First let’s examine why businesses use their bank for credit card processing.
- Lack of understanding that other options exist
Many businesses select their bank for credit cards processing simply because they have always used their bank for financial functions. It is thought that the bank must be able to give them the best deal based on a history of loyal patronage of the business. The truth is that businesses that use their bank for credit card processing typically pays more than any other segment in the country.Equipment purchase and lease prices are, on average, double and the processing rates are often much higher than a merchant service provider’s. Businesses are locked into long term contracts with no options for termination.
The reason for generally higher prices and inflexible contracts is that fact that most banks outsource their credit card processing to a merchant service provider (MSP) or independent sales office (ISO). The problem with outsourced service is the introduction of a middleman and additional margin that must be covered. All but a few large banks outsource their credit card processing.
Many businesses feel that it is more convenient to have one entity handle all their financial functions. It is very convenient to have one place to see all the business financial data. However, aside from the deposits, credit card processing and banking are not integrated. There for the service you get from a merchant service provider or your bank will be exactly the same.
Most businesses don’t know of other options beyond their bank and subsequently don’t research the cost and customer service benefits of a merchant service provider.
So why is it beneficial to select a merchant service provider for credit card processing?
Well, first of all is specialization. Your merchant service provider only function is to provide credit card processing and electronic check processing.
Next is superior customer service, lower rates and better pricing on equipment. Most respectable merchant service providers have 24 hour a day, 7 day a week customer service. Your business will also be given a personal account representative for questions, issues and payment consultation. Your merchant service provider also has access to the payment network and can solve most every issue over the phone. Issues are resolved on the first call and don’t result in your business calling different departments looking for the right person to help. Equipment pricing is often the very best as your business is negotiating at the source.
Another significant advantage is the ability of your merchant service provider to work with many different banks. If your business processes with your bank and you have issues with your account you will have to switch out both accounts which can be a huge pain.
Your merchant service provider also has a much higher level of business expertise in setting up the right service for your industry type. Odds are that your MSP has numerous other businesses just like your and can instruct you as to the most beneficial set up.Bottom line - merchant service providers have more industry experience, more available and focused customer service, better prices and are specialized in providing payment products and service for your business.