Back in the day, when you were selling lemonade as a kid, the transaction was simple: your neighbors would give cash directly to you in exchange for a cool refreshing beverage. Nowadays, you’re selling goods and services across an array of banks, currencies and regulations that require multiple third parties to facilitate that same transaction between you and your customer.
Welcome to the world of merchant services. It’s complicated, but luckily we’re here to break it all down into the four basic elements that facilitate a credit card transaction. And we’ll explain them in a way that even your entry-level lemonade vendor can understand.
As the name suggests, this is the “point of sale” where the transaction begins. Gateways are maintained by specialized providers to securely handle the sensitive data submitted in a transaction, such as credit card number, billing address, name on card etc.
Payment Processors are the entities that transmit payment gateway data for authorization by the banks. When a transaction is initiated through a payment gateway, the payment processor relays that information to the customer’s bank (the issuer) for authorization.
Merchant accounts enable merchants to receive those electronic funds. Many banks specialize in serving certain industries or types of merchants. But that bank must be registered with the card companies you intent to accept payments through.
Third Party Agents: ISOs, MSPs, & Agents
Independent Sales Organizations (ISOs) and Member Service Providers (MSPs) and Agents connect merchants to all the above merchant services on behalf of the acquiring banks. The main difference between them is whom they contract with. ISOs are contracted to VISA, MSPs to MasterCard, and Sales Agents are like a subcontractor providing said services for the ISO/MSP. All three provide merchants with transaction solutions such as gateways, merchant accounts, and POS terminals.
ChargebackHelp maintains extensive relationships across this spectrum of merchant services. We also provide a secure gateway designed specifically for high-risk merchants called BILLAPAY. If you’re a merchant finding your way through this labyrinth that sits between you and your customers, give us a call. We can help get you processing with the right merchant services for your business.