The information you need to accept and process payments.

Running a business isn't easy. As a merchant, there are new challenges every day. Use this definitive guide to merchant services to provide answers in the complex world of payment acceptance.


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What are merchant services?

Merchant Services - The products and services needed for a business to accept credit card payments.

How Merchant Services Work

Specific processes flow through banks, and technology such as software and hardware, all in order for a business to accept card payments.

Merchant Services Products

Products for merchant services include software and hardware. The ways you allow your customer to pay by credit card will determine the types of products you'll need for your business. 

Payment Gateways

A payment gateway is needed if you are looking to offer your customers a way to pay online. A gateway is secure software and can replace the need for a credit card terminal if you are an eCommerce-only business.

Credit Card Terminals

Credit card terminals are required for in-person payments. Credit card terminals are where you swipe, insert, or tap the card to process the payment. Terminals are available in a variety of shapes and sizes from many manufacturers.

Point of Sale Systems

Point of Sale Systems are more robust than a credit card terminal. A point of sale (POS) system have additional capabilities to not only accept card payments but manage inventory, manage employees, reconcile tips, run reports and more.

Merchant Service Providers

Merchant service providers offer financial services such as credit card payment acceptance. At the most basic level, there are two types of merchant service providers.
1. Merchant Account Providers - These providers set up merchant accounts. The merchant account is the bank account required to allow businesses to accept payments. These providers can also offer the tools (POS system, payment gateway, or terminals). Merchant Account Providers typically have a more in-depth application and set up process.
2. Payment Services Providers - The first difference between a merchant account provider and payment service provider is the way the account is set up. The Merchant Account Provider sets up a unique merchant account for individual merchants where as the payment service provider does not include a unique merchant account but creates an aggregate of all accounts and distributes funds from this account to each individual bank account. Payment service providers can also offer all of the tools (POS system, payment gateway, or terminals). Payment Service Providers usually are faster and easier to set up and offer a flat-rate with less complicated fees.
Taking this a step further. There are differences between payment service providers.
What is considered Retail vs. Full-Service Providers(FSP). What is an FSP?




Merchant services pricing can be complicated and unfortunately there are many providers that are not transparent.

It's important to note that the cost of merchant services will be dependent upon the company you select and the types of services you select from that company. If you need to purchase the point of sale system or payment gateway, that will be an additional cost above your credit card processing fees. Fees that applied once a purchase is approved are called credit card processing fees. They are made up of fees from issuing bank, the credit card network, the receiving bank, and the payment processor.

There are many fees associated with credit card processing. Here is a look at the fees you'll want to address and understand before signing your agreement: 

Flat Rate

Flat Rate pricing is a percentage of the transaction amount and an additional flat fee per transaction. For example, you may be charged a flat 2.8% plus $0.20 per transaction for online payments. This means, your customer can pay with any type of card and you'll pay the same rate. One thing to keep in mind with a flat rate program is that you may be charged differently based on the source of the transaction (ie: online or in-person)  

Interchange fees

A fee charged for every credit card transaction. Your processor pays this 2% to 3.5% fee to the bank of the card type in each transaction. It fluctuates based on several factors, including the type of card accepted (credit, debit or a rewards card), the type of transaction (if it’s done in store, by phone, or online), and the size of each transaction. It's important to note in-store transactions will cost you less in interchange fees, since the card is physically present, meaning there’s less risk of fraud.

Monthly statement fees

The credit card processing company might charge you monthly statement fees to cover the expense of mailing you a statement. It costs about $10 per month on average but some offer it for free and some charge as high as $25 a month.

Application and/or Equipment setup fees and/or Equipment costs

You may pay an application fee, an equipment setup fee, and a fee to purchase the equipment if you need a terminal. Each of these fees can vary widely, depending on the company. Some companies might have special promotions such as providing you with a terminal for free. In this case, keep in mind that if there is a free terminal, you'll want to look at other fees to compare whether or not this promotion is your best option. 

Monthly minimum fee

A monthly minimum amount in card transaction fees might be required by the processing company. For example, the company’s monthly minimum fee may be $25. If your total credit card transaction fees for the month were $20, the company will charge you $5 to make up the difference.

Monthly gateway access fee

Processors may charge you this monthly fee for providing a payment gateway, which transmits transaction data from your processing system to the credit card companies. Monthly fees cost approximately $10 to $30.

Early termination fee

Processors may charge you for an early cancellation of your contract. The fee can cost anywhere from a few hundred dollars to thousands.  Make sure you ask what happens if you close your business or decide to use another processor.

It's important to ask about all fees. There may be other fees than listed above and you will want to understand any and all recurring fees.

Choosing the right merchant processing services for your business

In order to make sure you have the right merchant processing services for your business, ask yourself the following questions:

  1. What ways will you accept payments? Online, in-person, or both
  2. What types of payments will you accept? credit cards, debit cards, contactless payments
  3. What type of hardware and software does your business need? Online payment gateway, a POS system, a credit card terminal only
  4. What type of merchant services provider do you need? A merchant account provider, payment service provider, a full service provider
  5. What pricing structure are you most comfortable with? Review your budget, understand what costs you'll need to pay beyond processing costs

Tips for selecting the right merchant services provider for your business

When seeking out the best credit card processor for your business, it's important to ask about all of the following in detail to get a clear picture of what you'll receive and what is expected from your business.


There are many fees associated with credit card processing. Take a look at the fee section above to familiarize yourself with possible fees you may be faced with. Always ask about recurring fees before signing your agreement. 


Penalties can be assessed by your credit card processor. Review if penalties ever assessed, how the penalty amount is calculated and when you might expect a penalty fee.


