Choosing A Merchant Service Provider In 2025 - A Complete List of Questions to Ask About & BONUS: Mind Map

updated 03/01/2025

A merchant service provider is an organization that helps you establish a merchant account held at an acquiring bank - which is a special type of bank account that’s different from a personal and from a business account, and allows you to process payments.

This merchant service provider works as an intermediary between banks, your customers and your business. There are multiple aspects to take into account when choosing a merchant service provider, and we’ve put together a list of criteria that you should consider before making a decision. 

The fintech terminology can be a little too much sometimes, so this is a beginner friendly guide that you should be able to understand even if you’re not familiar with the jargon or with this industry.

We’ve split the main criteria into subcategories to make it easier for you, and we’ve also added a list of questions that you might want to find answers to if you’re looking to dig deeper into your options. 

Also created a super useful mind map to guide you through the process:

Download the mind map

Cost Effectiveness 

One thing about merchant service providers is that you’ll find different pricing options. Generally, they will fall under one of these categories: 

• Blended (or flat-rate) – Blended rate pricing model involves a single flat rate for all credit card transactions, regardless of the type of credit card or the interchange fee charged by the credit card issuer. This model is simpler and easier to understand, but it may not be as cost-effective and transparent.
• Interchange plus - this is a more transparent model where the provider charges the interchange rate (set by the card networks) plus a fixed markup. The interchange rates generally vary based on card type, transaction size, and other factors, but the markup remains consistent. 
• Tiered pricing - this pricing model allows processors to group (or bundle) different interchange fee types into the general rate tiers of their choice - the tiers are called qualified, mid-qualified and non-qualified. Think of this pricing model like a game with three levels - easy, medium and hard. For every level, the store pays a different amount to the company that helps take card payments. For easy levels it costs less, and for hard levels it costs more. 

The pricing model, however important, is only one of the questions you should be asking about your future merchant service provider. Another important thing to keep in mind are fees that can apply on top of this pricing - from cancelation fees to setup fees and anything else that might count as a hidden cost.  

Another mention here would be to understand your needs and, once you get your contract, to negotiate the terms in a way that best suits your needs. This point is applicable to all aspects, from the fees themselves to the volumes that you’re going to be working with.  

Cost effectiveness questions you’ll be looking to answer to:

• What is the pricing model?

• Is there a fixed and/or minimum monthly fee?

• How is the transaction fee composed?

• Is there a cost optimization based on transaction volumes?

• Are there any cancelation fees?

• Are there any setup fees?

Technology And Integration

The first thing to keep in mind here is whether you need an API or a widget payment gateway integration. We’ve covered the detailed version in the expert guide to payment gateway integration.

Put simply, the widget option is more suitable if you’re looking for a friendly solution that’s easier to implement and strikes the right balance between convenience and compliance. It basically means that the payment form is on your website, but the sensitive payment data is transmitted to the payment gateway’s secure servers for processing. As an eCommerce business, chances are that you’re going to do just fine with this option, especially if the provider has ready to install plugins for eCommerce platforms. 

On the other hand, the API option caters to more complex business needs. It requires more technical implementation and maintenance, which is why it’s generally used by brands with highly specific customization options. Another potential issue with this type of gateway is that you’d be responsible for ensuring security and PCI-DSS compliance.  

Once you’ve decided between widget and API setup, it’s time to move to integrations. Look for a platform that supports you during the integration, no matter the option you have chosen. 

Another thing to keep in mind is the uptime of the gateway offered by the merchant service provider - a good, solid industry standard is 99,99% uptime, especially because the amount of tech used requires planned maintenance from time to time, which is the main source of downtime for a reliable provider. 

Technology & Integration questions you’ll be looking to answer to: 

• What are the integration options?
• Does the provider offer support during integration?
• Is it compatible with my website/solution?
• Does the provider support ready to use integrations / plugins?
• What's the uptime of the gateway?

Security & Compliance

When you’re looking for a merchant service provider, you should make sure that their payment gateway respects a set of security requirements. 

The security of sensitive data is a basic necessity for any merchant service provider. Starting with the basics, this provider should definitely be PCI DSS compliant. This abbreviation stands for the Payment Card Industry Data Security Standard, which is a framework that sets different guidelines for any company that accepts, stores, processes or transmits credit card information. Additionally, you should also check for 3D Secure, and Strong Customer Authentication (SCA), which are vital for enhancing transaction security, reducing fraud, and complying with regulatory standards. 

On top of this,  you should ensure that your chosen provider offers advanced fraud protection tools, such as real-time transaction monitoring and secure customer data encryption. 

