Before I applied to work at Priority Payments Local, I have to admit – I had no idea what a merchant services company was. Merchant services and payment processing are two services most people don’t think about until they need their services. Still, many don’t know where to begin and/or what to expect. Read on to learn what a merchant services company is and how they work.

How Merchant Service Providers Work

When you go to a store and make a purchase by credit or debit card sometimes the merchant will ask you to swipe or insert your card into a card reader if they don’t do it for you. Depending on the business, that card reader may or may not be tied to a POS (point of sale) system. Merchant services and credit card processing companies make those transactions work on the consumer end and on the merchant end by: providing the equipment to (a) process credit/debit cards (b) manage money (cash drawers for cash transactions), and (c) communicate transactions to necessary parties such as a gateway that processes the transactions, kitchen staff in restaurants, inventory management in retail, etc. Processing machines capture card information and an indicator transmits their data to corresponding credit card companies. If there is an issue with any transaction (such as a customer needing a charge back), the merchant services company can step in to help the merchant.

Categorization & Offerings

Merchant services companies/providers fall under the financial services category offering a service that every business needs. Some merchant services companies such as ours offer even more advanced technology designed to streamline business processes and help merchants process payments. For example, our MX Merchant is a custom built ecosystem that:

  • Processes credit, debit, and ACH transactions.
  • Provides tools to help with billing, collections, sales tracking, eCommerce, and customer engagement from a single source.

Determining Processing Rates

VISA and MasterCard charge to process debit and credit card transactions, offering a set discounted rate to processors. The rate is determined by:

  • Type of business
  • Types of cards accepted
  • How cards are processed
  • The risks associated with all of the above

For example, transactions processed over the phone by merchants who key information into a terminal are risker than cards accepted in person into an EMV compliant terminal. When accepting cards online, utilizing an encrypted form is key but the cheapest option will always be using an EMV compliant terminal due to the fact that it yields the least risk.

If you have any questions on what a merchant services company does or would like to inquire about services for your business, email us at or give us a call at 800-717-1250 and mention this post.

Photos: Pixabay downloaded 12/15/16.

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