Merchant Service Providers: What are They & What Do They Do?

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A merchant services provider can be a crucial player in not only expanding your business, but also in helping it operate smoothly and effectively in order to achieve that growth. Merchant services providers offer a number of benefits that are incredibly useful to businesses and are especially important to understand and utilise correctly.

That said, we’ve put together some useful information that can help you understand not only what a merchant services provider is but also how they work. 

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What is a Merchant Service Provider? 

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Merchant service providers offer both businesses and individuals the tools to be able to deal with online payment transactions effectively and efficiently via methods such as credit card and debit card payments. This also includes all other forms of electronic payments. 

Merchant service providers also helps you and your business to securely manage and keep in line with PCI compliance when processing and storing payment information meaning that merchant service providers help you keep your customer data safe and secure. Not only this but merchant service providers also allow you and your business to track payments, collect outstanding funds and even help you understand your businesses data.

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What are the different types of Merchant Service Providers? 

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A merchant service provider is considered representatives for either a business or an individual selling goods or services. Because of the way in which goods and services are offered to customers/consumers, there needs to be a number of different types of merchant service providers to accommodate these. The different types of merchant service providers include:

 

  • E-Commerce Merchant Service Providers
  • Retail Merchant Service Providers
  • Wholesale Merchant Service Providers

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So, how do Merchant Services work?

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The term ‘merchant services’ typically refers to a merchant account, which is something most businesses should have. A merchant account is often set up by the Merchant Service Provider (MSP) and thereafter, the Merchant Service Provider acts as an intermediary between the business bank account, the payment gateway and payment processors, credit card networks and the customers issuing bank. That said, it is fair to say that Merchant Service Providers play a crucial role in the payment ecosystem of many, many businesses. Without merchant services and subsequent Merchant Service Providers, you aren’t able to accept card payments or any other form of digital transaction. 

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What else do Merchant Service Providers offer? 

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So, now we’ve established what a Merchant Service Provider is, what they do and how they work, and we have a good understanding of how important they are in the payment ecosystem for a lot of businesses. What else can Merchant Service Providers do though? What other benefits are there for engaging with a Merchant Service Provider?

 

  • Some MSPs offer the ability for contactless payments.
  • Some allow for mobile payments to be made.
  • Some MSPs allow the integration of payments into an e-commerce store.
  • Payment Gateways and payment processing via MSPs.
  • MSPs also offer additional security in regard to payments.

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Imburse can help your business manage your bespoke payment needs for a secure and efficient payments that work for you. Get in touch with us today for more information.

 

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The Future of Financial Technologies

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What is Fintech?

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Fintech is simply the combination of Finance and Technology. The Fintech industry is full of large corporations and fast-growing start-ups that produce innovative financial technologies that are adopted to enhance or automate financial processes or services. This has a relatively broad reach as traditional banks tend to invest in and adopt financial technologies. Banks partner with Fintech companies to stay relevant in the industry and remain competitive to their customers. 

As our society adopts technology into every aspect of our lives, Fintech is one of the fastest growing technology sectors with innovation in nearly every area of finance. Financial technologies such as AI, data science, and blockchain are integrated for faster and safer financial processes. As financial technologies grow, so does cybercrime. As a result, Fintech is being challenged to provide secure solutions as regulations ensure standards for customer security.

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Future Trends of Financial Technologies

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Primarily, financial technologies seek to reshape the structure of financial services and adhere to customer needs and expectations. With applications in banking, insurance, investment, security and more, Fintech is transforming finances from business to customer.

This isn’t a new phenomenon; Fintech has been evolving for centuries. As technology advances, new financial and payment technologies are created. Since computers, the internet and mobile devices entered the mainstream, Fintech has been a global industry. After the 2008 fiscal crisis, a ‘Fintech revolution’ to offer industry solutions, rather than just advancements.

How is Fintech using financial technologies? Some of the newest trends include applying machine learning algorithms and data science, streamline payments, integrate billing, advance mobile payments, and improve security. Here is a breakdown of the 5 main applications from financial technologies that are shaping the future of Fintech.

