Merchant Services 101

Although taking card payments is now paramount for all museums, industry data suggests seven out of ten of all businesses pay unnecessary Merchant Services fees. But what are Merchant Services? How does it work? Why does it have to be so confusing? Tom Faithful from AIM Associate Supplier Unyfi explains.

What are Merchant Services?
The term merchant services is a wide-ranging description for the various card payment services built for businesses, including face to face payment processing, online payment processing and the hardware for taking payments itself. It essentially enables a business to accommodate card payments in a secure and timely fashion.

What am I paying?
Typically, a merchant will see charges as a percentage of the transaction for different card types, alongside a pence per transaction authorisation fee. Museums take many transactions with a low average transaction value (ATV) across a wide range of card types so ensuring the overall cost of taking payments is kept low is imperative.

What makes up the % charge?
The charge is made up of three elements:

1. The Interchange fee – This is the fee the merchants card issuer (NatWest, Lloyds, Santander etc.) charge for accepting an electronic payment. This fee is set by the bank and cannot be adjusted.
2. The Scheme fee – This is the fee the “scheme” charges, typically it will be VISA or Mastercard, but you may see AMEX or Diners. The scheme fee varies based on the type of card (VISA debit, Mastercard Credit or VISA Commercial debit etc . . .). These fees are set by VISA/Mastercard/AMEX and cannot be adjusted.
3. The Acquiring banks margin – The acquiring bank accommodates the payment being processed (Worldpay, First Data, Barclaycard, AIB) and makes up a large portion of the total cost. This is the area in which most museums are being overcharged and where companies like Unify can procure worthwhile savings.

The above only expands on one aspect of the cost of processing card payments. As you can see, the process is not straightforward, and it is no wonder 95% of merchants do not understand their monthly merchant statements. It is essential for any business to manage these costs and processes, with COVID-19 expected to be with us for the long term, cash is becoming more and more redundant, so card use is only going to increase.

Why does it have to be so confusing?
The majority of acquiring banks will not declare their margins and will increase the charges annually throughout the lifetime of the contract. Unless you are particularly diligent, these price increases will invariably be missed. At Unyfi we ensure our banks margin is declared at the quotation stage, whereby we provide a full transparent analysis of current costs, compared to future costings. This margin is also fixed for the duration of the contract, thus mitigating annual price increases.

At Unyfi, we pride ourselves on the transparency we provide to our clients and our ongoing support. Unlike going directly to a bank, where you only have one option, Unyfi conduct a comprehensive market comparison, ensuring each client has the most cost effective and suitable solution for their needs.

Still can’t understand your invoice? Talk to one of our expert advisors and we can provide industry specific help and no obligation comparison quotes free of charge.

Tom Faithful
Merchant Services Consultant, Unyfi
Tel: 07341 984641