In recent years we have seen a dramatic rise in consumers and businesses paying for goods and services by card, and even more so in the last 12 months. As a result, the decision a business takes in choosing the best route for arranging its card payment solution is more important than ever. In this article I will explain which parties can arrange a merchant account, and how they work, so you can make an informed choice as to what will be the best fit for your business. Likewise, if you are a professional, providing businesses services and value the importance of recommending the best option to your customers.
- Merchant Service Providers (MSP)
These companies (also known as Card Acquirers) are licensed by Visa, MasterCard and AMEX to process the cards you accept via a card machine, virtual terminal, unattended kiosk or website checkout. No matter who else arranges your card payment facility it is these companies you always contract with and they produce the statements and take the fees for cards you accept.
You may have heard of Worldpay, Barclaycard, Lloyds Cardnet, Elavon, First Data, AIB MS and Global Payments, however there are also many more MSP’s whom you may not know and specialise in certain sectors, with varying appetites for risk. The increasing number of MSP’s is good news and is providing much needed competition and choice.
These companies process each card payment on your behalf – They set the processing rates, additional charges and fees you pay on your merchant account and manage the payment flow. Some allow third parties to issue merchant ID’s on their behalf through white labelled services, typically providers of sector specific software so you may never know who the MSP is whom is processing the payments.
They all have a mix of Telesales and Field-Sales teams to secure new business by a variety of methods and some are closely linked to banks who only use the one MSP, greatly limiting your choice. Contract periods range from rolling 30 day notice up to 18 months, often linked to the length of card machine agreement you also sign up for which on its own can range from 12 – 48 months, restricting your ability to move after the merchant services contract period. There are certain limitations and drawbacks when dealing directly with an MSP, with pricing being typically higher and restricted to the connections they have with Epos integrated card machines and software that is specific to your sector, including a secure gateway for online shopping baskets. You may also leave yourself vulnerable should their attitude to risk change, particularly if circumstances change which has been highlighted over the last 12 months where the effects of the coronavirus pandemic and Brexit have brought this into sharp focus.
- 3rd Party Sales Companies (ISO)
If you already have a merchant card payment facility it is likely that you will have also had dealings with a 3rd party sales company (ISO) or reseller who has a commercial arrangement with a MSP. There are many ISO’s across the UK and the number of merchant accounts arranged through ISO sellers has increased significantly over the last 10 years.
These companies typically employ heavily targeted sales teams with some just using commission only agents who are driven by commissions that are weighted towards the length of a terminal agreement they persuade a business to sign up to. In most cases we have come across they are also unlikely to tell you whom the MSP is that you are contracting with until the point of you signing the final agreement, alongside their own terminal agreement. In our experience resellers can often omit to explain the full implications of these contracts which can include charges which haven’t been fully explained or rollover clauses with onerous and hefty exit fees/cancellation charges.
Furthermore, our experience indicates that many businesses switch providers on the promise of projected savings which simply do not materialise. In turn they then find themselves tied into a contract that they are unable to exit without payment of heavy penalties that can run into thousands of pounds.
We always recommend that before signing you seek a copy of their full T & C’s and pricing across all card types, with clarification around both terminal contracts/exit penalties, and most importantly whom the MSP is you are contracting with.
- Merchant Services Brokerage
Using a broker is something that most businesses and individuals will have experienced, such as those serving the insurance sector however it is not as well known in the merchant services sector where they will likewise provide access to a diverse range of MSP’s. In using a broker, you gain access to lower pricing from the payment providers due to the buying power and experience of your broker as well as a choice of providers and options to suit individual business needs, just like using an insurance broker.
Because of the close relationship brokers have with the majority of MSP’s, they will take the time to understand, recommend and arrange the solution with a provider that matches your individual needs, with all the rates, fees and charges presented in a clear and transparent way. They will also provide full details of the MSP at the outset with savings calculated and evidenced against the exact transactions and current fees if you are switching provider.
The other significant benefit is that your terminals will typically not be tied to one provider, giving you choice, flexibility and control. You essentially receive all the benefits of going to a MSP directly, with them providing the same level of service and support, but also you have your broker available for any additional advice and support. With such a wide choice of MSP’s, with varying risk appetite, there will always be a solution that fits every business type and sector.
A broker should also provide expert advice on other aspects of card payment processing, eg compliance, chargeback risk, fraud reduction and also offer advice on digital payment options including payment gateways, virtual terminals, pay by link, mobile phone solutions as well as EPOS systems and shopping carts.
Based on which shopping cart or Epos solution you are currently using or considering working with, your broker will know which MSP’s are connected to them, ensuring you are set up with the most suitable option for future flexibility and at the best pricing.
About the acceptcards merchant services brokerage:
Since 2005 acceptcards® have arranged merchant services for tens of thousands UK businesses. As a broker we have access to over 40 MSP’s, website payment gateways and terminal providers, making us the largest independent payments broker in the country. We are committed that you should have access to the best rates, best service and best support, coupled with the comfort and flexibility of being able to move providers should the occasion be needed.
We have been doing things different for 16-years, having built an expanding network of professional referral partners who share our values and importance of having access to the widest choice of merchant service providers and avoiding long contracts. For our referral partners and indeed businesses that contact us directly we are, in a sense, an extended part of their business and a single point of contact for all advice relating to card payment acceptance.
Contact: Richard Bradley Richard.firstname.lastname@example.org Tel: 07903 050089