Do you know Merchant Services And How They Work?

Most business owners know about merchant services and accept payment online. But how it works, fees, tax, or other charges - many don't know. This is because many merchant service providers don't explain everything to businesses owners.

 

I bet that Paycron knows! I bet Paycron explains everything!

 

That's true. Merchant services can be complex, and not all providers are transparent about their fees and charges. Let me try to give you a brief explanation of how merchant services work and some common fees and charges that you may encounter. Merchant services refer to the services that allow businesses to accept electronic payments from their customers, whether it's through a credit card, debit card, or other digital payment methods. Merchant service providers act as intermediaries between the business owner and the financial institutions that process the payments. When a customer makes a payment with their card, the transaction goes through a payment gateway, which sends the payment details to the acquiring bank. The acquiring bank then sends the payment request to the customer's bank (the issuing bank) for authorization. If the transaction is approved, the acquiring bank deposits the funds into the merchant's account, minus any fees and charges. Now, let's talk about the fees and charges. Merchant service providers typically charge a combination of transaction fees and processing fees. Transaction fees are a fixed amount charged per transaction, while processing fees are a percentage of the transaction amount. These fees may vary depending on the type of card used, the type of transaction, and the volume of transactions processed. In addition to these fees, some merchant service providers may charge other fees, such as monthly fees, setup fees, termination fees, and chargeback fees. It's essential to read the contract carefully and ask questions to understand what you're agreeing to and what fees you can expect to pay. Finally, let's talk about taxes. Sales tax applies to the total amount of the transaction, including any fees or charges. The merchant is responsible for collecting and remitting the sales tax to the appropriate taxing authority. I hope this helps you understand how merchant services work and what fees and charges you may encounter. If you have any further questions or need more information, feel free to ask!

 

Thank you, @oodya, for all that background!