The Best Credit Card Processors of 2020

By
Lori Fairbanks
,
business.com staff
| Updated
Jul 08, 2020

Which credit card processor is right for your business in 2020? We review the top-rated services.
Featured Sponsor
Quick turnaround
98% approval rate
Dedicated account managers
Best for Lowest Fees
Flat-rate pricing
Pay-as-you-go service
Free full-featured mobile app
Best for Small Business Overall
Transparent pricing
Rate-lock guarantee
Low interchange-plus pricing
Credit Card Processor with the Best Contract
Month-to-month service
No application fees
No setup or gateway fees
Best for Retail
Clover processing equipment
Incentives for veterans
Flat-rate pricing available
PayPal Credit Card Processing
Best Low-Volume
Read Review >
Flat-rate pricing
No monthly minimum
Pay-as-you-go service
TSYS
Best for Professional Service Providers
Read Review >
Healthcare-trained support agents
Flat-rate pricing available
Integrates with ERM systems
Fattmerchant
Credit Card Processor with the Best Rates
Read Review >
Transparent pricing
One monthly fee
Month-to-month service
FIS (Formerly Worldpay)
Best Direct Processor for Small Businesses
Read Review >
Choice of pricing model
1,000+ software integrations
Competitive rates
Stripe
Best for Online Businesses
Read Review >
Flat-rate pricing
Pay-as-you-go service
Easy integrations for platforms
Which credit card processor is right for your business in 2020? We review the top-rated services.
Updated 07/08/20

We've updated this page to include information about Stripe's new customer portal for its invoice and subscription billing service.

Credit Card Processing Comparisons

To help you find the best credit card processing company for your small business, we researched the top processors in the industry. We looked for processors that have transparent pricing, low rates, few fees, and month-to-month or pay-as-you-go contracts. Read on to learn more about these payment processors and why we chose them, along with information on pricing, features and contracts for credit card processing. If your business is new or you process less than $3,000 per month, check out our mobile credit card processing reviews.

Find the Right Credit Card Processing Service for Your Business

Fill out this questionnaire to find vendors that meet your needs.

To help you find the best credit card processing company for your small business, we researched the top processors in the industry. We looked for processors that have transparent pricing, low rates, few fees and month-to-month or pay-as-you-go contracts. Read on to learn more about these payment processors and why we chose them or keep reading to learn more about pricing, features, and contracts. If your business is new or you process less than $3,000 per month, check out our mobile credit card processing reviews.

February 2020: Visa has notified its banking partners that it is updating its interchange rate structure to "optimize acceptance and usage and reflect the current value of Visa products," according to a Visa document obtained by Bloomberg. The card brand says this will be the most significant structural change to the rate tables in a decade, and plans a two-part rollout, scheduled for April and October. Visa says rates for card-not-present transactions (such as online purchases or payments accepted by phone) will increase, but rates for businesses in education, healthcare and real estate will be lowered. It will also expand its categories to include parking, rent and vending machines.

How We Decided
Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.
102
Considered
33
Researched
9
Selected

Compare Our Best Picks

 

Transparent

pricing

Pricing model Monthly fees Contract length 24/7 phone support
Helcim Yes Interchange-plus Yes Month to Month Yes
Paypal Yes Flat rate No Pay as you go No
Square Yes Flat rate No Pay as you go No
Stripe Yes Flat rate No Pay as you go Yes

Flagship Merchant

Services

No Interchange-plus or tiered Yes Month to month Yes
Fattermerchant Yes Flat rate Yes Month to month Yes
Fiserv No Flat rate Varies Varies Yes
TSYS No  Flat rate Varies Varies Yes
FIS No Interchange-plus or flat rate Varies Varies Yes

Our Reviews

Merchant One: Featured Sponsor

PCI compliance is included in your monthly fee.
This processor charges an early termination fee if you cancel your account before your contract expires.

Merchant One provides merchant solutions designed specifically to suit the needs of businesses of all sizes. They provide a range of services, including everything from entire POS systems with terminals to credit and debit card swipers that attach directly to your iOS and Android devices.

Merchant One offers fast turnaround times, with the ability to get your services up and running within 24 hours. They work with all types of businesses, even those with less-than-perfect credit scores. The company has a 98% approval rate. Merchant One provides its customers with dedicated account managers who are there to help you throughout the setup process and can off any support you need once the system is operational.

Square: Best Low-Fee Credit Card Processor

For its basic service, all you pay are processing rates. There are no monthly or annual maintenance fees.
The app, available for both iPhones and Android phones, comes with a full suite of POS features.
It's the only top mobile credit card processor that charges a per-transaction fee to its in-person processing rate.

Square is one of the biggest names in mobile credit card processing, providing its services to more than 2 million small business merchants and individual sellers in the U.S., the U.K., Canada, Australia and Japan. 

We chose Square as the best low-fee credit card processing service because it doesn't charge any of the monthly or annual account maintenance fees that most companies charge, such as statement, payment gateway and PCI compliance fees. All you pay are its flat-rate transaction fees. It doesn't have a chargeback fee either, which is unusual, even among mobile credit card processing companies. 

Read Review

Helcim: Best for Small Business Overall

Helcim's pricing is transparent, making it easy to see rates and fees online, so you know what you'll see on your bill.
Its single monthly fee includes PCI compliance and access to the virtual terminal, online store and more.
You may be able to find lower rates elsewhere, particularly for online processing.