While the technical terms and legal jargon can be confusing, knowing what your processor and acquiring bank are responsible for and what you are responsible for makes the relationship between the partners involved flow smoothly. Understanding who the acquiring bank is and what their role is in the relationship is also very important. Take time to read the contract. Understand the contract term, when it ends, and what happens if you want to get out of the contract.


Even more important than price is the type and level of security offered by a credit card processor. Tokenization technology and Point-to-Point Encryption (P2PE) offer protection against fraud. Tokenization is used to submit the Primary Account Number for customers who use tokens; P2PE encryption starts at the moment a debit or credit card is swiped and continues through the entire authorization process. With P2PE, data transmitted between parties remains completely secure. With these technologies, a breach is nearly impossible. 

Services & Benefits

Other benefits provided by the processor could be the determining factor in your decision.  Just to name a few value-added benefits:

Online Access

Online dashboard that lets you do business on the day and time that you want to do business

ACH Payments

ACH Payments, the account number and/or routing number is transmitted through an ACH system, which is typically faster and more cost-efficient than standard checks. 

Reconciliation, PCI Compliance Assistance, Customer Support, etc.


Security & Fraud Prevention

Train employees to identify fraud pertaining to both in-person and online credit card transactions.

Tokenization technology and Point-to-Point Encryption (P2PE) offer protection against fraud. Tokenization is used to submit the Primary Account Number for customers who use tokens; P2PE encryption starts at the moment a debit or credit card is swiped and continues through the entire authorization process. With P2PE, data transmitted between parties remains completely secure. With these technologies, a breach is nearly impossible.


A Chargeback is when a customer requests a refund. There will be times when chargebacks are inevitable. How your business and employees are trained to handle them will make all the difference. Preparing and educating your staff will result in the best customer experience. Here are a few ideas for training topics that are most effective when tailored to your specific environment.

Start with the basics and then call-out important information that can be gathered quickly once they know what to look for.

There are various methods of payment from a card-present transaction, when you have the physical card in your hand to run it in your card machine to card-not-present transactions, which is typically an online purchase or over the phone order when you do not have the actual card to process. Let's start with card-present.

Card Present - When you have an in-person, in-store transaction and have a physical card the best way to process the card to avoid chargebacks is to verify the information. Start with the card expiration date and enter the three-digit security code (CVV).

Card not-present - As most transactions without a physical card will be online, the most successful way to reduce chargebacks and build a case to support your business in the event of a chargeback is to collect additional information. Capturing digital signatures and IP addresses are recommended. 

Payment Descriptor - Your descriptor appears on the cardholder’s statement. It's a listing, identification name for your business. It is to help the consumer connect the purchase to your company. If your descriptor is unclear, the cardholder may not recognize your company name or the purchase and file a dispute. In the event that your payment descriptor causes confusion for your customers, minimize concerns by sharing this payment descriptor upfront to remove confusion and provide transparency. 

Review every chargeback individually - Every chargeback will be different and it is important to review every chargeback based on the specifics in that situation. For instance, if a long-time customer files a dispute it might be better to accept the chargeback to retain a good customer. Training your employees on knowing what to ask can help to uncover special circumstances and adjust accordingly. 

Strong customer service - Never underestimate the power of EXCELLENT customer service. One thing your business can take control over and uphold a standard-level across departments and from employee-to-employee that is above and beyond. Customer service is an area that every business can continue to positively improve and reinforce.

PCI Compliance

PCI compliance is another consideration. For your company to accept payments, it may require compliance with the PCI Data Security Standard. This prevents security issues and provides early detection and necessary action in the event of fraudulent activity.

Payment processors may offer services to assist in compliance procedures, alerts, and documentation.

Merchant Payment Programs

Merchant programs are available to offset the burden of credit card processing costs to allow businesses to continue accepting card payments while reducing associated fees. If you've been considering Surcharge or Cash Discount there are a few differences to keep in mind. These two programs do not work for every business and average transaction amount, number of monthly transactions, and the number of skus within your business can all be factors that can help with the decision. Advanced surcharge and cash discount  software is available today to help businesses to eliminate card processing fees, accelerate growth, and have one easy to read monthly statement.

Payment acceptance







What is a surcharge?

A surcharge is a specific charge or fee that is added towards the price of products or services. In the US, surcharge fees are allowed in 40 states. Surcharges can be added to customers who pay by credit card. Debit card purchases can never be surcharged. It is illegal to include sales tax in a surcharge percentage in states required to collect sales tax.

Since surcharging is legal with the proper notification to your customers such as posted signage of the surcharge amount.

*Read more on the Durbin Amendment

Cash Discount

What is Cash Discount?

Like a surcharge, a business is required to notify all customers of a service or convenience fee added to all transactions prior to purchase. The difference between a surcharge and cash discount is that with a cash discount, the fee can be removed with the consumer paying with cash.

Businesses are permitted to offer a discount to customers as an incentive and to encourage customers to pay by alternative methods such as checks or cash to receive a discount on their purchase. The cash discount works by applying a small customer service fee on all customer transactions. This fee is removed if the customer pays with cash or in-store gift card. Legal cash discount programs must present a clear receipt detailing the service fee or cash discount amount.

The consumer sees your prices upfront and the convenience or service fee is openly disclosed for transparency. Offering a discount for a cash payment gives your customer the option to save money and your business keeps card processing expenses at an all-time low. 

To the right, you can see the savings by monthly processing volume and your card processing fees by using the proprietary cash discount software Rise Free, from Aurora.


Get started with a trusted and reliable leader in payment acceptance.

  • Aurora is trusted by 30,000+ Merchants Nationwide
  • Lowest card processing rates guaranteed
  • Proprietary cash discount & surcharge software programs
  • Smart POS terminals, EMV technology, eCommerce solutions
  • 24/7 US-based technical support

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