Choosing a Merchant Service Provider

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Since 2000 there has been an explosion of online purchasing, yet there seems to be a lack of companies that are qualified to guide merchants through the complex process of setting up systems to enable online payments and transactions.

So, while the number of merchant service providers has grown, their complete understanding of online transaction processing has not. That can be trouble for the growing number of retail merchants looking to expand their businesses to include a Web presence. It is often perplexing and confusing for merchants to find someone who understands the Internet side of the payment industry.

Part of the problem is that most banks helping merchants set up for business are staffed by representatives that only comprehend the retail side of merchant processing. Because of their lack of knowledge and understanding, these bank representatives only provide merchants with a merchant account and then outsource the payment gateway, the shopping cart and integration of their website to third-party providers.

For merchants, having to deal with several different providers can create an environment of uncertainty. It also creates a complex web of systems and providers that might not be easily understandable by the merchant. That lack of knowledge could mean the merchant is not properly set up to accept payments online and may risk losing their payment processing privileges.

In order to establish those privileges in the first place, the merchant bank needs to assess the risk or exposure of loss relating to the merchant and its type of business. That means the bank must review the merchant's personal credit history, business credit history, a description of the products or services being sold and the monthly processing volume.

So how do merchants avoid the confusion and get set up properly for online business? When looking for a merchant service provider make sure that they offer an integrated product. That means they provide the customer service for all the products required to do processing online. This can help ensure that merchants are properly set up and only one phone call is needed to solve any problems. If the ancillary products, such as shopping cart and payment gateway, require a separate phone call, it'll take more time to figure out which provider is ultimately responsible rather than solving the issue.

Most importantly don't make a decision based solely on price. Many providers will offer special discount rates to initially get business and then jack up its rate three months later. Also look for hidden fees and charges that might not have been clearly disclosed upon signing up.

Before entering into an agreement, be sure to call the provider's customer service number to get a sense of the quality of its service and support. Are the support people knowledgeable, courteous and helpful? How long was the hold time? Do they provide service on all of the products sold? If not, look for another provider.

Choosing a merchant service provider is among the most important business decisions and entering into it hastily or without proper research can have tragic consequences.

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