Helcim is a Canadian processor that's been in business since 2006 and entered the U.S. market in 2013. We selected Helcim as the best credit card processing company for small businesses because it's one of the most transparent processing services in the payments industry, offering interchange-plus pricing and posting its complete rates and fees online.

Helcim's retail rates are lower than average, and it's one of the few processing companies that has a rate guarantee, which means that the interchange-plus markup percentage and per-transaction fee you pay won't increase during the life of your account. It has quality customer service and no lengthy contract or termination fees, as it provides its services on a month-to-month basis.

Read Review

Flagship Merchant Services: Credit Card Processor with the Best Contract

Flagship offers month-to-month services to all of its customers and doesn't charge a cancellation fee.
It offers its merchants a choice of interchange-plus or tiered processing rates.
It lacks pricing transparency, and its contract has a vague "additional services" clause that you must opt out of within 30 days to avoid a monthly fee for services you don't want.
Visit Site

When you're looking for a credit card processing service, one feature you should insist on is a contract with month-to-month terms. Payment processors that offer such favorable terms show confidence in the quality of their services and in the competitiveness of their pricing, since you can easily move on if you find a better deal elsewhere.

We selected Flagship Merchant Services as the full-service payment processor with the best credit card processing contract because it offers all customers month-to-month service terms and doesn't charge an early termination fee. In addition to its favorable month-to-month contract, Flagship gives you a choice of pricing models, so you can choose the one that saves your business the most money.

Read Review

Fiserv: Best for Retail

Flat-rate pricing is available through its Clover website.
Experienced retail businesses that process a high monthly volume of sales can negotiate competitive interchange-plus pricing and favorable terms.
Small businesses may be able to find better pricing elsewhere.

Small and midsize businesses in the retail sector often process a high volume of transactions each month and, therefore, have ample choices when it comes to credit card processing companies. Even large processors that typically work with corporations and financial institutions compete for this market segment and are willing to offer favorable terms and competitive pricing.

We selected Fiserv, which was formerly known as First Data, as the best retail credit card processor. It's an industry leader that high-volume retailers can negotiate with to get a good deal, it offers incentives to veterans, and it allows retailers in tourist towns to accept payments via Alipay, a popular Chinese payment app.

Before its merger with Fiserv this year, First Data was already one of the biggest credit card processing companies in the world. It provides its processing services to more than 6 million business locations in 118 countries. It processes more than 3,000 transactions per second, amounting to more than 33 billion transactions per year. Annually, these transactions are worth $2.6 trillion.

Fiserv works with businesses of all sizes, from startups to multinational corporations, and across nearly every industry, including retail, food and beverage, and professional services. It also owns the Clover brand of point-of-sale systems, which is sold by more than 3,000 Fiserv resellers nationwide.

Pricing and Terms

Fiserv doesn't post its rates, fees and contract terms on its website, which is inconvenient for merchants wanting to shop around for a good deal online without calling companies. However, this is a fairly common practice among large, full-service processors, as many prefer to customize quotes to prospective merchants, considering factors such as industry, monthly processing volume, and sales ticket averages to calculate your rates.

The company does post its flat-rate pricing on the Clover website, and those are the rates we were quoted when we reached out to the company, posing as a small business owner.

Flat-Rate Pricing

This pricing model can be the best option for small businesses that have a lower monthly processing volume and new businesses that don't yet know what their processing average will be. Like other flat-rate plans, Fiserv's flat rate includes all fees – which can save you money if you don't process a high volume of credit card sales each month. The caveat is that Fiserv expects its small business customers to use Clover, so there is a fee for the Clover point-of-sale software.

There are two flat-rate plans. The one you use depends on the Clover POS software you use.

Clover Register POS

  • In-person transactions: 2.3% +$0.10
  • Online and keyed-in transactions: 3.5% + $0.10
  • Monthly fee for Clover Register software: $29

Clover Register Lite POS

  • In-person transactions: 2.7% + $0.10
  • Online and keyed-in transactions: 3.5% + $0.10
  • Monthly fee for Clover Register Lite software: $14

Interchange-Plus Pricing

Industry experts prefer this pricing model for its transparency, and for most businesses, this is the most cost-effective plan. The rep we spoke with said he could provide us with interchange-plus rates, but only if we could provide a statement. If you're currently processing and willing to provide the company with a statement, you may be able to receive an interchange-plus pricing quote and negotiate lower rates than we received in our testing, depending on the specifics of your business.

Like most full-service merchant account providers, Fiserv charges account service fees with its interchange-plus plans. You may be able to negotiate with your sales rep to waive some of them. Fees include the following:

  • Application fee. When we last reviewed the company, we were initially quoted $149 for this fee, but the sales rep later offered to waive it for us.
  • Cancellation fee. All standard contracts include an early termination fee, but the sales rep we spoke with was willing to waive it.
  • Monthly statement fee. At our last review, we were quoted $5.95 for this fee, but it's also negotiable.
  • Monthly minimum. This amount is based on the processing rates and fees you pay the processor for the credit card transactions you process each month. Fiserv's minimum is $25, which is on par with what most companies charge.
  • PCI compliance fee. Fiserv doesn't charge this fee but instead charges you $19.95 per month for the TransArmor security solution, which includes tools to help you achieve and maintain PCI compliance. This is higher than the $99 annual fee that most processors charge for PCI compliance, so you should try to negotiate a lower rate.

