What Is Merchant Services?
Merchant services is the umbrella term for all the tools, technology, accounts, and support businesses need to accept electronic payments—primarily credit and debit cards.
If you want to accept card payments (and in today's economy, you really have to), you need merchant services. This includes:
- Merchant Account: A special bank account that receives funds from card transactions
- Payment Processor: The technology that routes transactions between customers, your bank, and card networks
- Payment Gateway: For online stores, the secure connection between your website and the processor
- POS Terminal/System: The hardware where customers tap, insert, or swipe their cards
- Reporting Tools: Dashboards to track sales, refunds, and deposits
How Does Payment Processing Work?
When a customer pays with a card, here's what happens in about 2 seconds:
1. Authorization: The customer's card info goes to the payment processor, which contacts the card network (Visa, Mastercard), which contacts the issuing bank to verify funds 2. Approval/Decline: The bank approves or declines based on available balance and fraud checks 3. Capture: At end of day, you "batch out"—submit all approved transactions for settlement 4. Settlement: Within 1-2 business days, funds are deposited into your merchant account, then swept to your business bank account
What's a Merchant Account?
A merchant account is a special type of bank account that serves as a holding place for card transaction funds. When customers pay with cards, the money doesn't go directly to your business checking account—it goes to your merchant account first, then transfers out (usually next business day).
Merchant accounts require application and underwriting because the bank takes on risk—if you go out of business or commit fraud, they're on the hook for chargebacks and refunds.
Merchant Account vs Payment Processor
These terms are often confused:
- Merchant Account: The bank account where funds are held
- Payment Processor: The technology company that routes transactions
Most providers bundle both together as a complete solution. When you sign up with a company like Unison Payment, you get a merchant account AND processing services in one package.
Types of Merchant Services
Card-Present (In-Person) Processing
For retail stores, restaurants, and service businesses. Customers physically present their card at checkout. Lower fees because fraud risk is lower.
Card-Not-Present (Online/Phone) Processing
For eCommerce, phone orders, and mail orders. Higher fees because fraud risk is higher—you can't verify the cardholder is present.
Mobile Processing
Accept payments anywhere with smartphone card readers. Great for contractors, vendors, and field service businesses.
High-Risk Processing
Specialized accounts for industries banks consider risky—CBD, nutraceuticals, gaming, adult, travel, and others. Requires specialized underwriting.
How Much Does Merchant Services Cost?
Processing fees typically include:
1. Interchange: Set by Visa/Mastercard, paid to the card-issuing bank. Non-negotiable. 2. Assessment: Small fees to card networks. Non-negotiable. 3. Processor Markup: The processor's fee for their services. This IS negotiable.
Total fees typically range from 1.5% to 3.5% per transaction, depending on card type, transaction type, and your negotiated rates.
How to Choose a Merchant Services Provider
Look for:
- Transparent pricing: Interchange-plus shows exactly what you pay
- No hidden fees: Beware of statement fees, batch fees, PCI fees
- Month-to-month terms: Avoid long contracts with cancellation fees
- Good support: Real humans who answer the phone
- Industry expertise: Choose a provider who understands your business type
Getting Started
Ready to accept card payments? Here's the typical process:
1. Apply: Submit a merchant application with business details 2. Underwriting: The provider evaluates your business (24-48 hours typical) 3. Approval: Receive your merchant account credentials 4. Equipment: Get your terminal, POS, or gateway credentials 5. Go Live: Start accepting payments
Most businesses can be up and running within a week.