Merchant Services is better known as credit processing. It involves the handling of electronic payment transactions for traders. Its activities include procuring sales information from the merchant, receiving authorization to transact, collection of funds from the bank that issued the credit card and sending payments to the merchant.
Merchant services is a worldwide name that refers to a broad category of financial services that can be used by all kinds of businesses. Specifically, it refers to the service that allows a business to accept a transaction payment via a secure channel with the use of credit cards, debit cards or NFC/RFID enabled device.
Kinds of Merchant Service Providers
- Credit and debit cards payment processing – This merchant service provider processes the payment every time a credit card or debit card is used. The process uses two messages, namely authorization and clearing and settlement.
- Automated Clearing House check drafting and payment services – Automated Clearing House is a computerized clearing and settlement facility that processes the exchange of electronic transactions between participating depository institutions. Merchant service providers facilitate the check drafting and payment with the Automated Clearing House.
- Check guarantee and check conversion services – Merchant services provide guarantee for checks and check solution conversion services.
- Payment gateway – This is an e-commerce application service provider service that gives authorization to credit card payments for online retailers, e-businesses, traditional brick and mortar and bricks and clicks.
- Gift Card and loyalty programs – This merchant service provider provides accurate and timely net settlement of gift cards. This web-based solution allows consumers to timely reload funds on stored-value cards from a checking account or a credit card.
- Online transaction processing – This is a group of information systems that facilitates and manages applications involving transactions, usually for data entry and retrieval transaction processing.
- Merchant cash advances – This type of merchant service provider buys a specified dollar amount of the future sale of debit and credit cards at a discount. This is not a loan but a funding.
- Point of Sale systems – This refers to the time and place when a retail transaction is completed. It is a point when the customer pays for purchases or services. The merchant service provider issues a receipt that is dispensed electronically.
- Electronic benefits transfer programs – This is an electronic system that allows state welfare departments to issue benefits though a payment card that is magnetically encoded.