Contract

With the flat-rate plan, the terms of the contract depend on the Clover subscription you choose. Terms vary, so you should ask your sales rep about the availability of month-to-month terms. Be aware that if you decide to lease your processing equipment or POS hardware, you'll also have a noncancelable leasing contract. Leasing contracts are notorious in this industry; whenever possible, you should purchase processing equipment upfront to avoid them.

With the interchange-plus plan, Fiserv's standard contract has lengthy terms that automatically renew and have an expensive termination fee if you choose to close your account before the term expires. However, better terms are available if you ask. When you call for a price quote, don't be afraid to ask for month-to-month terms with no cancellation fee.

The rep will send you a pre-application form that asks for information about your business before providing you with the full contract to review. The rep we spoke with noted that we didn't need to sign it or provide our personal information (bank account and Social Security numbers).

When you receive the merchant application, be aware that this is part of the contract and by signing it, you're actually signing the contract. Make sure you receive the other parts of the contract as well – the terms and conditions and the program guide – and read them. You want to verify that the rates and fees you were quoted match those on the application, that you're aware of all possible fees, and that you understand the cancellation policy.

Also make sure you have a written waiver or that the contract was updated to reflect reduced or waived fees that the rep promised you. As with any processing contract, you don't want to sign it or provide your bank account and Social Security numbers until you've read the full contract and understand your obligations. 

Features

As a full-service payment processing company, Fiserv can help you accept credit and debit cards across multiple channels so you can sell your products in your brick-and-mortar store, on your website, over the phone, and on the go. You can also accept paper checks, ACH payments and gift cards. It offers loyalty programs that you can use to offer incentives to your regular customers. 

Multiple Processing Equipment Options

Fiserv offers its Clover line of processing equipment to its small business merchants. There are several options, ranging from Clover Go, a mobile credit card reader that plugs into your phone or tablet, to Clover Station, a full-featured POS system that includes a monitor, card reader and printer. Every option allows you to accept multiple types of credit and debit payments, including magnetic stripe, chip, and contactless cards as well as mobile wallets like Google Pay and Apple Pay.

As with its processing fees, Fiserv doesn't post hardware pricing on its main website (the old First Data website now titled "First Data is now Fiserv") but is visible on the Clover website. As mentioned in the pricing section above, you can purchase processing equipment upfront or installment plans. Leasing is also available, but you should avoid this option, as it's more expensive over the long term and the contract is noncancelable.

Security

EMV and PCI compliance are the two main security factors to look for in a credit card processor. No matter what type of processing hardware you choose, it should be EMV compliant so you can accept chip credit cards properly and avoid liability for counterfeit fraud occurring at the point of sale. All of Fiserv's Clover processing equipment is now EMV compliant.

If you have a merchant account, you're required to be PCI compliant. Fiserv helps you establish PCI compliance using its TransArmor security software and charges a monthly fee for it. The software simplifies PCI compliance with its PCI Rapid Comply questionnaire wizard and prevents fraud using tokenization to encrypt each transaction, ensuring sensitive credit and debit card data is safely transmitted to the processor and never stored in your system. It also monitors your hardware and software for tampering and includes a $100,000 liability waiver against card association costs that could be incurred if your data is breached. As with any processing service, you need to keep your PCI compliance current to avoid expensive noncompliance fees.

Customer Service

Fiserv's customer service team is available 24/7 by phone or over live chat during extended business hours. You can also email the company. If you prefer to find the information you're looking for online, you can search the company's knowledgebase. Fiserv also provides webinars, whitepapers, newsletters, videos and infographics, which are useful if you want to learn about Fiserv, Clover or processing topics like fraud prevention. 

Additional Considerations

Fiserv works with nearly every business type, and industry-specific solutions are available for businesses in healthcare, corporate billing, financial analysis, gambling and gaming, government, and education. Here are some of the programs it offers:

  • First Data Salutes is a companywide program that supports the military community with career opportunities and business solutions. The Military Times magazine and other organizations have recognized Fiserv as a top veteran employer. It provides a free Clover Mini POS device to its new merchants who are veterans or military spouses.
  • Fiserv merchants who use Clover processing equipment can accept credit card payments via Alipay, a popular Chinese payment app. Businesses in tourist towns or near travel destinations that have a lot of Chinese travelers can use this feature to cater to a growing customer segment.

Limitations

Because it has millions of merchant customers, Fiserv – under the First Data name – has a lot of negative reviews. Many of the complaints are due to its equipment leasing division, First Data Global Leasing, which has lengthy, noncancelable contracts. Other complaints are from merchants who were surprised to see more fees on their bills than they bargained for, claiming that sales reps didn't disclose them.

You can avoid these problems by purchasing your equipment rather than leasing it and reading the full contract before you sign up with Fiserv (or any other processing service). This is important, because it's the only way you can verify that the waivers you were promised are documented, that you're aware of all rates and fees, and that you know how long the term is and how to cancel without penalty if you choose to do so. 

Here are some additional drawbacks to keep in mind before signing up with this company:

  • Even though Fiserv offers its services to small businesses and is very interested in working with this market segment, small businesses that have a low processing volume may find less expensive processing services elsewhere. Experienced merchants with higher processing volumes may be able to negotiate better rates, fewer fees and month-to-month terms.
  • Although you need to review the contract in full before filling out Fiserv's application, you may need to fill out the company's pre-application form to get it, according to the reps we spoke with. One noted that we could withhold our personal information (bank account and Social Security numbers) but did need to provide business information.
  • You can't find Fiserv's interchange-plus pricing online, which is inconvenient if you want to see whether it's in your price range. You'll need to call the company for a pricing quote specific to your business, though you can also use Fiserv's live chat service if you're more comfortable with that communication channel.

