Merchant Service Provider: 12 Questions to Ask

So you’re in the market for a merchant service provider?

You’re probably already researching like crazy, but we’re going to take a second to again remind you that choosing a merchant service provider is a very important decision.

Processing costs and the mishmash of services, software, and hardware that go into a great payment solution can feel a bit overwhelming, but taking the time to understand the variable costs and pros and cons of different providers is well worth it.

Choosing the right merchant service provider could save you thousands in expenses each year, and your payment solution has a direct impact on your customer’s experience.

The best case is a win-win for both you and your customer. You work with a merchant service provider that is modern, low-cost, helps you with chargebacks, and doesn’t have surprise fees, and each customer that walks into your door has a smooth checkout experience. You shouldn’t have to sacrifice quality for price or vice versa.

We’ve compiled what we think are the most important questions to ask whomever you’re thinking about working with. These are the questions that separate good decisions from bad decisions.

But before we dig into that, let’s make sure we’re all clear on what a merchant service provider or merchant account provider even is.

What is a merchant services provider?

A merchant services provider is a company that provides a variety of services and products all centered around accepting payments of all types.

These are the guys that set you up with a merchant account, sell terminals, install POS systems, help you fight chargebacks, give you online invoicing capabilities, sales data — you name it. What each merchant service provider offers is unique to them, but all of them act as a liaison between your business and the world of payment processing. Ideally, they become your go-to resource for all things payment.

Okay! On to the questions.

12 Questions to ask a Merchant Services Provider before you commit

Do you charge setup fees?

Some MSPs do. Some don’t. If it’s anything steep, ask why.

Do you charge cancellation fees?

Unless you’re a 7-8-figure business dealing in $100k+ transactions per month, you should never work with someone who charges cancellation fees. If they aren’t earning your business month after month, then why should you be penalized for leaving?

Is there a really long contract length?

Same idea here. There are a lot of bottom feeders in the merchant services industry. It’s just the way it goes, but someone asking for a 5-7 year commitment combined with a hefty cancellation fee is likely one of these and is usually something you should steer clear of.

Is there a transaction or processing quota per month? If so, what are the penalties?

This is another red flag. If you have a bad month, some merchants will charge you for it. We think that’s ridiculous at Tidal, considering they earn money for every transaction — meaning they earn more on your good months. It should be a partnership, not a relationship where the merchant service provider beats you while you’re down.

Learn more about Tidal’s payment processing.

On a similar note, is there a transaction cap? If so, what are the fees for surpassing it?

Same idea. They are already earning more money! Why should you be charged?

Do you have a staff member who helps me with chargebacks?

Chargebacks are the perennial thorn in merchants’ backs, and reputable MSPs like Tidal offer a chargeback assistant to help fight back against fraud and customer chargebacks.

How does your company approach PCI Compliance?

Just because you have PCI-compliant software doesn’t mean you’re PCI compliant. PCI compliance is its whole little world, and some merchant services providers leave it all up to you while others proactively equip you with the best resources and software. Make sure it’s the latter.

If they offer a low entry rate — why? Where do they make their money, and why don’t they just have a benchmark percent they can rely on?

Here’s the thing. No one gives away software, hardware, or insanely low payment processing rates without knowing they’re going to make it up somewhere else. If a rate or deal seems too good to be true, it probably is — this is where you look out for fees more than anywhere else. If someone gives you free terminals and a 1.5% flat rate, they’re either taking advantage of you or will go out of business very, very soon.

Do you have any breach assistance?

Some Merchant Service Providers like Tidal offer breach assistance in case of PCI compliance violations. This is super nice to have in your back pocket in case you’re liable for a breach.

What kind of software and hardware do you all sell or provide?

The best merchant service providers equip you with the hardware and software you need — everything from PCI & HIPAA compliance dashboards to sales analytics, to smart, mobile terminals. Make sure the MSP you’re looking at has what you need at a reasonable cost.

What kind of technical support do they offer?

Nothing is worse than have an outage during a rush and your MSP not being there to help. ²⁴⁄₇ technical support is the only way to go.

What kind of rate do they charge? Is it flat rate? Interchange plus? Both? How will they help your business decide what’s best for you?

Your MSP should sit down with your statement and figure out what’s best for you. Not all businesses are equal, and depending on your transaction types and frequency, you may be a better fit for one pricing structure over another. Make sure they do the work to answer that question thoroughly.

Merchants save up to 35% when they switch to Tidal Commerce.

And there you have it! Do your due diligence with those questions, and you’re bound to make a smart decision for your business.

Tidal Commerce loves to work amazing business owners. We work with retail, healthcare, professional services, eCommerce, nonprofits — you name it. And as long as you want to grow your business and appreciate transparency and honesty, then you’ll fit right in.

Think you’re in that camp and want to work with someone who really has your back?

Awesome.