5 Facts for Business Owners About Merchant Services

What you need to know about merchant services

The COVID-19 pandemic has dramatically changed the way businesses and consumers interact. As a business owner, you need a payment processing system that can adapt to this new reality—and that’s where merchant services can help.

So what should you expect from your merchant services provider during these challenging times, and which payment solution is right for your business needs right now? Here are five things to consider:

1. Merchant services in the era of COVID-19

We’re seeing a fundamental shift in the way people pay—cashless transactions are now the norm, and the less contact, the better. As you begin to resume operations, you need to be ready to accept payments the way your customers want to pay, whether it’s via online, mobile, over the phone, or curbside.

The right merchant services provider can help you easily implement a flexible, contactless payment solution that meets your customers wherever they are.

2. Merchant services go beyond payment processing

Payment processing is the backbone of merchant services, encompassing the entire process of transferring payment from buyer to seller. This includes the payment device (the POS system), the payment software, the security software that protects the transaction data the payment record, and the transaction itself.

Merchant services go beyond just debit and credit card transactions, including:

e-commerce: As people have embraced social distancing to slow the spread of COVID-19, more of them are opting to shop online. That’s created a huge surge in ecommerce—in fact, in the last few months, online orders in the U.S. have increased by 56%.

Gift cards and rewards programs: Gift cards allow customers to support your business while providing you with a much-needed cash infusion. Gift cards are also a significant factor in raising customer retention, and could even increase profits by more than 25%. A full-service merchant services provider like Umpqua Bank can help you implement rewards and gift cards to drive your business.

Data security: According to Wired magazine, fears about data security is the number one factor that keeps customers from adopting mobile banking. That’s why solid data security is a must-have merchant service.

Buying vs. leasing merchant services equipment: If your business occasionally needs a physical POS system or credit card terminal, look for a merchant services provider that offers equipment leasing. However, if you’ll be using the terminal on a regular basis, it’s almost always a better value to simply buy one. A good merchant services provider will be able to advise you on what’s the best option for your individual circumstances.

3. What’s the role of a merchant service provider?

Merchant service providers act as an intermediary to streamline and secure the payment process between businesses and their customers. Money can come from multiple sources, including debit and credit card payments, bank transfers, and online payment gateways, but a business deals with one channel to ultimately receive their money: the merchant service provider.

Merchant service providers are also known as payment services providers (PSPs) and payment processors. Firms who provide this service in the ecommerce world are known as payment gateway providers, since the “payment gateway” refers to the online equivalent of the point-of-sale system.

4. Merchant services isn’t one-size-fits-all

Not every payment processing option offers the same value, and your business will have individualized needs. With all of the options available, many businesses are attracted to so-called “payment aggregators” which don’t usually offer a complete suite of merchant services. For example, platforms like these usually don’t offer businesses their own merchant account, nor do they have the service capabilities to offer a truly individualized solution that can grow along with your business.

You can maximize your value by choosing a full-service provider who can offer you expertise and match you with the solutions that are right for your business. Jeff Vandeventer, a VP merchant sales manager at Umpqua Bank, explains, “An experienced sales consultant should be able to suggest products and services that can save time, lower unnecessary processing costs, increase security, or improve customer loyalty.”

5. Which payment solution is right for you?

The answer really depends on your unique business needs and the type of industry you’re in. For instance:

• A restaurant deals with a high volume of sales on a daily basis, with most customers paying with debit and credit cares. They will also have a large staff that receives tips. Since cash flow is a necessity, restaurants need quick and easy access to card transaction deposits.
• On the other hand, healthcare-oriented businesses like dentists, physicians, and veterinarians tend to process a lower volume of transactions, though each sale will be larger on average. In addition to a POS system for in-house credit and debit card transactions, medical offices usually need to process online payments, personal checks, and mobile wallet transactions.

No matter what type of business you own, a full-service provider of merchant services can help you choose the perfect payment tools for today’s challenges—and tomorrow’s opportunities. 

Learn more about Umpqua Bank merchant services and cash management here. Got questions? Contact our small business banking team today.