 

PayPal Credit Card Processing: Best Low-Volume Credit Card Processor

As one of the best-known brand names in credit card processing, it inspires customer confidence in your business.
It's one of the few processing services that can be used by individuals, making it a great option for freelancers or solopreneurs.
Its chip and contactless card reader is more expensive than competitor card readers.

PayPal is a huge name in the payments industry, serving 23 million merchants and 246 million consumers in more than 200 countries and regions. With a PayPal Business account and the PayPal Here app, small businesses can accept credit, debit, and PayPal payments online, in-store and on the go.

PayPal is one of the few processors that allows both businesses and individuals to accept payments, making it a popular choice for freelancers, consultants, solopreneurs, and other very small businesses. It has flat-rate pricing and no contract, so you only pay for the processing services you use, and you can close your account at any time without paying a penalty. For these reasons, it's our pick as the best low-volume credit card processor.

PayPal is also our pick as the best Android mobile credit card processor. While some mobile credit card processing apps are platform-specific, the PayPal Here app works equally well on both Android and Apple phones and tablets, and its Android app includes all the same features as the Apple version.

Pricing and Terms

If your business doesn't accept many credit card payments each month, you may find it expensive to work with a full-service processor that has a monthly minimum processing requirement and a handful of regular fees, such as monthly statement and gateway fees, and an annual PCI compliance fee. Choosing a processor like PayPal that has flat-rate pricing and pay-as-you-go terms can save you money since you only pay for the processing you use.

PayPal is very transparent with its pricing, and you can find all of its rates and fees posted on its website. Here's what you'll pay when you accept credit cards using PayPal.

Accepting credit card payments in-person using PayPal Here:

  • 2.7% of each transaction for credit cards, debit cards and contactless payments you accept in-person using the PayPal Here app and a card reader. The rate is the same, no matter what type of credit or debit card your customer uses – including mobile wallets like Apple Pay, Google Pay and Samsung Pay.
  • 3.5% + $0.15 of each transaction for the credit and debit cards you manually key or scan in using the PayPal Here app. If you don't yet have a card reader and need to accept credit card payments, you'll pay a higher rate.

Accepting payments online or by invoice:

  • 2.9% + $0.30 of each online transaction for credit and debit cards you accept through your website or digital invoice.

Accepting credit and debit card payments using a virtual terminal:

  • 3.1% + $0.30 of each transaction for the Visa, Mastercard and Discover payment cards you accept using PayPal's virtual terminal (such as payments you accept over the phone, by fax or by mail).
  • 3.5% of each transaction for the American Express cards you accept using PayPal's virtual terminal, PayPal Payments Advanced or PayPal Payments Pro.

You'll notice that PayPal's transaction fees are somewhat higher than those of full-service processors. However, it's still more cost-effective if your monthly processing volume is low, because you aren't paying account fees.

If you use a full-service processor, you pay around $20 per month in account maintenance fees and have a monthly minimum of $25, which can be difficult to meet if you process less than $2,500 per month.

Here are the fees you won't pay using PayPal:

  • No application fee or setup fee
  • No monthly fee for statements and customer support
  • No monthly minimum processing requirement
  • No gateway setup fee
  • No monthly gateway fee
  • No annual fee
  • No annual or monthly PCI-compliance fee
  • No early termination or account closure fee

Incidental and optional fees. Some of PayPal's additional services cost extra. For example, if you need the money from your transactions immediately, you can pay 1% for an instant transfer from your PayPal balance to your bank account. Regular bank transfers are free and usually take one business day.

Here are some more examples of optional services that carry fees:

  • Chargebacks: $20 per incidence
  • Recurring billing service: $10 per month
  • Advanced fraud protection services: $10 per month plus $0.05 per transaction
  • PayPal Payments Pro: $30 per month. This option allows you to accept payments directly on your website and includes a virtual terminal
  • Cross-border fee: 1.5% is added to the transaction fee when you accept payments from customers outside the U.S. If your cross-border payments require currency conversion, it costs an additional 2.5%

Special pricing is available for certain business types:

  • Registered charities pay 2.2% + $0.30 for online donations; in-person donations cost the same as regular business accounts, at 2.7%.
  • Businesses with transactions less than $10 may qualify for PayPal's micropayment fees, which cost 5% + $0.05 per transaction.

Terms. There's no long-term contract requirement with PayPal, as you accept a user agreement instead of signing a contract. As your business grows and your processing volume increases to the point where the savings from lower rates would surpass account fees and you want to close your PayPal account and switch to a full-service processor, you can do so at any time without penalty.

Features

One of the best things about PayPal is that you can accept various payment methods simultaneously – on the go, at a brick-and-mortar location and online, via invoice and website – and the money from all of your transactions goes into one PayPal account, making it easier to manage your finances.

Here are more features PayPal offers

Free basic POS software. To accept payments in person at your business or on the go, you install the PayPal Here app on your phone or tablet and attach a credit card reader. This mobile credit card processing app includes point of sale features that help you run your business.