Look for features like tokenization, which replaces sensitive card data with unique identifiers, enhancing data security. 

Also, consider a provider offering secure and reliable payment gateways with SSL (Secure Socket Layer) encryption, protecting the data exchange between your website and your customers. These additional layers of security help safeguard your business and your customers' sensitive information from cyber threats. 

Security & Compliance questions you’ll be looking to answer to: 

• Is the provider’s solution PCI DSS compliant?
• How does the provider comply with PSD2 directive?
• Do they offer end-to-end encryption for transactions?
• What measures are in place for fraud detection and prevention?
• How does the provider handle suspicious or potentially fraudulent transactions?
• Does the provider have an incident response plan for data breaches or security threats?
• How is customer data stored, managed, and shared?
• How does the provider ensure compliance with data protection laws such as GDPR?

Reach And Payment Options

When selecting a merchant service provider for your eCommerce business, consider their global reach and the variety of payment options they offer. Key aspects to look for include:

• Supported currencies - choose a provider that supports multiple currencies (both for processing and settlement), facilitating international transactions and enabling you to cater to a global customer base. Make sure to partner with payment service providers (PSPs) that offer a wide range of settlement currencies, allowing for "like-for-like settlement" to avoid unnecessary foreign exchange costs.
• Bank partnerships - a provider working with a broad network of acquiring banks can offer more reliable and diverse payment processing options, as well as redundancy/back up to ensure continuity of your business. Keep in mind that working with a single acquirer provider has a higher chance of making you end up with a blocked account and money lock in.
• Geographical coverage - if you’re in the EU or the UK but trading internationally, make sure your provider operates in all of these countries, enabling seamless transactions across borders.
• Scalability - opt for a service that can scale with your business growth, handling increased transaction volumes and expanding geographical reach without requiring a switch to another provider.
• Supported payment methods - this should include credit/debit cards, digital wallets, and alternative payment options, catering to a wider customer base. Look for solutions that offer mobile optimization, as a lot of online shopping is done via mobile devices. 

A provider strong in these areas will help you build a versatile, globally accessible eCommerce platform.

Reach & payment questions you’ll be looking to answer to: 

• What payment methods are available?
• What currencies are supported (processing and settlement)?
• How many banks does the provider work with? 
• What countries / geographies does the provider serve? 
• Is the service scalable?

Customer Support 

Now don’t let yourself be fooled by the fact that this criterion doesn’t sit right on top of the list. Customer support will make the difference between a great collaboration and an awful choice. 

From onboarding to integration and maintenance, you should make sure that your chosen provider is there for you through it all. 

A good indicator of a merchant service provider’s commitment to your business is the types of channels through which you can access support, as well as whether this support is available 24/7 or only within a certain time interval. 

Another way to determine whether you’re making the right choice are third party platforms and the reviews you’ll find there. If the reviews specifically mention the quality of customer service, then you’re on safe hands. 

Customer support questions you’ll be looking to answer to: 

• Does the provider help with the onboarding? 
• Is there a 24/7 support and emergency line?
• What is the SLA response time?
• Through what channels (phone, email, live chat) can you access support?
• What do other customers say about the quality of their support?

Contract Terms And Flexibility

Flexibility goes a long way if you’re looking to grow your eCommerce business in 2025. So it’s only natural that you look for key points such as: 

• Termination fees - whether there are penalties there for early termination, which is generally a red flag right from the start.
• Service adaptability - this stands for flexibility from the merchant service provider as you start growing and scaling your business. 
• Contract length - very long term commitments might not align with your business development plans a few years down the line, so try to avoid a partnership that traps you instead of helping you. 
• Settlement - this refers to when and how the money gets into the merchant bank account (the operating principle here being the quicker the better).
• Good Collateral terms- for both fixed and rolling reserves, an amount will be held by the processor and placed into a reserve account, and you should be careful to inspect how these funds are withheld and released by the payment processor. 

Contract terms and flexibility questions you’ll be looking to answer to: 

• What is the length of the contract and what are the terms?

• What is the settlement period?

• What is the collateral? Is it rolling or fixed reserve?

• What is the process and cost for terminating the contract?

• Can the service scale with my business growth?

Conclusion 

Choosing a merchant service provider is no easy job, and while it’s even more difficult when you’re not a technical person, there are ways to ensure that your business is in safe hands. 

At CatalystPay, we’re always looking for your best interest, so if you’ve got any questions or would like to go into more details, we’re more than happy to talk at any time.