Merchant services relate to credit card processing for businesses. Managing your own can be risky and expensive, so many companies choose to outsource their merchant services. The main benefits of outsourcing are:
- General cost advantages.
- Increased efficiency.
- Ability to focus on core areas.
- Monetary savings in infrastructure and technology.
- Access to skilled resources.
- Faster and better services.
These advantages are also applicable to e-commerce and payment processing. Here are three activities businesses should consider outsourcing to merchant services.
3 Most Important Benefits of Merchant Services
Credit Card Processing
Credit cards are widely used in commerce. They not only attract new business, but buyers spend up to 18 percent more when paying by card.
Some consumers, however, are concerned about keeping their credit card information safe. The 2017 Identity Fraud Study by Javelin Strategy & Research revealed that identity fraud incidence increased by 16 percent in 2016, a record high since the study’s inception in 2003. The study revealed that fraudsters successfully embezzled $16 billion in 2016.
In 2010 several cyberattacks were directed at PayPal and Mastercard. In 2015, 150,000 Spanish cardholders had their funds frozen, due to an alleged fraud case involving PayPal service provider Younique Money. Cases like these highlight the need for both credit card and merchant services in your business. Thus, it’s important to choose a merchant service provider that specializes in high-risk processing services.
Automated Clearing House (ACH) Processing
ACH is a highly popular transaction network that processes credit and debit activity as well as direct deposit, payroll, and more. The National Automated Clearing House Association (NACHA) processed around 24 billion transactions in 2015, with a total value of $41.6 trillion. It achieved similar figures in 2016 and 2017, processing in excess of 20 billion transactions per year.
If your business trades via this network, it’s a good idea to use a merchant processing service that specializes in this area.
Businesses often overlook one of the risks involved in accepting credit card payments: chargebacks. By using a merchant processing service that includes chargeback prevention, however, you can mitigate some of the risk.
Ways business owners can prevent issues associated with chargebacks include:
- Understanding why chargebacks occur within the sales process.
- Using accurate payment descriptors on the merchant account.
- Using a reputable payment processor with fraud detection and seller protection features.
- Responding to customer issues and complaints immediately.
- Posting a clear return policy in-store, on websites, and on receipts.
- Recording pertinent information for every sale.
- Knowing if the business is at a higher risk for chargebacks.
- Using a chargeback protection service to verify sales.
By outsourcing these three commerce activities, you can focus more on growing and developing your business. But don’t think of outsourcing as merely contracting these tasks out. Think of outsourcing business payment processing and chargeback prevention to a merchant service as creating a collaborative business relationship with that provider.
Ultimately, you must determine what merchant processing service you want to use and how much you’re willing to spend to share a portion of your payment processing risk.
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This article, “Thinking About Outsourcing Some Business Activities to Merchant Services? Start with These 3” was first published on Small Business Trends