The payments processing industry involves a unique chain of participants, starting with the customer, who makes a payment and passes through several entities before reaching its destination. Somewhere along the way, agents are involved. Here’s a look at the difference between agents and merchants and the vital role that agents play in providing payment processing services to their merchant clients.
Difference Between Agents and Merchants: The Payment Chain
Identifying all the different players along the chain of events involving a processed payment is essential and understanding their roles. Here’s the cast of characters for a typical transaction:
Customer: This person makes the credit card or debit card payment to the merchant for goods or services the merchant sells.
Merchant: This is the seller or retailer who receives the payment in exchange for goods or services. Likewise, the term “merchant” can refer to all types of merchants, from a small business with one or two salespeople to a mega-corporation like Walmart or Amazon. Essentially, the term “merchant” refers to the person or entity owning the products and controlling the sale of goods for their business.
Agent: Also called an independent agent or Independent Sales Organization (ISO) agent, this is the person who helps merchants create a merchant account by connecting them to a payment processor. An agent sells credit card processing products and services to merchants. A merchant can maintain a merchant account through an agent, which is required to process credit card payments.
Merchant acquirer: The acquirer is the bank or financial institution that hosts and manages the merchant’s account and accepts the sales payments. Acquirers serve as the financial backers for credit card networks. When analyzing the difference between agents and merchants, acquirers provide the product (in the form of payment processing services), which agents can then sell to merchants.
As one of the nation’s leading acquirers, National Merchants Association provides a wide variety of payment processing products and services. With a National Merchants Association merchant account, a merchant can accept credit cards and a vast array of electronic payments, including direct deposit ACH payments and convenient digital wallet payments. With a National Merchants Association membership, you can have the affordable payment processing tools you need to streamline your operations management, boost sales, and increase customer retention.
Payment processor: The payment processor has the critical task of managing and executing the credit card transaction. Payment processors transport the card data and information to its end destination: the banks and financial institutions backing the credit cards.
Credit card networks or card brands: These are the credit card companies that own and manage all the major payment cards, such as Mastercard, Visa, Discover, and American Express.
Issuer: Standing at the end of the payment processing chain, the issuer is the bank or financial institution that issues the credit or debit cards. In addition to providing the cards, the issuer releases transaction funds to the acquiring bank when the transaction is approved. Also, the issuer has the power to approve or deny transactions and is responsible for approving or denying credit card applications.
Now that we’ve explained the chain, you can see the main difference between agents and merchants. Essentially, the merchant sells goods and services to the customer for payment. The agent provides the merchant with ways to accept those payments by connecting them to an acquirer such as National Merchants Association.
How Do Agents Work?
Agents work independently with payment processing providers, selling their merchant services and products to merchants. Agents earn money by adding residual fees to the payment processing products they sell and setting their monthly rates to make profits.
It’s important to understand that independent agents don’t work as salespeople. Instead, they act as intermediaries or mediators in the payment processing supply chain by connecting the merchant to the processing services provided by a reputable acquirer. So, for example, an independent agent can set up a merchant to use National Merchants Association credit card processing services. This way, an ISO agent connects the merchant to the payment processing products their business needs.
How Agents Can Benefit Merchants
Market research shows that customers may spend 83 percent more when they have the option to pay with a credit card. In addition, studies show that using credit cards can increase the enjoyment customers experience when making purchases.
There are many types of merchants, from retailers that sell in large quantities and require warehousing for their inventory to full-service wholesalers that use a variety of distribution channels to ensure that products reach their end users. By connecting retailers, e-commerce sellers, merchant wholesalers, and distributors to an acquirer like National Merchants Association, independent agents can provide these merchants with a full roster of payment options that can increase sales.
If you’re an independent agent or planning to become one, National Merchants Association’s ProAgent Partner Program gives agents a wide variety of unique programs, services, and revenue-generating initiatives. These are all specially created to help agents gain the skills they need to maximize their earning potential and build profitable portfolios of merchant clients. In addition, our customized interactive training programs can help you gain an edge in this highly competitive industry, so you can make merchant services easy for your clients and profitable for your business.
If you’re a business owner and need merchant account services, contact us to learn how National Merchants Association can provide you with a wide range of credit card and electronic payment options that can boost sales and profits.
ABOUT NATIONAL MERCHANTS ASSOCIATION
National Merchants Association is a merchant advocacy group dedicated to reducing unnecessary fees associated with accepting credit card payments. Since 2004, it has delivered tailored payment processing solutions, best-in-class merchant service, and support for all levels of credit risk. Whether it’s high-risk merchant accounts, low-risk merchant accounts, brick-and-mortar businesses, or e-commerce stores, National Merchants Association will create the best payment processing experience for your business. For more information, call (866)-509-7199 or visit www.nationalmerchants.com.