Here's what it can do:

  • Accept credit and debit card payments
  • Record checks and cash payments
  • Create an inventory list and add photos of items
  • Add multiple users to your account and manage their access
  • Set taxes, suggest tip amounts, apply discounts at checkout
  • Email, text or print receipts
  • Refund sales
  • Generate sales reports
  • Transfer funds from your PayPal balance to your bank account or your PayPal Business Debit Mastercard

Card reader options. PayPal has several card readers for you to choose from. The basic Mobile Card Reader costs just $19.99, but it isn't EMV compliant as it only reads magstripe cards.

Because there's a greater risk of counterfeit fraud when you use this card reader, PayPal will hold your funds in a reserve account if you use it to process more than $500 of sales in a seven-day period. You can avoid this problem by choosing one of PayPal's other three card readers.

The following credit card readers are EMV compliant and connect to your phone or tablet via Bluetooth. PayPal also sells receipt printers, cash drawers, stands and cases.

  • PayPal Chip and Swipe Reader: Free. Until December 31, 2019, new PayPal Here merchants will receive this card reader at no cost. If you need additional readers or you already have an account, it costs $24.99. With it, you can accept magstripe and chip cards.
  • PayPal Chip and Tap Card Reader: $59.99 (or $79.99 with charging stand). Accepts magstripe, chip and contactless cards. This model also accepts mobile payments from Apple Pay and Google Pay as well as contactless credit and debit cards.
  • PayPal Chip Card Reader: $99.99. Accepts magstripe, chip and contactless cards as well as mobile wallets. This is the only model that has a screen and a built-in PIN pad.

PayPal integrations. One of PayPal's strengths is that it integrates with many business systems and applications. Here's a small sampling of the business solutions PayPal integrates with:

Online payments. PayPal makes it easy to accept credit, debit and PayPal payments online. It offers two plans for this payment method as well as a payment gateway option:

  • PayPal Payments Standard. There's no monthly fee for this plan; all you pay are the processing fees for your online transactions. With it, you place buy buttons on your website that redirect your customer to a checkout page hosted by PayPal.
  • PayPal Payments Pro. This plan costs $30 per month. With it, you can design and host the checkout pages yourself. It includes a virtual terminal that you can use to key in credit card information for sales made over the phone or by fax or mail.
  • Payflow payment gateway. If you already have a merchant account through another processor and need a payment gateway for your website, this may be a good option for you. With it, you can accept credit and debit card payments on your website as well as PayPal payments. You can also offer your customers PayPal Credit as a payment option. It costs $0.10 per transaction (above the processing rates you pay your other processor), and there are no setup or monthly fees.

Online invoicing. You can create and send invoices by logging into PayPal's website using your business account credentials or using the PayPal Business app on your phone or tablet. Your customer receives an email with a link, clicks the link to open the invoice and can then choose to pay the invoice using their credit or debit card or their PayPal account. There's no cost to send invoices; when receiving payments from your customers, you pay 2.9% + $0.30 for each transaction.

  • Invoicing with Messenger. If you and your customers use Facebook, you can create invoices in Messenger to send to your customers. Your customers can click on the invoice in your message to pay it using their PayPal account.

Accept payments from international customersIf your small business sells to customers in other countries, PayPal is a good processor for you. It accepts payments made in over 100 currencies around the world.

PayPal Commerce platform. Startups with online marketplaces, crowdfunding platforms and other e-commerce solutions can use this advanced payment platform to allow their sellers to accept payments from buyers around the globe.

Additional Considerations

Here's additional information about PayPal to keep in mind as you decide which payment processing company is the best fit for your business.

Customer service. If you run into an issue using PayPal, you can call or email the company 24/7 or use the self-help resources on its website, which include live chat, FAQs, a searchable knowledgebase, how-to guides, a community forum and its Resolution Center that assists with customer disputes. Although the company lists extended phone hours on its website, a company rep noted that you can actually reach a customer service representative 24/7, though if you call after hours, your call may be routed to one of its international offices.

SecurityPayPal uses multiple security measures to keep your customers' payment data safe, including end-to-end encryption and 24/7 transaction monitoring. It complies with the data security standards established by the Payment Card Industry, and most of its card readers are EMV compliant, which deters counterfeit fraud. Your account is password-protected, and you can add a second authentication factor using PayPal Security Key, which sends a unique one-time PIN code to your phone via text.

PayPal Business Debit Mastercard. Using this card, you can spend your PayPal funds at any store and receive 1% cash back on qualified purchases. You can also withdraw cash from in-network ATMs. There's no annual fee for this business debit card.

PayPal Business Loan and PayPal Working Capital. Eligible merchants can receive small business loans and working capital through PayPal. You can also offer your customers financing options on purchases over $99 through PayPal Credit.

Drawbacks

PayPal is a great solution for low-volume businesses as it allows you to accept credit, debit, and PayPal payments in-person and online on a pay-as-you-go basis with no monthly or annual account maintenance fees and no long-term contract. However, if you go beyond the basic credit card processing services, there are a lot of little fees to keep track of, and they could add up quickly. Though to PayPal's credit, it lists them in full on its website.

Another issue to be aware of is held funds and frozen accounts, which is the cause of many online complaints. This problem isn't exclusive to PayPal – you'll find similar complaints about other payment facilitators online as well – as this type of payment processor tends to be more wary of fraud than traditional processors, and irregular patterns in your processing, such as spikes in transaction amounts or frequency, can raise red flags.