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Digitisation

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Digitalisation continues to expand in the financial services and offer many benefits. This includes;

  • Big data analysis
  • Cloud computing
  • Fintech collaboration
  • Customer experience
  • Operational efficiency

Mobile banking is revolutionary for personal finance and allows customers easy digital access to their bank accounts. With the rise in neobanks around the globe, this also allows technology to make banking more accessible. The majority of banks already offer global payments and virtual payment transfers with the use of digital banking, and any that don’t likely soon will. 

Not only are digital financial technologies helping customers, but they’re also improving processes for businesses. For example, this has applications for retail banking, insurance, wealth management, and migrating to commercial banking. There has even been a rise in investing and savings apps in recent years, which decentralises the role of banks for financial management.

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Blockchain

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Bitcoin, a cryptocurrency that uses Blockchain, already has a wealth of opportunities in the world of Fintech. In fact, in a survey, 77% of financial service incumbents were preparing to adopt blockchain into their processes. We expect blockchain ‘public ledger’ will integrate into the Fintech industry long term, with applications for anti-money laundering efforts and creating new financial services.

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Business Model

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New financial technologies have been disrupting the typical Fintech business model, as a result there has been a lot of experimentation with how to structure a fintech company. Some speculate that the Fintech industry will soon be a ‘sharing economy‘, and have numerous microservices that are managed concurrently. This decentralised asset ownership tends to utilise information technology such as cloud-based software-as-a-service (SaaS) applications to manage bespoke financial solutions beyond the services of banks.

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AI and Robotics

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Enhancing transaction accuracy for smarter and faster responses with machine-accessible data, machine learning, big data and AI is the main initiatives for algorithmic trading. This shift from Internet finance to data finance is a key trend in recent years, and AI has been named the “future of financial data computation”.

AI in the context of financial technologies focuses on deep learning, intelligent analysis, and intelligent decision-making. This has a range of applications, according to Narrative Science, AI adoption grew by 60% in 2017. Many financial service providers have utilised AI technologies such as;

  • Predictive analytics
  • Voice recognition
  • Logical reasoning
  • Navigation
  • Mobility
  • Emotional and social intelligence
  • Natural language processing
  • Physical sensors
  • Self-supervised learning
  • Identify patterns

This is because AI has the ability to run large amounts of data through algorithms designed to spot trends and risks, so financial technologies are able to adapt this for a multitude of applications.

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Cyber-Security

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With innovations in AI and machine learning, blockchain, cryptography, and quantum computing, also come a lot of potential fraud risks. Strengthening data security policies needs to be a primary concern for Fintech, and due to a rise in new technologies we have also seen a rise in regulation. Regulatory technology has been an answer to this, named ‘RegTech’ which aims to help companies navigate regulatory complexities. 88% of UK companies suffered a data breach between 2019-2020. With the use of third party vendors, rapidly evolving financial technologies, cross-border data exchanges, and increased mobile technologies, cybercrime is a growing problem. Intelligent solutions that securely store and manage payments is the future of Fintech, and its applications.

 

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Fintech aims to streamline the segmented structure and core financial technologies used in the industry to ensure a secure, competitive, and user-friendly financial services. Imburse offers bespoke payment solutions for your business. To help manage your payments in an innovative, complaint, and safer way, get in touch with our team today.

 

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Why Choose Payment Gateway Integration?

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What is a Payment Gateway?

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Payment Gateway Integration is utilised when a merchant can accept online payments via their site, this is done by connecting the website and the payment processing bank to allow secure, encrypted payment transactions. A payment gateway can process credit cards for online and offline stores.

As e-commerce grows increasingly more popular, even the older generations are becoming more proficient and trusting in digital payments, particularly as payment technology improves its security and user experience.

Payment gateways are a great way to increase sales and drive more customers to your site. While a good payment gateway will enable a better user experience, there are many additional features and benefits your business can take advantage of.

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How does Payment Gateway Integration work?

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Once a payment gateway is integrated, the sale process on your site will likely look like this;

  1. Once a user clicks ‘Buy’, and an encrypted checkout page will appear within the platform.
  2. The user submits the required information.
  3. The payment gateway processes the payment and either confirms or denies payment with the card association, via encrypted SSL connection.
  4. The customer is informed whether the payment is complete.
  5. This process takes as little as 2-3 seconds, and then minus any transaction fees, the money owed is paid to the merchant.

