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 enable 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
- Digital payment gateway
- Check guarantee and check conversion services
- Automated Clearing House check drafting and payment services
- Gift card and loyalty programs
- Merchant finance services
- Online transaction processing
- Point of sale (POS) systems
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 connected to a mobile phone through Bluetooth and then use the phone’s Wi-Fi 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 costs 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.
In finance, a loan is the lending of money by one or more individuals, organizations, and/or other entities to other individuals, organizations etc. The recipient (i.e. the borrower) incurs a debt, and is usually liable to pay interest on that debt until it is repaid, and also to repay the principal amount borrowed.
The document evidencing the debt, e.g. a promissory note, will normally specify, among other things, the principal amount of money borrowed, the interest rate the lender is charging, and date of repayment. A loan entails the reallocation of the subject asset(s) for a period of time, between the lender and the borrower.
The interest provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.
Acting as a provider of loans is one of the main activities of financial institutions such as banks and credit card companies. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Different business loans are as follows:
- Short-term business loan: Most term loans, classified as short-term business loans, usually have a maturity of one year or less. They must be repaid to the lender within one year. Most short-term loans are often repaid much smaller businesses most often need short-term loans instead of long-term debt financing. Quickly than that, often within 90-120 days. Term loans with short maturities can help you meet an immediate need for financing without requiring you to make a long-term term commitment.
- Small business loans: Loans provided to small businesses for various purposes by a lender. These small business loans may have less restrictive requirements, enabling the small business to secure the funds. A small business loan may provide other incentives for the borrower, which could minimize expenses for the business.
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