Customers no longer ask whether a business accepts credit — paying with plastic is standard, and it’s not just for retail.
Manufacturers can process smaller orders by
accepting customers’ credit cards, and businesses may pay vendors through electronic
transactions. End users prefer to use a debit
or charge card for convenience purposes.
The ability to process and collect funds this
way is called merchant services. Customers
expect it, and business owners can cut down
on costly invoicing and access cash flow
faster with “card” capabilities, says Sharon
Young, vice president, treasury management
sales team leader, Huntington Bank.
“Merchant services is a must for any business that accepts and processes payments,”
Young says. “Today everything is fast-paced.
People want to complete transactions quickly. They want the ease, flexibility and security of paying with debit or credit cards.”
As a business owner, how quickly can you
access funds paid by debit or credit? What
equipment is necessary to complete these
transactions? How much will fees cost?
Smart Business spoke with Young about
merchant services, and what a company
should consider before setting up a program.
What are merchant services?
Merchant services allow businesses to
accept credit, debit and various types of
stored value cards, such as gift cards.
Merchant services also include point-of-sale
devices, such as electronic terminals
equipped with software systems that link to
cash registers, PIN debit card devices and
scanning machines for paper checks.
Merchant services involve representatives
who can help businesses select appropriate
equipment and set up the devices. These professionals should also be on hand for support
via telephone and in person. Banks that
maintain relationships with merchant services representatives can introduce business
owners to trusted providers and serve as a
liaison, ensuring that all needs are met.
Who can utilize merchant services?
In the past, mainly retail businesses and
restaurants utilized merchant services to process transactions. But this has changed
drastically as credit cards have evolved as
one of the preferred methods of payment for
all businesses. Schools, manufacturing companies, service organizations — any type of
business can benefit from a quality merchant
services program.
What benefits do business owners realize by
utilizing merchant services?
While there are fees associated with credit
card transactions, the savings in administrative expenses and time far outweigh the
costs. Credit payment can save businesses
the time and cost of processing purchase
orders (PO), filing invoices, collecting bills
and processing checks for goods and services. For example, if a customer wants to place
a small order for products that a manufacturing company produces, that company can
simply process the client’s credit card instead
of asking for a PO. This means the business’s
cash flow for funding is faster, and the
accounting department does not have to follow up with invoicing and pay a fee to
process a check. Most importantly, the business can focus on delivering the goods and
servicing the customer.
Some businesses hesitate to process small orders because of the cost of POs and invoicing. Merchant services allow operations to
accept one-item orders and get paid for them
quickly. Business owners know immediately
whether a customer can pay. The security
that credit cards provide ensures that businesses don’t suffer losses because of customers who pay late, as long as they meet
credit standards and compliance.
What advantages do customers enjoy?
Besides instant gratification, they benefit
from the flexibility of being able to place
small orders. Because companies can collect
funds on the order efficiently, customers are
more likely to receive products faster. On the
retail side, customers benefit from the convenience and security of not carrying cash.
What should business owners consider when
contemplating merchant services?
They should consider more than the cost of
the program. Ask about security. Businesses
should deal with reputable merchant services companies that offer products that ensure
the end user’s security is a priority. Business
owners also must understand what equipment is available and the services they need
for their individual organizations. They
should ask how soon they could access funding. Payment processing can take anywhere
from 24 hours to four days. They should not
be tempted to accept a lower fee for a longer
pay period if cash flow is important.
Before launching a merchant services program, owners should entrust a banker who
can serve as a point person and facilitate conversations with merchant services representatives. Banks that partner with merchant
services providers can assist companies in
finding a quality program. They can arrange
face-to-face meetings with merchant services
representatives — education is an important
part of the process.
SHARON YOUNG is vice president, treasury management sales
team leader for Huntington Bank in Akron and Canton. Reach
her at [email protected] or (330) 438-1803.
Huntington partners with First Data Merchant Services.