Following PayPal's seller best practices can reduce the likelihood of having your money held in a reserve account. You also want to make sure that the products or services your business provides are within PayPal's acceptable use policy; otherwise, your funds may be frozen or your account may be closed without notice.

 

TSYS: Best for Professional Service Providers

It offers medical practitioners flat-rate pricing with no monthly processing minimums or cancellation fees.
The TSYS Health Division has healthcare-trained, in-house, U.S.-based customer service agents.
It doesn't post its rates online, so you must call the company for a quote, which is inconvenient for busy merchants.

We chose TSYS Merchant Solutions as the best credit card processor for professional service providers because it has affordable rates, few fees and provides a secure way for medical practices to accept credit cards from patients at the time of service or over the phone. 

TSYS partners with the American Medical Association as part of its Member Value Program (AMA MVP) to provide discounts and perks to medical practitioners, and also works with other regional, state and national healthcare associations. For businesses in the medical industry, there are no setup fees, no monthly minimum processing requirements, no cancellation fees and no batch fees. TSYS also includes a virtual terminal for no additional cost. 

Read Review

Fattmerchant: Credit Card Processor with the Best Rates

There's no percentage markup on transactions, so in addition to a monthly fee, you only pay interchange and a flat per-transaction fee.
It has a merchant dashboard that you can use to analyze your sales.
You need to process a minimum of $7,000 per month for this pricing model to save your business money.

Fattmerchant is a Florida-based company that has been in business for five years. It offers credit card processing solutions to small businesses in many industries, including retail and e-commerce, spa and fitness, food and beverage, and professional services such as healthcare and legal services. It can be used to accept payments at a brick-and-mortar location, on the go and online.

We selected Fattmerchant as the credit card processor with the best rates because it doesn't charge a markup percentage and has some of the lowest per-transaction fees for a processor with membership-based wholesale pricing. Although its monthly fee is higher than its competitors', it also has a higher cap on the dollar value you can process each month, making it the best value for high-volume merchants that prefer this pricing model.

Read Review

FIS (Formerly Worldpay): Best Direct Processor for Small Businesses

FIS works directly with small businesses, offering them competitive pricing and terms.
It integrates with more than 1,000 software applications and has developer tools that businesses can use to create custom integrations.
It doesn't post any rates or fees online, so you must contact the processor for a quote.

FIS, the result of a 2018 merger between Vantiv and FIS, is one of the largest credit card processors in the world and claims the title of No. 1 global merchant acquirer. The company recently announced a merger with FIS (Fidelity Information Services), a leading technology provider for financial institutions. Once settled, the combined company will be known as FIS.

Although FIS is a giant in the payments industry that works with large corporations like banks and ISO/MSP processing companies, it also works directly with small businesses. It offers every form of processing, including omnichannel solutions, and tech savvy businesses can use its developer tools to create custom integrations. It also has very competitive rates and a one-year contract that you can cancel without penalty when you provide 30 days' written notice. For these reasons, we selected FIS as the best direct processor for small businesses. 

 

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Visit our best picks page to see all of our recommendations for credit card processing companies. If you're looking for the processor with the lowest overall pricing, see our pick for the best credit card processing company for small businesses. 

Pricing and Terms

FIS doesn't post its pricing on its website, so you'll need to call the company and speak with a sales rep or fill out the "build a quote" questionnaire to receive a pricing quote via email. 

When we called FIS, posing as a small business owner with a retail store, the sales rep quoted us both interchange-plus and flat rates. We didn't have to specifically request interchange-plus, and the rep recommended this pricing model for us as it would be less expensive. This is impressive – especially from a large processor – as most prefer to set you up with tiered pricing. Industry experts recommend interchange-plus pricing because it is more transparent than other pricing models ‒ the markup percentage and per-transaction fee you pay the processor is the same no matter what type of credit and debit cards you accept. 

Here's what we were quoted. 

  • Interchange-plus rate: 0.20% + $0.10 above interchange
  • Flat rate: 2.75% + $0.15 

Credit Card Processing Fees

There aren't any additional fees for the flat-rate pricing model, but FIS charges a monthly fee for its interchange-plus plan, as do most full-service processors. The contract also notes a monthly chargeback service fee, which is somewhat irregular. If you have two or fewer chargebacks per year, your overall monthly fees are around $20 per month, which is an average dollar amount for total monthly fees. However, if you have more than two chargebacks each year, the monthly rate is higher than average. Most service providers don't charge this fee but instead have a chargeback fee – usually around $25 – that they charge on a per-incidence basis. 

Here are the recurring fees you'll pay if you choose the interchange-plus plan:

  • Monthly fee, which includes PCI compliance support: $5.95 (the rep said this was discounted from the regular amount of $24.95)
  • Monthly minimum: $25
  • Monthly chargeback fee: $10 to $50. The amount you pay for this fee is based on the number of chargebacks you have within a year. If you've had no chargebacks, it costs $10 per month. One or two chargebacks cost $15 per month. Three or four chargebacks cost $20 per month and so on up to $50 per month when you have 22 to 25 chargebacks within a year. If you have 26 or more chargebacks within a year, you're charged $25 each instead of the monthly fee 

Here are the fees you won't pay with FIS:

  • No application or setup fee
  • No early termination or account closure fee when you give 30 days' notice
  • No PCI compliance fee
  • No annual fee
  • No batch fee 

