Should You Use Your Bank for Merchant Services?

As a business owner, you most likely have multiple accounts and cards. You also need easy access to your funds wherever you are. For this reason, many merchants choose to use a bank they already do business with to open merchant accounts for credit card processing. If you are banking with them already, it would be an obvious choice to work with them for your credit card processing also.

When looking at some of the top-rated merchant service providers, most do not do consumer banking.

Larger companies such as Wells Fargo and Bank of America promise next-day funding and value-added services such as cash advances and loans. While it is convenient to keep all your account activity in one place, it usually comes at a higher cost.

Larger banks that offer merchant account solutions such as Wells Fargo, Bank of America, and Chase Paymentech do so only to keep customers and obtain more of their business. This doesn’t always equate to best practices or the most cost efficient for merchants.

While it is important to look at how soon your money is available, you also need to look at who is doing the actual credit card processing. Also look at what other services and features they offer.

How Soon Can You Access Your Funds?

One of the primary reasons a business owner will turn to their own bank that offers merchant accounts is next-day funding. Normally, if you open a bank account with them. Banks like Wells Fargo and Bank of America offer this feature. However, Chase Paymentech, which is the largest and best-rated of the three, doesn’t offer this as a feature. Most funds are available within 2 business days, which is industry standard.

There are other Merchant processors that offer next-day processing. One example, Vantiv offers same-day and next-day funding. This does normally come with additional costs or fees. They are not the only company that offers this.

Some additional examples of top-rated processors that offer an option for next day funding include Dharma Merchant Services, FattMerchant, Payment Depot, and Helcim.

Note: This isn’t the default option. With Dharma or FattMerchant, only if you qualify. With Helcim, if you are willing to pay a little bit more monthly, you can get this perk.

You can get next-day funding even if you process cards through a company other than your bank.

Who Really Processes Your Transactions?

Not all banks that you choose as your Credit Card Processor actually process them directly. Chase does processes payments directly for its clients as the acquiring bank. However, both Bank of America and Wells Fargo process through First Data.

This is very common in the payment industry. For example:

  • Helcim uses Elavon to process their credit cards and Payline Data uses Vantiv. Just because a merchant service provider works through another larger company, doesn’t mean you can’t get great service. Most important is that whoever you choose is giving you the best service at the best value. When you compare pricing and contract terms between different processors they vary.
  • Bank of America offers First Data’s Clover POS and similar contract terms. If you open a merchant account with Bank of America, you will only ever get access to what services First Data makes available to B of A.

Most importantly, read your contract terms and know them. Including knowing when your contract is up and how to cancel. Verify if there are any early termination fees. If you don’t think there are, make sure the contract says that, or have a waiver form specifying no termination fees that is signed and attached to your contract.

How Valuable are Value-Added Services?

You’ll often see banks offering value-added services for merchant account holders. This looks like a huge selling point, second only to the convenience of centralized accounts. These types of services often include:

Dispute managers

Tools to help you fight chargebacks. Most are just document organizers, though, and you won’t get any real support from your service provider.

24×7 support

Customer service and technical support are an essential service. However, 24/7 service is a good thing only if it’s good service. Larger companies tend to fail in this regard.

Payroll and scheduling services

Good for managing employees and encouraging new business.

Gift cards/loyalty programs

These can be invaluable tools for businesses.

POS systems

A bank that offers merchant accounts and a default POS can be good or bad. A POS is no small consideration, and you need one that works for all your business needs. Chase actually has partnerships with more than 400 software companies, while Bank of America promotes First Data’s Clover platform. It is imported to use a POS system that meets all your needs. Don’t feel obligated to sign up for something just because it’s convenient.

E-Commerce support and payment gateways

Brick-and-mortar retail and online shops are becoming more integrated, so if you want to sell online and in person, or you already sell primarily online, you should pay attention to what offerings you get: Do they offer hosting, a domain, a ready-to-go payment gateway?

Virtual terminal

Turn your computer into a register to take payments over the phone, via mail, or even in person using a virtual terminal. Just make sure you need this service and you aren’t paying for it if you don’t need it.

Mobile processing

Some banks and many traditional merchant service providers now offer mobile processing. Some examples: Capital One’s Spark Pay; Bank of America has the Clover Go. There are also plenty of standalone services available. Some examples are: Square, Intuit GoPayment, and PayPal Here.

Loans and lines of credit

With all the companies available offering these services, it is difficult to know which ones to trust your business to. Nontraditional lenders might give you a better offer than your own bank. Value-added services are available from any decent credit card processor, not just banks.

Review the full offer, it might be worth paying higher rates for credit card processing to get additional services for free or at a discount. You might even just add on a monthly fee for them. It is in your best interest to compare the costs of standalone services to what your merchant service provider offers and see who has the best overall deal. There is no value in free services if you don’t need them.

So: Should you use your Bank for Merchant Services?

Opening a merchant account through your bank, although it might be the most convenient, may not be your best option.

  • Regardless of you Merchant Processor, all your money eventually goes into your bank account.
  • Several processors, not just your bank offer next-day funding.
  • You can get all the same services — and sometimes even more — that you can get from a bank. That includes a large selection of POS systems. 
  • Look for a payment processor that is reputable and willing to work for you to get better customer support and better pricing, too.

It is so important for you as the business owner to be informed about the payments industry. You have a wide variety of options, with more options available all the time. Don’t talk only to your bank about a business account and credit card processing, Talk to them, then research other options. List your needs, then check into other merchants, there are alternative choices.