Choosing a payment service provider: tips for merchants
As a merchant, the contract you sign for processing credit and debit card payments received by your business is very important. You may be approached by an acquirer or an independent sales organization offering services, but it is always a good idea to compare the services and prices of a few organizations. As with other services, you should consider shopping around to find the supplier(s) that will provide:
- the package of services that best meets your needs
- best value for the services you receive
The following tips can help you with your search:
Identify the services you need
As a starting point, make a list of the services you need from your provider. Consider the following questions:
- From which payment card networks do you plan to accept payments?
- How many payment terminals will you need? Look into the advantages and drawbacks of renting, leasing or buying the terminals before you make a decision on which option you’ll choose.
- Do you plan to accept payments by Internet or contactless payments? This may have an impact on your hardware and software requirements.
As payment service providers present their service options, think about which ones best meet your needs and offer value to you.
Identify potential service providers
A web search will help you find the websites of payment service providers.
- Consider asking other businesses about the providers they are using and their satisfaction with their services
- Ask the financial institution where you do your commercial banking about services that it can offer
- If you belong to a business organization or association, check whether it has negotiated service packages and preferred rates for its members or if it can provide information on potential suppliers
Review the contract documents of each potential service provider
You must receive documents that have a summary that identifies the key details of each contract.
As of November 12, 2013, if a service provider offers you a package that includes contracts with more than one provider, the documents you receive must have a summary that identifies the key details of each contract, as outlined in the FCAC Commissioner’s Guidance on this issue.
- Find out whether you will have a single contract with one supplier for all services or whether your package includes services from multiple providers.
- If you will be dealing with multiple service providers, note that your relationship with each provider may be subject to different terms and conditions. For example, if expiry dates for your contracts with different suppliers vary, this may limit your options when your contract comes up for renewal or renegotiation.
- Among the points to review carefully to help you make the best decision for your business are:
- your obligations
- all fees
- merchant discount rates or flat fees applicable to different cards and transaction types, and any minimums or tiered pricing that may apply
- balance that you are required to maintain in your reserve account for settlement. Note: the balance is generally subject to change during the term of the contract.
- when you will receive funds for the credit and debit card transactions processed on your behalf. Typically, merchants receive the funds one to three days after the transaction date
- expiry date(s) for the contract(s)
- whether the contract is automatically renewed unless you give notice
- how to cancel, what notice is required, and any costs that may apply. For example, if you cancel in circumstances not covered by the Code of Conduct, would you be required to pay a flat cancellation fee or liquidated damages, which could be much higher? Are there fees to close the account if you do not renew at the end of the contract?
- who to contact if you need to raise issues.
- Ask questions about anything you don't understand. Consider having the contract(s) reviewed by a legal advisor, accountant or trusted business association.
- Always insist on having a complete copy of what you sign, along with the fee tables, and keep these documents for your records in case of discrepancies or disputes. Make sure any verbal commitments are included in the documents.
- Never sign a contract under pressure.
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