Like most processors, FIS charges some incidental fees on a per-occurrence basis. Here are some examples:

  • Voice authorization or voice address verification services (AVS) fee: $0.60 per occurrence. These are charged when you call the processor to authorize a charge or to verify that the address a cardholder gives you matches the billing address the card issuer has on file.
  • Retrieval fee: $2.50 per occurrence. This is charged when a customer's bank requests additional documentation for a specific charge, usually before initiating a chargeback.
  • Nonsufficient funds: $15 per occurrence. If there's not enough money in your bank account when the company withdraws your regular fees, you'll pay this fee.
  • PCI noncompliance fee: $19.95 per month. The sales rep noted that this is a fee you should never pay, as the company helps you achieve and maintain compliance with the Payment Card Industry's data security standards (PCI DSS). 

Payouts

FIS deposits the processed money from your transactions into your business bank account within one to three business days. The industry average is two business days. If you need to receive your money faster, the processor has a FastAccess Funding program for qualified merchants. With this program, your money is deposited daily – including weekends and holidays – and is accessible with a debit card that it provides. 

Terms

It's important to read through your contract (application, terms of service and program guide) to verify that the rates, fees and terms you were quoted are noted on the application, amended in the contract, or that you receive a written waiver. 

The initial term we were quoted in our testing is for one year, with no cancellation fee if we provide 30 days' written notice. The standard contract has a three-year term that automatically renews with additional one-year terms and requires 90 days' notice before the term expires to cancel your account. The standard contract also has an early termination fee of $495 per location plus liquidated damages (as stated, with the one-year contract, this fee is waived with 30 days' written notice). 

Features

FIS sets you up with a merchant account that lets you accept all major credit and debit cards wherever you do business, whether that's in a brick-and-mortar store or office, on the go at offsite locations or events, on your website, or over the phone.

Here are some of the features FIS offers. 

Processing Equipment Option

You can purchase a terminal or mobile card reader from FIS, and options include models from top brands such as Ingenico, Verifone and PAX. When we called, the sales rep offered us a free EMV-compliant Verifone terminal with no contractual obligations or additional fees. 

Payment Gateway

As one of the world's largest payment processing companies, it's no surprise that it has its own online payment gateway. FIS Gateway Services can be used for both mobile and online transactions. It supports more than 300 types of international payments so your customers can make online payments in their local currencies, which may be an important consideration for global e-commerce businesses. Hosted payment pages are available, as are integrations. 

Integrations

FIS has more than 1,000 software integrations, so chances are good that it will integrate with your accounting software, e-commerce platforms, shopping carts and point-of-sale systems. This payment processing company doesn't resell POS systems but integrates with hundreds of them, including popular options like Vend, ShopKeep and Lightspeed, so in most instances, you can continue using FIS as your processor. 

Virtual Terminal

You'll need FIS's virtual terminal if you want to process payments using your computer, such as for credit cards you key in when accepting orders over the phone, accepting ACH payments and setting up recurring payments. You'll also need virtual terminal access if you want to use a mobile card reader with your phone or tablet. 

Level II and III Payment Processing Solutions

Businesses with B2B and government customers that collect additional payment details – such as the information typically included on purchase orders and invoices – may qualify for lower interchange fees, which can save you money when you're accepting large payments on corporate credit cards. 

Reporting

FIS's reporting tools are available through Vantiv iQ, the processor's online self-service platform. With it, you can see your sales data in real time, displayed as colorful graphs on the dashboard. You can also generate reports, set alerts and have your sales data sent to you daily by text or email. 

Developer Tools

If you have developers on staff and want to create a custom payment integration for your website or mobile app, FIS offers multiple tools, including APIs and SDKs with documentation, sample code, developer sandboxes and simulated test environments. It also has a community forum and a developer's blog with payments technology articles, such as a how-to guide for adding Apple Pay to your mobile app and top trends for internet of thing payments. 

Additional Considerations

Here's some additional information about FIS to keep in mind as you look for the best credit card processor for your business. 

Application Process

After you call for a quote, the sales rep sends you a link to an online application. After you fill it out and submit a voided business check, it takes between 24 and 48 hours for the company to approve your application and set up your account. It then ships your terminal and can send it overnight, if needed. 

Security

Data security is a top concern for payment solutions providers. FIS has multiple security protocols in place to help you keep your customers' sensitive payment data safe. It uses point-to-point encryption that prevents hackers from accessing card data as it travels from your system to the processor and tokenization that replaces card details with randomly generated tokens. It requires you to be PCI compliant, and sells EMV-compliant credit card terminals so you can accept chip cards properly and avoid counterfeit fraud liability. 

To help you achieve and maintain PCI compliance, FIS includes its OmniShield Assure program as part of your monthly fee. The sales rep we spoke with explained that the company proactively helps its merchants achieve and maintain PCI compliance. Your rep can help you if you need assistance filling out the annual questionnaire, and the company provides quarterly scans to ensure your system complies with PCI data security standards. It also includes breach insurance that covers up to $100,000 of your liability, should you experience a data breach. 

Customer Service

FIS provides its merchants with 24/7/365 customer support across multiple channels, including phone, live chat, email and online contact forms. When we called the credit card processing company, posing as a small business retailer, the sales rep we spoke with was eager to work with us and offered interchange-plus rates and favorable terms. After our call, she followed up with us quickly, with a link to an application that included the rates she quoted us and terms of service for us to review. 

