Starting, building, growing, and elevating a business to the tune of an ongoing concern is a right, a privilege, a responsibility, and reward that today’s dynamic world allows business owners access and opportunity to. You may be a merchant just starting out a new business venture with questions about how to accept payments. You may have an established business and may want to diversify your payments options. Choosing the right merchant account broker greatly influences the operability of a merchant’s business finances, operations, and most impactfully their customers.
Payment options available in today’s marketplace are expanding and with it, customer preferences too have seen changes in ways unseen before in the practice of business and commerce. It’s important for merchants to understand the differences between a merchant account provider and a merchant account broker, and the convenient payment options your customers want, such as credit card processing, mobile app payments and other contactless and emerging payment options.
Today we will learn about what a merchant account broker is, what merchant account services are, how payment gateways and POS systems work and their relationship to Payment processing brokers, the merchant account fees, and the benefits of custom specialized merchant account services as well as how to find the best merchant account service provider for your business.
Understanding the Role of a Merchant Account Broker
What is a Merchant Account Broker?
Merchant account brokers are intermediaries between businesses (merchants), financial institutions, and third party service payment processors. Merchant account brokers help businesses obtain a merchant account.
Merchant Account Explained
Quick overview on what a merchant account is:
- Separate business bank account
- Allow electronic payment options for goods or services.
- Sales transaction processing
- Can be payment gateway or POS system
- Designed to accept funds from customers in digital and online transactions
Merchant account brokers are also known as Payment processing brokers. Playing a key role in facilitating credit card processing, debit,and electronic payments for a seamless experience. Merchant account brokers help merchants find the best solutions for their business with the right security and measures with respect to items, such as PCI compliance when processing payments to keep customers’ data safe.
Merchant Account Services
Merchant Account Services: Payment Gateways and POS Systems
Payment gateways are payment solutions offered by merchant account providers and merchant account brokers. Payment gateways allow merchants to accept card and electronic payments from their customers online, providing encryption to protect customer information as it passes between the merchant and the customer. POS systems functional similarly to payment gateways for in person sales with cash, card, or contactless payment.
Benefits of Using a Merchant Account Broker
Traditional financial institutions may not be willing to open a merchant account without superimposing merchant account fees that would stifle the growth of any merchant’s success. Merchant account brokers on the other hand, work with various payment account providers (i.e. Paypal), allowing merchants to better negotiate rate and terms on their merchant accounts.
| Feature | Merchant Account Broker | Merchant Account Provider |
| Role | Helps businesses obtain merchant accounts | Provides merchant accounts to businesses |
| Works with | Multiple merchant account providers | A single merchant account provider |
| Services offered | Compares different merchant account providers, negotiates rates and terms, helps with the application process | Provides merchant accounts, hardware, and software to process credit and debit card payments |
Other benefits partnering with a merchant account broker include:
- Access to a broad range of payment processing solutions
- Access to expertise and industry knowledge
- Better Bargaining Power and Negotiation for better rates and terms
- Personalized customer support
Different businesses and industries may want the flexibility and access to different solutions based on their specific needs and requirements. Transaction volumes, types of transactions, legislative and regulatory compliance are of the many factors influencing the business economic environment that merchants operate in.
Benefits of Using a High Risk Merchant Account Broker
Some merchant account providers or merchant account brokers specialize in servicing businesses and industries considered high risk. High-risk merchant account brokers can obtain merchant accounts at more favorable terms by working with a network of merchant account providers who are willing to work with high-risk businesses. Payment processing brokers like EMB can service wide array businesses of many industries.
Low Risk Industries
EMB’s competitive rates, flexible funding options, and range of payment processing solutions make partnering with us an easy choice. Our team of experts have a strong reputation of providing industry-specific support for low-risk industries:
- Apparel
- Auto parts
- Beauty products
- Home
- Moving companies
- Pet supplies
Medium Risk Industries
EMB connects merchants regardless of risk with the necessary tools to keep businesses running securely. Our missions is to provide merchant account services and technology the tools they need to succeed, regardless of the industry:
- Classified websites
- Electronics
- Luxury
- Subscription-Based Services
- Travel and Tourism
High Risk Industries
Traditional banks hold outdated, unrealistic standards that just don’t support modern business demands. Some of the industries wrongfully penalized by banks from a risk perspective include:
- Adult Entertainment
- Cannabis and CBD
- Credit Repair Services
- Cryptocurrency
- Debt Collection Services
- Event Ticket Sales
- Firearms and Ammunition
- Gambling and Betting
- International shipping
- Nutraceuticals
- Online Gaming
- Pharmaceuticals
- Tattoo and Piercing Parlors
- Tech Support Services
- Telemarketing and Direct Marketing
How to Choose the Right Merchant Account Broker
Businesses have several factors that must be considered when choosing the right merchant account broker. These factors include:
- Experience and reputation: How long has the merchant account broker been in business? What is their reputation in the industry? Reading online reviews and getting recommendations from other businesses can be helpful in gaining an understanding of a merchant account broker’s experience and reputation.
