Merchant services is a broad category of

financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

intended for use by businesses. In its most specific use, it usually refers to merchant processing services that enables a business to accept a transaction payment through a secure (encrypted) channel using the customer's

credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...

debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but u ...

NFC NFC may refer to: Psychology * Need for cognition, in psychology * Need for closure, social psychological term Sports * NFC Championship Game, the National Football Conference Championship Game * NCAA Football Championship (Philippines) * Nati ...

RFID Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. An RFID system consists of a tiny radio transponder, a radio receiver and transmitter. When triggered by an electromag ...

enabled device. More generally, the term may include: *

Credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

and

payment processing A payment processor is a system that enables financial transactions, commonly employed by a merchant, to handle transactions with customers from various channels such as credit cards and debit cards or bank accounts. They are usually broken do ...

* Check guarantee and check conversion services *

Automated clearing house An automated clearing house (ACH) is a computer-based electronic network for processing transactions, usually domestic low value payments, between participating financial institutions. It may support both credit transfers and direct debits. The ...

check drafting and payment services *

Gift card A gift card also known as gift certificate in North America, or gift voucher or gift token in the UK is a prepaid stored-value money card, usually issued by a retailer or bank, to be used as an alternative to cash for purchases within a parti ...

and

loyalty program A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features and ...

s *

Payment gateway A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The ...

Merchant cash advance __NOTOC__ A merchant cash advance (MCA) was originally structured as a lump sum payment to a business in exchange for an agreed-upon percentage of future credit card and/or debit card sales. The term is now commonly used to describe a variety of s ...

s *

Online transaction processing In online transaction processing (OLTP), information systems typically facilitate and manage transaction-oriented applications. This is contrasted with online analytical processing. The term "transaction" can have two different meanings, both of wh ...

Point of sale The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice f ...

(POS) systems * Electronic benefit transfer programs, such as

ration stamp A ration stamp, ration coupon or ration card is a stamp or card issued by a government to allow the holder to obtain food or other commodities that are in short supply during wartime or in other emergency situations when rationing is in for ...

s (called ''food stamps'' in the U.S.). Merchant service providers work as an intermediary between the bank, a person or organisation wanting to receive funds and the person or organisation looking to purchase goods or services. The merchant service provider will provide businesses and individuals with the requirements to accept credit cards, debit cards, and other forms of electronic payment for the transaction to take place. Not all merchant service providers offer their merchants a specified merchant account, but act as an intermediary for their merchants by holding funds collected from successful payments under the MSPs "blanket account". Funds are then distributed to merchants according to the amounts they have processed. For example, a retailer selling a product to a customer. The customer uses a payment card for the purchase, the merchant service provider will move the customer's funds to that of the retailer. This can usually take up to 48 hours for these funds to be credited to the retailer's bank account. Some merchant service providers offer cash advance services to transfer funds faster. Merchant service providers typically require the merchant to have a merchant account with the provider, either directly or through a referral partner, such as banks or B2B service companies. All banks in the United Kingdom, except for

Barclays Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...

Barclaycard Barclaycard (; stylized as barclaycard) is a brand for credit cards of Barclays PLC. , Barclays had over ten million customers in the United Kingdom. History Barclays launched Barclaycard on 29 June 1966, initially as a charge card, but followin ...

, offer merchant services by referring customers to a merchant service provider. A Merchant services provider will set up a

merchant account A merchant account is a type of bank account that allows businesses to accept payments in multiple ways, typically debit or credit cards. A merchant account is established under an agreement between an acceptor and a merchant acquiring bank for t ...

, a special type of bank account that allows transactions to come in via the merchant

payment gateway A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The ...

. In the case of

mPOS The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice f ...

systems, mobile pin entry devices (PED) are typically connected to a mobile phone through

Bluetooth Bluetooth is a short-range wireless technology standard that is used for exchanging data between fixed and mobile devices over short distances and building personal area networks (PANs). In the most widely used mode, transmission power is limi ...

and then use the phone's

WiFi Wi-Fi () is a family of wireless network protocols, based on the IEEE 802.11 family of standards, which are commonly used for local area networking of devices and Internet access, allowing nearby digital devices to exchange data by radio wa ...

mobile data Mobile broadband is the marketing term for wireless Internet access via mobile networks. Access to the network can be made through a portable modem, wireless modem, or a tablet/ smartphone (possibly tethered) or other mobile device. The fi ...

to connect with the banks. This system does not require a merchant account although the companies that offer this type of service will still have a relationship with an acquirer. The cost of payments made through mPOS are significantly higher so it is more suitable for businesses that do not put through many card transactions. There is usually also a charge for buying the device from the mPOS system provider.

References

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