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Merchant services is a broad category of financial services intended for use by businesses. In its most specific use, it usually refers to merchant processing services that enables a business to accept a transaction payment through a secure (encrypted) channel using the customer's credit card or debit card or NFC/RFID enabled device. More generally, the term may include:
- Credit and debit cards payment processing
- Check guarantee and check conversion services
- Automated Clearing House check drafting and payment services
- Gift card and loyalty programs
- Payment gateway
- Merchant cash advances
- Online transaction processing
- Point of sale (POS) systems
- Electronic benefits transfer programs, such as ration stamps (called food stamps in the U.S.).
Merchant service providers typically require the merchant to have a merchant account with the provider, either directly or through a referral partner, such as banks or B2B service companies. All banks in the United Kingdom, except for Barclays/Barclaycard, offer merchant services by referring customers to a merchant service provider.
In the case of mPOS systems, mobile pin entry devices (PED) are typically connect to a mobile phone through Bluetooth and then use the phone's WiFi or mobile data to connect with the banks. This system does not require a merchant account although the companies that offer this type of service will still have a relationship with an acquirer. The cost of payments made through mPOS are significantly more so it is more suitable for businesses that do not put through many card transactions. There is usually also a charge for buying the device from the mPOS system provider.