A Merchant is a legally registered multinational or a retail company that agrees to abide by the agreement signed with a bank or any other card acquiring company to accept and process cards payment from their establishment by offering their goods and services to the card holders.
POS basically means ‘Point of Sale’ and refers to the area where customers can pay for their purchases.
The process where the merchant account is settled or credited from the proceeds received from the acceptance of cards is known as a merchant payment.
A point of sale terminal (POS terminal) is an electronic device used to process card payments. A POS terminal generally does the following:
- Reads the information of a customer’s credit, Prepaid or debit card.
- Route the transactions to the issuer bank for approval.
- Records the transaction and prints a receipt after approval.
- Transfers the funds from the customer’s account to the seller’s account after settlement.
The POS terminal needs at least a telephone line or an internet connection to function or SIM card required to operate wireless POS Terminal.
Any company needs to fulfill the following mentioned points to become an eligible merchant:
-The company should be legally registered and should have good background related with its sales potentiality and market presence which should be able to at least attract a potential number of cardholders.
-The Company should not be blacklisted or should not have any criminal or fraud history.
-The company must agree and accept to all the terms and conditions / policies mentioned by the acquiring bank. (The bank which acquires and processes card payments).
-The company must have a bank account / an account with the acquiring bank would be more recommended. So that the proceedings of the sales can be transferred to the account.
The Procedures to acquire POS Terminal are as follows:
- Site Inspection Report.
- The Company should have a bank account with the acquiring bank to settle the cards payment.
- The Company should provide all the necessary legal documents as per the nature of the company.
-(some of the basic required documents)
Company registered certificate.
VAT or PAN Certificate.
Foreign Exchange Permit Certificate (For Companies who do FCY transactions especially Travel Agencies)
Shareholder List or Certificate
Application / Request letter for acquisition of POS terminal.
Other Documents as needed.
4.The Company should have at least a telephone line / Internet Connection to set up the POS terminal in their establishment.
5. The Company should have eligible staffs without any fraud or criminal history to operate the POS terminal and should be educated enough to understand the instructions required to operate a Pos Terminal.
6.The Company should take all the responsibility of the POS terminal and its transaction and should take the full custody of the POS machine and protect it from any damage or threats.
POS Terminal has really taken over the traditional way of making payments and acquiring highly potential card members. Some of its tantalizing benefits of owning POS are as follows:
- The first most enticing benefit is the competiveness factor which is added to any company that owns a POS terminal. Because not only it eases the payment procedure but it also opens up a whole new group of consumers as the company is now capable to compete in highly potential market of card business.
- The company is now able to grasp new potential consumers (card holders) which will no doubt excel the sale of its goods and products, which in turn highly levitates its profit share.
- The company can now have automated and up to date records of its sales without any manual labor as the receipts of sales and settlement report can be easily filed and stored for safety and future references. So no need of those troublesome account registers required.
- This saves time and increase the efficiency and effectiveness in keeping and storing financial records. Helps in reducing the overhead cost.
- The company is more immune to frauds or any other false claims made by the consumers as the signed receipt can be easily presented whenever needed that facilitates as evidence in time of legal claims.
- Transactions are more speedy and efficient with fewer chances of any manual omissions as the user can easily see the transaction amount in the POS terminal which enhances efficient calculations and less chance of errors. This also cuts down those long queues while making payments.
- Card holders are more allured to buy as they don’t need to carry large sum of amount and are tempted to do more speedy decisions while buying goods and services. This increases sales transaction and speeds up profit margin.
- The newly introduced wireless POS Terminal enhances to acquire business even while traveling that could be through exhibitions / workshops and even helps to get consumers who are not in the local area which enhances consumer service by providing pos terminals in the consumers’ door steps and enhances home delivery system with increased efficiency and effectiveness.
Besides the above mentioned basic advantages there are many other factors that help a merchant to grow his business and market share.
The frequency for card transaction through the use of the POS Terminal is set by the Issuing bank or the financial institution which issues the card.
The Limit of any card which can be used per day depends upon the limit assigned to the particular card by the issuing bank. So it may be different on each card as defined by the issuing bank.