After payment gateway integration, you’re still able to accept payment types such as credit and debit cards, ACH (Automated Clearing House), and eWallets. The biggest difference for your business and customers is having a high-quality checkout experience on your site.

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Why does your site need Payment Gateway Integration?

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If you’re questioning whether you need a payment gateway for your e-commerce website, the answer is easy ‘yes’. According to Invespcro, shopping car abandonment reasons are 11% complex checkout process, 12% need too much information, and 7% do not have enough payment options. But with payment gateway integration, you can collect direct payments from your customers and utilise the many benefits of using a payment gateway. 

This includes:

  • Saving time
  • Improving user experience and staying competitive
  • Expanding your customer base on a global level
  • More secure transactions and avoiding fraud-related losses
  • Convenient payments

This is why payment gateways are suitable for most sites. While this is essential for e-commerce, even traditional ‘brick-and-mortar’ stores stand to benefit significantly.

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Payment Gateway Integration or Hosted Payment Gateways?

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With payment gateway integration, you won’t be sending your customers away from your site to complete a transaction, which avoids the risk of lower conversion rates and customer mistrust in third parties, as you would get with a hosted payment gateway. 

A hosted payment gateway simply means that the payment gateway isn’t embedded onto your site, instead users are sent away from your site to complete the payment process. When payment gateway initiation is integrated on your site, you are responsible for the security and customer data used in the transaction process, whereas a hosted payment gateway provider would manage this for you. 

For payment gateway integration, you also need to consider your platform, as some have special requirements for compatibility, such as Shopify. If you don’t have the developer resources for an API connection needed to integrate, a hosted payment gateway may be the best option for you. Although, there are greater benefits for user experience and conversions with a payment gateway integration.

Choosing between integrated and hosted payment gateways means considering multiple factors and what satisfies the needs of your customer and your business.

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Compliance & AML

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As online payments offer ample opportunities for fraudulent transactions, so prioritising security when facing payment gateway integration is key. PCI-DSS compliance (Payment Card Industry Data Security Standard) should be made as easy as possible with a good payment gateway. Your business will also need to account for GDPR (General Data Protection Regulation) when storing customer data, and SCA (Strong Customer Authentication) as part of PSD2 compliance from the European Union. Therefore, you must ensure fraud protection, AML compliance, and secure cardholder information storage when considering payment gateway integration or risk a nasty fine.

All payment gateways come with fraud detection applications, but you should still find a payment gateway that offers tools to protect your customers during the purchasing process and after. With a good API, modules for this will be readily available to integrate unless you run your site via a customer engine.

Generally, API is the most commonly used payment integration technology, so it’s important to consider the quality of your API. Can you directly adjust the code, does the API provide code samples, and whether you can trial it out via the documents are all potential signals for its quality? A quality API and payment gateway can bring further benefits to your business.

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Payment Gateway Applications

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You should also consider what future features you would want to add and how flexible the payment gateway is to that. If you’re looking to expand the number of transactions you’re completing, plan ahead when choosing the right payment gateway integration. Site’s with payment gateways are always convenient to customers, so make sure to focus on your own business strategy.

  • Subscription for recurring bills.
  • Notifications for verified transactions.
  • Payment information storage for users to save their information.
  • Customisation abilities via your API.
  • Integrate with accounting software to automatically track transactions.
  • Support for global transactions to aid cross-border sales.
  • Accept and be flexible to different payment types and currencies.
  • Easy customer onboarding.

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Payment Gateway Costs

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Payment gateway can have many associated costs to consider when choosing the right one for your business.

  • Registration
  • Set-up
  • Monthly fees
  • Transaction
  • Processing
  • Refunds
  • Chargeback
  • Fund transfer fees
  • Termination fees

The most common transaction types include; authorisation, sale, refunds, and void payments. So, considering these costs in relation to your business will help you to identify how suitable a payment gateway is for your site.

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Imburse Payments can help you manage your payments, and utilise technology to access global markets without lengthy integrations. Contact our expert team today to find out how our bespoke solutions can help you.

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