What are merchant services?

3-minute read

Thurs Jul 05 2018

In short, ‘merchant services’ is the umbrella term for everything you need to know if you want to accept card payments from customers. You need to understand what merchant services are if you want to take debit and credit card payments from customers:

· face-to-face, for example in store;
· over the phone; or
· online, via your website.

Here goes.

If you’re a shop owner, restaurant, taxi driver, hairdresser or any other type of business (of any size) that wants to offer customers the option to pay by debit or credit card, there are five things you need to have:

Step	What you need	Where to go to get it
1	A registered business and trading name (depending on how you prefer to trade)	Companies House and GOV.UK
2	A business bank account	A bank, for example Barclays
3	A merchant account and merchant number	An acquiring bank, for example Barclaycard
4	A payment gateway - this could be an online payment gateway or face-to-face payment gateway	A payment gateway provider, for example Barclaycard
5	The necessary software or hardware to accept card payments - for example a card reader for accepting contactless and chip and PIN payments face-to-face or over the phone	A hardware provider, for example Barclaycard

Numbers three to five (above) are all merchant services.

For the purposes of this article, we’ll call you (the business that wants to take card payments) a merchant.

In short, your customer's bank is called the issuer or issuing bank, while your bank (as a merchant) is called the acquirer or acquiring bank.

Getting a merchant account and merchant number

Once you’ve registered your business and got a business bank account (steps one and two in the table above), you can apply to an acquiring bank for a merchant account and merchant number. You can apply for a merchant account and merchant number with Barclaycard online, over the phone or in person. This will allow you to start taking debit and credit card payments online, over the phone, face-to-face, or via a mix of these channels.

Merchant accounts and why you need one?

A merchant account is basically a bank account set up through a payment processor (like Barclaycard Business) that’s separate from your business bank account.

Any money you take through card payments will go into your merchant account first, before being released into your business bank account. How long it takes to see the money in your business bank account depends on who you have your business bank account and merchant account with. If you’re a Barclays and Barclaycard customer, it usually takes two to three working days.

This two-step process happens so that the transaction fees you have agreed with your acquirer can be deducted before any money goes into your business bank account. It’s an automatic process and you don’t need to do anything except check your monthly merchant account statements to make sure you’re on top of your cash flow.

Card processing fees explained

Transaction fees are one part of card processing fees.

The fees you’ll pay to take card payments, as well as exactly what payment gateway and/or hardware (like card readers) you’ll need, depends on how you want to take card payments, for example in your store, restaurant or pub, or via your website.

Accepting card payments online

To accept card payments online, you’ll need an online payment gateway that connects your website with your merchant account.

Accepting card payments face-to-face

To accept card payments when your customer is in front of you, you’ll need a card reader or several card readers. Find out more about the card readers we offer here.

Card readers are also called card machines and terminals – each phrase describes the same thing, so don’t be bamboozled.

Accepting card payments over the phone and by mail

To accept payments by phone, mail or email, you’ll need a virtual terminal. Using a virtual terminal is as easy as visiting a website, logging in and putting in the customer’s card details and transaction amount when prompted. It’s basically the online version of a card reader you’d have in store for face-to-face, contactless and chip and PIN card payments.