Choosing a Merchant Service Provider – Part Two

This is part two of the series explaining how to choose merchant service provider. It deals with the 2nd factor of which payment types are supported.

Factor Two: Payment Types

  • Credit cards/ signature debit cards – These are the most common types of payments that merchant services support. Signature debit cards are the same as¬†credit cards from acceptance point of view. All merchant services support these.
  • PIN debit – These are debit cards that are verified by a PIN, and require a PIN entry device. You can only accept these when the customer is present in an attended retail or unattended retail (e.g., gasoline purchases). So unless you have this need, you can skip the PIN debit.
  • ACH direct debit – Some providers allow your to process ACH payments by accepting bank account numbers. The fees on these are typically much lower than credit cards. If you receive¬†high value payments from customers that you have a relationship with e.g., doctor’s office, rent payments, tuition, etc. you would want the ACH option.
  • Check 21 – If you receive paper checks, and do not have the time to go to the bank, you can sign up with a provider that lets you scan and deposit the check. This feature is now commonly available from most banks so it isn’t offered by payment services any more.
  • SEPA or equivalent direct debit schemes – Depending on the country, you may want to accept payments in other forms such as SEPA direct debit, or UK direct debit. These are similar to ACH direct debit in the US, but vary in account identification, authorization, holding period and other rules.
  • Alternative payments – These are payment schemes that are often layered on top of bank or card payments, and offer payments using the network specific id, e.g., PayPal, Amazon Payments, Square Cash, Apple Pay, etc. In most cases your payment provider is able to set these up for you. If not, you may still be able to accept payments via these services by signing up with them directly in addition to or in lieu of your existing service.
  • Visa Direct – This is a new product from Visa that makes funds available to you quicker than ACH. Once your merchant service provider has collected funds via one of the schemes above, you can have it deposit the funds directly to your bank by providing your debit card. Once you provide the card, merchant provider pushes the money directly to your debit card, and by proxy to your linked bank account within minutes. There is often a charge for this service so you only want to use it when you need the cash fast.

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