Merchant Service & Merchant Account Why do you need it?

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What is Merchant Service and Why you need a Merchant Account to take Card Payments?

In this blog we will be looking at what is a Merchant Service Provider and why without one and a Merchant Account number you won’t be able to take card payments. By not taking card payments  you are most probably behind your competitors and losing business.

A recent customer of ours realized this having accepted only cash he was asked by a customer if he would take a card payment for his order of Fish & Chips. He explained unfortunately he didn’t but there was a cash point machine just around the corner. The weather was not particularly pleasant this day so customer left never to return. Not only a sale lost but a customer for life.

The Four Steps you need to take to begin taking card Payments

Step 1: Decide on what type of card transactions do you plan to take?

The type of card transactions that you plan to take should be determined in advance. It can be a combination of the following:

Card Present Transaction: Typically this will be via a fixed terminal at the till point for a retail shop or for a restaurant a wireless terminal. The card holder will be requested to enter his pin point of sale.

Card Not Present Transaction (Mail Order or Telephone): As simple as taking details over the phone or by mailed request. Basically entering card information presented to you directly

Card Not Present Transaction (Internet) Typical if you have a website. This is no different to placing an online order with typical E-commerce sites.


Step 2: Decide on a Merchant Service provider known as an acquirer

Before you can start taking credit card payments you need to choose a merchant service provider but who or what is this?

The Merchant Service Provider is a financial institution that maintains the merchant’s bank account. The contract with the acquirer enables you to process credit and debit card transactions.

Another important role of the Merchant Service Provider is that it will be aware of any changes made by the card schemes on how a transaction should be processed, the rules that they make, or the introduction of new card types.

Example of Merchant Acquirers:

There are a number of merchant acquirers and some of the more common ones are Barclays, World Pay Elavon and First Data.

It is important that you choose the right acquirer and at a New Horizon Systems we have strong links with all the major merchant acquirers. We strongly urge you to use our free service to get the right acquirer for your business at the best price we can offer.

Step 3: Negotiate your rates and beware of other costs.

Why is this so important? This is the point at which it is decided upon what rates you pay for each transaction card type. For example a debit card might be 12p per transaction, Visa and Master Card a 2% charge for example.

Factors to consider:

  • The rates you pay depend upon the nature of your business. Typically this will involve estimating how many card transactions you expect to take on cards.


  • Be clear on what is the minimum agreement term and if there is a minimum monthly service charge. Typically this could be say £20.00 per month, so if you take no payments during the month you will be still charged.


  • Is there a Minimum agreement term? For Example 1, 2, 3 or even 4 Years


  • Does the Merchant Acquirer charge a minimum monthly service charge. Typically this could be £20.00 per month, so if you take no payments during the month you will be still charged.


  • Check if there is a joining or set up fees? Some Banks charge up to £100.00


  • What level of support are provided and how easily can the merchant acquirer be contacted.


Step 4: Complete Paper Work and Receive your Merchant Account Number.

After completing all the paper work, your merchant acquirer will issue you with a merchant account number. This can take up to 7-10 working days. Remember without this number you will not be able to take card payments, be it for a short term rental or a fixed terminal. This number is similar to your bank account number and is what allows your business to accept payments such as debit or credit cards.

Our Free Merchant Services

The world of taking card payments can be a minefield and we are experts:

Our Free merchant services takes all this pressure of you so contact us and we will be happy to help. If you already have a merchant account with another enquirer we can still help. Provide us with a statement and we will look to lower your costs. For a recent customer we secured a 40% discount on transaction costs.

Our next serious of blogs will look at PDQ Hire for events. What to do if you need to take card payments and don’t have a merchant account number, and types of terminals available.

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