- Merchant account fees: How much does the merchant account broker charge for their services? Merchant account brokers may charge application fees, transaction fees, chargeback fees, or early termination fees. Merchants need to ensure that all of the fees involved are understood before signing a contract.
- Merchant account services: What services do they offer? Some services include : card, mobile, and online payment processing, fraud prevention technology, chargeback management, payment gateways, reporting and analytics, recurring billing, virtual terminals, multi-currency processing, high risk merchant services. Merchants need to ensure they have a firm understanding of all services being offered.
- Relationship with merchant account providers: Does your merchant account broker have relationships with multiple merchant account providers? This will give your businesses access to more payment processing options to choose from.
- Expertise in your industry: Does your merchant account broker have experience working with businesses in your industry? Ensuring that the merchant account broker you work with understands your specific needs and can provide you with the best possible service.
- Reliable Customer support: Is your merchant account broker responsive to your needs? Do they have a good reputation for customer service? This is important, especially if you are new to merchant accounts or have any questions or problems.
Types of Merchant Account Brokers
There are various types of merchant account brokers. These include:
- Independent merchant account brokers: Independent merchant account brokers are not affiliated with any particular merchant account provider. They work with a variety of providers to find the best one for each business’s needs.
- ISO (Independent Sales Organization) merchant account brokers: ISO merchant account brokers are affiliated with one or more merchant account providers. They sell merchant accounts on behalf of these providers.
- Bank-affiliated merchant account brokers: Bank-affiliated merchant account brokers are affiliated with one or more banks. They sell merchant accounts on behalf of these banks.
- High-risk merchant account brokers: High risk merchant account brokers help businesses in these high risk industries obtain merchant accounts by working with a network of merchant account providers who are willing to work with high-risk businesses. High-risk merchant account brokers can also help businesses negotiate lower rates and terms on their merchant accounts.
Fees and Pricing Structures
As noted earlier, there are various fees that can be associated with merchant account providers, merchant account brokers and the merchant account services they offer. These fees can include: upfront fees, application fees, setup fees, monthly fees, transaction fees, chargeback fees, early termination fees, commission fees and other types of fees.
Factors Influencing Fees and Pricing Structures
- Account type: Some account types, such as online merchant accounts, may have higher fees than others. Partner with a quality merchant account broker to ensure
- Business credit history: Businesses with good credit history tend to qualify for lower fees.
- Business industry and model: High-risk industries may be subject to additional fees due to the nature of their industry. Working with a high-risk merchant account broker ensures merchants circumvent this potential issue.
- Chargeback rate: Merchants with a history of frequent chargebacks might be charged higher fees to offset the risk and administrative costs associated with chargeback disputes because merchant account providers have to absorb the cost of chargebacks.The higher the chargeback rate, the higher the fees tend to be.
- Contract Terms: The length of the contract, early termination fees, and other contractual provisions can impact overall fees and pricing structure. Merchant account providers might offer more favorable terms or waive certain fees for merchants willing to commit to longer contract terms.
- International Business: Cross-border or multi-currency transactions usually incur additional fees due to foreign currency conversion and elevated risk.
- Sales transaction volume and value: Merchant account providers may offer lower per-transaction fees for businesses with high transaction volumes or high average transaction values while businesses with low monthly volumes or low-ticket sales might face higher fees or additional monthly charges.
- The higher the sales volume, the lower the fees tend to be. This is because merchant account providers can process more transactions at a lower cost per transaction.
The higher the average transaction value, the lower the fees tend to be. This is because merchant account providers can earn more revenue from each transaction.
Conclusion
Today we learned about what a merchant account broker is, what merchant account services are, how payment gateways and POS systems work and their relationship to Payment processing brokers, the merchant account fees, and the benefits of custom specialized merchant account services as well as how to find the best merchant account service provider for your business.
EMB, Your Trusted Merchant Account Broker Streamlining Your Business
Merchant account brokers, like EMB, aligns businesses with the right merchant account providers, negotiating favorable conditions, and offering ongoing support and advice. A merchant account broker’s expertise, industry relationships, and support is instrumental for businesses of all risk levels in securing and managing merchant accounts. We’ve constructed a platform designed to work for you. We add new features all the time to meet our client’s unique needs.
EMB offers merchant account services with low fees, increased savings, and 24/7 customer support. Merchant accounts allow your business to accept credit and debit cards online. EMB is a proven industry leader. With EMB’s merchant accounts, clients realize many advantages such as increased savings and award-winning customer support. Our customer service teams are ready to talk to merchants and agents, always providing the exceptional service, care, and support that EMB is known for.
Have some questions? Great! We have a dedicated staff on hand ready to answer any questions you might have about the process. We love talking to our merchants, and helping them launch their business.