Find a way to process your customers' card payments that will work for your business.
Just like there are a number of different types of credit cards, there are also a number of different ways to accept card payments in your business. The right way for your business to accept card payments will depend on a few different factors. This includes whether you operate an online store or a bricks-and-mortar store (or both), whether you need a portable payment solution or a fixed terminal and what cards and types of payments you want to be able to accept.
This guide will take you through the types of merchant services that are available, how to decide what your business might need, what fees and restrictions there are and how to compare to find the right one for you.
What are merchant services?
Merchant services are financial services and products offered by banks specifically for businesses. While the category can be broad, it typically refers to payment terminals and software used to accept and process card payments.
- Mobile payment solutions. This is a solution to suit businesses that don't have a stationary point-of-sale (POS) set-up or that are on the road, such as tradies.
- Integrated payment solutions. These are payment terminals that tend to be larger and integrate directly into a store's existing POS system.
- Online payment solutions. For businesses that operate online or need to be able to accept online card payments, there are also online solutions. These include apps and payment gateways as well as fully integrated business webstores.
How do I decide what type of payment terminal my business needs?
To decide what type of card payment terminal to get, keep the following points in mind:
- How do you need to accept card payments? The type of payment terminal/s you need depends on whether you accept card payments online, in-store or in a number of different locations. Some payment terminals can only operate in a fixed location, so they suit businesses that have fixed POS locations. If your business requires a portable payment solution or you just think this would be a convenient option to have, consider a terminal that links to a mobile phone or one that is portable and still links to your POS system. Online payment systems are different from physical payment systems and can include apps or full online store set-ups.
- Do you have a POS system it needs to integrate to? If you don't have an existing POS system or your business is a smaller operation, you may not need a payment terminal that integrates with a POS system. However, if you'd like a terminal that does do this, there are a number of options available. The benefit of this set-up is that it is a more automated system and allows for faster payment processing, easier reconciliation and fewer errors with transaction accuracy.
- If you don't have an existing POS system, do you want it to link to a mobile app? If you have a small operation or are just starting out with your business, it's important to decide how much of a set-up you want to invest in. A POS system can reduce your admin time and increase the accuracy of your accounting, but the cost is higher. Payment terminals do not require you to have a POS system to operate, you can link certain terminals to your phone and download an app to manage payments. You just need to decide what will work best for your business.
- Do you have an existing business bank account? Whether you have a business bank account as well as the bank the account is with will influence your decision regarding which bank to consider for your merchant services. Some banks require you to open an account with them to use all of the features of their merchant services while others do not, so check what restrictions apply.
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How do I compare the features of payment terminals?
Payment terminals can come with a number of features that can make running your business easier and accepting payments more convenient. Here are some features to look out for and to compare when considering what merchant services are right for you:
- Portable payment terminals. Not all payment terminals need to be stationary; many terminals allow you to carry them around the store with you or take them anywhere there is an Internet connection to process payments. Consider if this will be useful for your business.
- Connect to a smartphone. Some payment terminals can connect to your smartphone, doing away with the need for a full POS set-up. These terminals usually come with apps to make processing and managing payments simple.
- Payment options. Depending on the payment options you want to accept, terminals can be contactless-enabled and can accept Visa, Mastercard, American Express, Union Pay and Diners Club.
- Insights and analysis. Features for insights and analysis into business performance vary between providers, so see what is available when you are comparing terminals.
- Settlement time. Check if the bank offers instant settlement for card payments, which means the transaction will show up as soon as it has been processed.
- Email receipts. Many plans have the option to email customer receipts rather than giving printed receipts to customers.
How much will I pay for merchant services?
The fees you will be charged differ depending on the bank or merchant services provider. Any of the following fees may apply:
- Total monthly cost. If you are quoted a monthly cost for a merchant services plan, the plan will generally have a cap on the card turnover that you can process per month. If you need to process over this amount, you will be charged a fee as a percentage of every purchase over the cap.
- Credit card authorisation fees. These are fees charged when you check whether there are funds available on a card before a transaction is processed.
- Credit card service merchant fee. This fee may be charged by the bank when you process a Visa or Mastercard credit card and is generally expressed as a percentage. Some retailers choose to pass this fee onto their customers, but you are restricted as to how much you can charge.
- Payment terminal and account fees. You may be charged fees for administering your account, installing your payment terminal or establishing your account. Establishment fees, cancellation fees and equipment fees may also apply.
- Chargeback fees. You'll be charged a fee if the cardholder disputes a credit card transaction.
- Terminal access fee. This is a fee the bank may charge you for providing and maintaining your payment terminal.
- Debit card fees. You may be charged fees for processing debit purchase transactions or for a customer getting cash out at an EFTPOS terminal.
How do you apply for and set up a payment terminal?
The application and set-up will differ greatly between providers and will also depend on the size of your business and the type of payment terminals you choose. For example, if you select a payment terminal that just requires an app to operate or can be set up with your existing POS system, you simply need to apply online for your chosen solution and have the terminal delivered to your business address. Instructions for the payment solution will be included and you will be guided through the set-up when you download the app.
If you have a large business, need a custom solution or have a complicated set-up, someone may assist you with the set-up for your business. Find out about the set-up process before you apply so you are comfortable with it for your business. It's also a good idea to see what customer support services are offered from the bank in case technical issues arise to avoid it affecting your business.
Questions business owners have asked about merchant services and payment terminals
Do I need to open a business bank account to sign up for merchant services?
Some banks require you to open a business bank account to be able to use all of the features of its merchant services, but not all banks do this. If you have an existing bank that you want to stay with, you may want to check if they offer merchant services or find a merchant services provider that will let you stay with your current bank account.
Do I have to sign a minimum period contract to get a payment terminal?
Some banks may require this, but many have options with no-lock-in contracts.
If I get a payment terminal without a POS option, can I still accept cash payments?
Some merchant services' apps have options that let you enter cash transactions, so check if this feature is available with the bank you are considering.
What happens if I don't know how many card transactions I will be processing each month?
Not all plans are structured with a cap limit on transactions. Find a merchant services provider that has no transaction limit or one that will let you move to a plan with a higher transaction limit if you find the cap is not high enough.
Can I customise my receipts?
Most merchant services providers let you customise your receipts by adding your business logo at the top, but the information on the receipt and the layout will be a standard format.
Can I pass on the cost of processing cards to my customers?
Yes, but you cannot charge customers more than what it costs you to process card payments. You can find out more information in our guide.