to submit an application within minutes. An agent will screen your application, including the documentation, and pass judgment. It’s essential you outline all the issues with your business. 

Underwriting

Merchant accounts for small businesses only become active after an evaluation of the company. This means that all areas of the business are checked, and a risk level assessment is drawn. All providers do this since a merchant account means they’re taking a lot of liability. 

Choosing a Merchant Services Provider for Small Businesses

There are many metrics to consider when selecting an optimal merchant services provider. You first need to outline your business demands to help you in your search. Here are some questions to ask:

  • Are you operating strictly on e-commerce platforms or using other forms too?
  • Do you need a POS terminal as a permanent outlet?
  • What is the volume of transactions processed per month?

What is the level of revenue you process via electronic payment forms?Answering these questions honestly will help you draw an outline of the kind of merchant account your small business needs. 

Choosing a merchant services provider includes several metrics to be considered. Here are some of them:

  • Whether the provider offers support for the payment modes you want to use 
  • Transaction and other fees. The type of charges on small business merchant services differ. 
  • Cost of equipment. Many providers do not charge for the essential tools they offer you.
  • Ease of integration with your current software and hardware.
  • Virtual terminal availability. Is payment via the internet allowed?
  • The level of compliance with PCI guidelines. 
  • Reporting and analytics tools. This allows you to see your cash flow and make an analysis. 

While these tips are not the only things to consider, they can guide you to partnering with the right provider for your company.

Avoid Paying High Merchant Fees with PaymentUSA

As a small business, the volume of your monthly sales may be low. You can settle for a payment services provider as rates will be fairly low. But you would still pay a percentage as a fee for each transaction. 

With PaymentUSA, the rates are competitive, with no chance of encountering hidden charges. You also save yourself the headache of opening a merchant account on your own since we take care of all the paperwork. This allows you to get your account up and running quickly. 

Whether credit card processing or electronic checks, PaymentUSA’s merchant services for small business covers all areas. We have a track record of helping small businesses and startups grow. 

Here are some of the ways we make our PCI compliant merchant services for small business more secure and convenient:

  • Provide more secure debit and credit card processing to improve sales.
  • Seamless software integration into existing systems.
  • Wireless account access for managing small businesses more effectively.
  • Access to PCI DSS-compliant secure networks that you can rely on. 

Because we understand the unique challenges small businesses face, we help keep costs to a minimum. This gives you the freedom to focus on your core strengths while our experts take care of your online payment requirements. 

We have the resources that your small business needs.