If your business is new to accepting credit card payments or you are not happy with your existing merchant provider, you might feel the urge to obtain the services of either a merchant broker or a merchant services consultant.
These services often offer to help businesses create merchant accounts and point-of-sale (POS) systems. Some of these services offer to help businesses better negotiate deals on merchant services with lower credit processing fees. Businesses, however, must weigh these advantages against all of the given factors.
This article reviews what you need to consider if your business is debating obtaining the services of a merchant broker or merchant services consultant.
Why Payment Solution Brokers Are Chosen By Some Companies
To accept card payments, your business requires both a merchant account and a payment processor to adequately handle each transaction. Merchant accounts are offered by acquiring banks in connection with card networks. Payment processors handle credit card transitions with the help of a high-security payment gateway.
Because multiple institutions take part in card transactions, this type of payment method carries several associate merchant fees, which can end up adding somewhere between 1% to 4% of the transaction in question.
This percentage includes the basic transaction fees in addition to any additional fees placed by the payment provider. This amount does not include the initial setup fee or any other types of cancellation fees.
While these costs might seem like a big obstacle at an immediate glance, they are required for card payments and many businesses even discover that they end up helping them to expand their operation.
The Role of Payment Solutions Brokers
After accepting card payments, payment solutions brokers help businesses review the available options and determine what solution is most suitable to the business’s goals. While e-commerce companies might need a feature that lets them accept multiple currencies at the lowest possible rate, physical (“brick-and-mortar”) stores might need a point-of-sale (POS) system.
With various options as well as a long list of providers to choose from, payment solutions brokers try to find the best possible options among merchant accounts, POSs, and acquiring banks for each unique business. Many times, brokers also attempt to negotiate lower card processing fees that a person can achieve on his or her own.
Some of the tasks performed by payment solutions brokers include:
- Help applying for merchant accounts. Despite how simple eMerchantBroker (EMB) tries to make the merchant application process, it can seem daunting if you are a new business or an operation classified as high-risk. The application process often requires businesses to submit business plans, bank statements, credit histories, tax filings, average monthly/yearly transaction volumes, credit card processing logs, and data about chargeback ratios. To make matters easier for a business, brokers sometimes offer to help complete applications. Merchant brokers routinely share relationships with various acquiring banks, which makes it easier for that broker to interact with the financial institute.
- Merchant service provider negotiation. The fees that are charged by card issuers and card networks are fixed, but the amount that businesses must pay merchant account providers varies enormously between companies. Given monthly and yearly processing volumes, payment solutions brokers can review this data and determine what merchant service provider is best for a business.
- Obtaining the best possible payment processing hardware and software. After a business obtains both a merchant account and a merchant service provider, the business needs a way to accept credit card payments. These payments might include virtual terminals, traditional terminals, point-of-sale systems, mobile card readers, and payment gateways. For e-commerce businesses along with other online operations, secure payment gateways are often all that is necessary. Along with providing financial suggestions about merchant accounts, payment solutions brokers also provide payment solutions that can address anything from card reader software to leases.
Reasons Why Companies Hire Payment Solutions Brokers
If your business has decided that a payment solutions broker is a good choice, you will likely find that one of the following factors is worth the potential risks:
- Informed guidance. Payment solutions brokers offer guidance to businesses about how to make the best possible financial, legal, and logical choices. Brokers often work with countless financial institutes, which means they know the best possible option. Given this extensive knowledge about business transactions and the surrounding industry, brokers sometimes help merchants negotiate and lower the price of payment processors.
- Work and knowledge. Given their work and knowledge of countless financial institutes, brokers often can provide countless insights to new businesses.
- Indemnification. Merchants must deal with various nuances and brokers can occasionally help to indemnify sellers from these liabilities. For example, different payment processors offer a range of different service prices. Brokers can help distinguish what the best possible payment processor is.
- Knowledge about financial institutes and connections. Payment solutions brokers often know existing financial institutes along with existing relationships with contacts at these locations. These details can help new sellers experience an easier time in establishing merchant accounts.
- Help in comparisons. Experienced brokers offer fair comparisons between processors or other necessary service providers. With these comparisons, new businesses can make sure that they obtain the best possible payment processing and other merchant services so their business starts its operation on the right foot.
- Avoid time wasted. Payment solutions brokers help businesses find the most suitable payment processors, which can save business owners and operators a substantial amount of time. This way merchants can expand their business without thinking about transactions.
Factors To Weight Between Payment Solutions Brokers
Businesses must locate the best possible payment solutions broker if they decide to retain one. Brokers are trained in a range of important business topics like e-commerce and high-risk classifications.
Make sure that your payment solutions broker has the following traits:
- Experience. The broker your business hires should be trained in the areas unique to your business’s situation. For example, if your business is classified as high-risk, make sure that your broker has experience helping other high-risk businesses. This helps to make sure that your broker offers you the best possible options. A broker’s knowledge helps merchants deal with the nuances involved with running a business’s incoming profit. Brokers help to construct the most appropriate connections, which saves merchants a substantial amount of time. With the best possible broker-recommended services and choices, businesses can make sure that they do everything possible to ensure growth and the maximum amount of profit.
- Costs. What brokers charge can vary greatly, with some payment solutions brokers offering much higher fees than others. Businesses should weigh affordability versus the other advantages that a broker provides. Additionally, businesses should ensure that brokers do not have hidden costs after offering their services. Make sure to address what your broker expects to be paid before retaining his or her services.
- Security. The best possible payment solutions broker can increase a business’s chances of avoiding fraud and exposing customers to financial exploitation. Not all brokers are equally informed about how to best secure a business’s operations. The best brokers regarding security will already have connections with the top payment processing companies. Through these broker’s recommendations, businesses can make sure that their business has the highest possible security without disrupting customers’ enjoyment of interacting with the business.
- Flexibility. Businesses should speak with brokers about the specific needs of a business. The best possible brokers assess your account to determine if there is any way to save money by switching providers for your business’s continued operation. This saves additional costs as well as time for the business’s owners and operators.
- Truthfulness. Cases have existed where some disreputable brokers have attempted to coerce businesses into signing contracts that offer unfavorable terms to the operation but favorable ones to the business. Businesses must select the most trustworthy payment solutions broker possible. Trustworthy brokers are often connected to trade associations and recommend top-selling and well-known merchant service providers. The most reliable brokers also have positives on sites like Google. Transparent payment solutions brokers are also easily capable of being contacted either online or by phone. If the broker does not have a live service, businesses should approach this service cautiously. The most candid brokers also do great work and do not need to rely on overly aggressive marketing tactics to capture the interest of consumers.
- Support in various areas. The best brokers can offer businesses support and help in a wide range of areas. The suggestions the best possible brokers make range from increasing a business’s revenue to saving time so a business can focus on other critical parts of successful operations.
Deciding If A Payment Solutions Broker Is Suitable For Your Business
Utilizing a payment solutions broker when a business is new is a unique decision that every business must weigh. Dealing with brokers can expose some companies to entering costly contracts or being provided with equipment that is more costly than needed. Because payment solutions brokers work on a commission, they sometimes make self-interest decisions.
If you need a merchant services provider, your business should make sure to weigh its choice and make the best possible decision. If you want an industry-recognized leader, contact us today.