What Is A Merchant Services Provider?

A merchant services provider (MSP) lets businesses accept credit and debit cards, but not all MSPs are the same. Learn more in this guide.

WRITTEN & RESEARCHED BY
Erica Seppala
Editor & Senior Staff Writer

Last updated onUpdated September 24, 2025

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Key Takeaways

MSPs let businesses accept credit/debit cards and other non-cash payments.
They provide tools like POS systems, payment gateways, and mobile payment options.
Different MSP types -- merchant account providers, PSPs, and gateway providers -- fit different business needs.

If you’re starting a new business or thinking about accepting credit and debit card payments, you may run into unfamiliar terms and concepts. One key term is merchant services provider, a company that helps you process payments and run your business efficiently.

Merchant services cover everything from payment processing and credit/debit card acceptance to software, hardware, and other tools that help run your business day to day.

Table of Contents

What Is A Merchant Services Provider?
Types Of Merchant Services Providers
Key Products & Services Offered By Merchant Services Providers
Choosing The Right Merchant Services Provider

What Is A Merchant Services Provider?

A merchant services provider (MSP) is a company that helps businesses accept credit and debit card payments, plus alternative payment methods like ACH transfers. MSPs often provide additional tools such as point of sale (POS) software, payment gateways, and business analytics.

Some providers are called acquirers, processors, or merchant account providers. At Merchant Maverick, we use “merchant services provider” broadly to include merchant account providers, payment service providers (PSPs), and payment gateway providers.

Types Of Merchant Services Providers

Not all providers are the same. Most fall into one of these categories:

Provider Type	What They Do	Examples
Merchant Account Providers	Offer merchant accounts and, in some cases, direct processing services through card networks	Chase Payments Solutions, Fiserv, FIS Worldpay, Global Payments
Payment Service Providers (PSPs)	Allow businesses to accept payments without a dedicated merchant account; accounts are aggregated with other users	Square, PayPal
Payment Gateway Providers	Enable online payments via a gateway; may or may not provide a merchant account	Authorize.Net, PayTrace

Merchant Account Providers

These are best for businesses that plan to process moderate to high volumes of credit and debit card payments. They provide stability, unique merchant IDs, and lower processing costs at scale.

Best for: Established businesses that need a full-service solution and are willing to go through underwriting to secure a dedicated account.

Payment Service Providers (PSPs)

PSPs like Square or PayPal are great for small, seasonal, or part-time businesses that want a quick and easy way to start accepting payments. There’s minimal setup, no long-term contracts, and predictable flat-rate fees.

Best for: Businesses that process only a few thousand dollars a month or are just starting out.

Payment Gateway Providers

These are essential for online or eCommerce-focused businesses that need a secure way to process payments on their website. Some gateways offer full merchant accounts, while others are gateway-only.

Best for: Businesses that already have a merchant account or are integrating multiple payment options online.

Key Products & Services Offered By Merchant Services Providers

Most merchant services providers offer products and services to help you accept payments and manage your business. Your specific needs depend on your business type. While every business needs a merchant account or PSP account, other features — like a payment gateway — are only necessary for certain businesses.

Here’s a quick overview of the most common services:

Merchant Accounts

All businesses that want to accept credit or debit cards need a merchant account. A merchant account ensures funds from card transactions are deposited into your business account. Full-service accounts include a unique Merchant ID, which provides stability and fraud protection.

Mobile Payment Processing

Mobile POS (mPOS) systems let you turn a smartphone or tablet into a card terminal. Modern mPOS devices support EMV and NFC (contactless) payments and usually connect via Bluetooth.

Credit Card Terminals

Traditional terminals read credit and debit cards and send transaction data to your provider. Modern terminals often feature touchscreens, customer-facing displays, and smart functions, and may connect via Wi-Fi or LTE.

Buying a terminal is generally preferred over leasing to avoid high long-term costs. Also, be cautious of “free” terminal offers, as these usually require long-term contracts with early termination fees.

Point-Of-Sale (POS) Systems

POS systems combine a credit card terminal with inventory management and reporting features. Many run on tablets or dedicated terminals and support optional accessories like cash drawers and check scanners.

An additional fee for POS software is often required.

Payment Gateways & Virtual Terminals

Payment gateways process online payments and often include recurring billing, customer databases, and security features like encryption and tokenization.

Virtual terminals turn a computer into a card reader for mail-order or telephone-order transactions.

Online Shopping Cart Integration

Shopping cart software supports eCommerce operations and customization for your website. Make sure your merchant services provider supports your chosen platform.

ACH & eCheck Processing

ACH transfers let customers pay directly from their bank accounts at lower processing costs.

eCheck processing allows paper checks to be scanned and verified electronically.

Alternative Payment Methods

QR codes, digital invoices, and even cryptocurrency payments are increasingly common. Offering multiple payment options can boost sales and customer convenience.

Merchant Cash Advances & Small Business Loans

Merchant cash advances and small business loans provide another way for your business to receive funds when you need them, and most merchant services providers offer them. Check out our guide to short-term business loans for more information.

Choosing The Right Merchant Services Provider

The services you need depend on your business type. Retail-only businesses typically need reliable terminals, while eCommerce businesses require payment gateways. Businesses operating in both spaces may need almost all available services.

Remember that some tools are proprietary, meaning they only work with the provider that offers them. If you switch providers, you may need to replace hardware or software, so choose carefully.

For a full list of top providers and their features, check our guide to the best credit card processors for small businesses.

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Erica Seppala

Editor & Senior Staff Writer at Merchant Maverick

Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.

View Erica Seppala's professional experience on LinkedIn.