The company's website is searchable, and you can find educational articles about credit card processing and detailed information about the services FIS provides. You can also visit the subscription center to sign up for newsletters, product updates, promotions and information about events the company is hosting or attending. On its support page, you'll find phone numbers, login links and support guides for its online payment gateway. If you stumble across the old Vantiv support page, you'll find a searchable knowledgebase and a link to a merchant support video library. FIS merchants can also find guides and user training on the iQ reporting platform. 

Limitations

The company's online presence continues to be split between FIS and Vantiv websites, which is somewhat confusing – especially when you're redirected from one site to another. However, both sites appear to be maintained and up to date. Vantiv site's logo has been updated with the tagline "Now FIS," which is useful information for small business owners redirected from the FIS site. 

The chargeback service fee that the processor charges monthly instead of a per-incidence chargeback fee may be an extra expense for some companies. For example, if you average two chargebacks per year, you pay $10 per month, totaling $120 per year, which is more expensive than the $25 per incidence, totaling $50 per year, that most processors charge. 

The company doesn't post its rates, fees or equipment pricing. Although the sales rep we spoke with offered us competitive rates, favorable terms and a free terminal, we recognize that others may have a different experience, depending on the sales rep they speak with.

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Stripe: Best Credit Card Processor for Online Businesses

Stripe is highly versatile, with integrations, premade checkout forms, APIs and developer tools.
It has competitive rates and pay-as-you-go pricing.
Although it offers 24/7 support by email and chat, and you can request a call back, you can't call the company directly for support.

Stripe is an online payment processing company that works with businesses of all sizes, including small startups to multinational corporations. It's designed to facilitate credit card payments for e-commerce, mobile commerce, subscription as a service, marketplace and platform businesses. 

We chose Stripe as the best online credit card processor because of its versatility. It integrates with hundreds of e-commerce platforms, shopping carts, and other business software and services. It has prebuilt checkout forms that can easily embed into an existing website. Or, for businesses with development resources, Stripe offers APIs and developer tools that allow you to create customized checkout forms or entire payment flows for your website and mobile app. 

Additionally, Stripe has competitive rates and provides its services on a pay-as-you-go basis, so you're not locked into a lengthy contract. It's also one of the few processors that refunds the chargeback fee if a dispute is resolved in your favor. 

Pricing and Terms

The best online credit card processing companies have clear, transparent pricing and terms of service. Stripe is a good example of this, as it posts detailed information about its rates and transaction fees, and you can read all of its service agreements on its website. 

Stripe has simple flat-rate pricing and charges very few fees. There's no additional cost to use Stripe's integrations, prebuilt checkout form or developer tools. 

Here's what you'll pay when you accept credit card payments online using Stripe Payments. 

Accepting Online Payments

  • 2.9% + $0.30 for domestic credit and debit card payments, no matter what type or brand of card your customer uses, or if they use a digital wallet.
  • 0.8% with a $5 cap for ACH debit transfers. Stripe also allows you to accept ACH credit and wire transfers, and you can view pricing for these payment methods on the company's website. 

Accepting In-Person Credit Card Payments Using Stripe Terminal

  • 2.7% + $0.05 per transaction, regardless of card type or brand. 

Stripe offers volume discounts for businesses that process more than $100,000 per month, and custom pricing is available for businesses that have microtransactions or abnormally large sales tickets. Nonprofits may qualify for special pricing. 

Incidental fees you may encounter while using Stripe include the following: 

  • If you accept international cards, you add 1% to the transaction rate, and if currency conversion is necessary, it costs an additional 1%.
  • If a customer disputes a charge and requests a payment reversal, you pay a $15 chargeback fee. If the dispute is resolved in your favor, however, Stripe refunds this fee, which most processors don't do.
  • If you issue a refund, there's no fee, but it doesn't return the original processing fee to you. 

Here's a list of the fees you won't pay when you use Stripe as your online payment processing company: 

  • No application or setup fee
  • No monthly fees for statements or customer service
  • No monthly minimum processing requirement
  • No payment gateway setup fee
  • No monthly payment gateway fee
  • No annual fee
  • No PCI compliance fee
  • No early termination or account closure fee 

Optional Fees

Stripe offers several other products, such as Stripe Billing, Stripe Connect, Radar for Fraud Teams, Stripe Sigma and Stripe Atlas. If you choose to use them, other fees apply. You can learn more about these products and what they cost on the company's website. 

Payouts

Once you begin accepting credit card payments using Stripe, you must wait seven to 10 days for the company to transfer the money from your transactions into your bank account. After this initial payout, your funds are transferred on a rolling schedule of either two or seven days. Most businesses are on the two-day schedule – which is an average amount of time – but if Stripe considers your business to be a higher risk, you're on the seven-day schedule. If your cash flow is often tight and you need to receive your money faster, you might want to consider a different processor, as many offer next-day deposits and some, such as PayPal and Square, offer instant transfers for an additional fee. 

Terms of Service

Stripe Payments offers its services on a pay-as-you-go basis, so you can close your account at any time without incurring expensive early termination fees. Instead of signing a multiyear contract, you accept a service agreement that you can read in full on the company's website. As with all payment processing companies, you want to take the time to read this document before signing up with the company to make sure it's a good fit for your business and you understand what you're agreeing to. 

Like many processors that offer flat-rate pricing with few fees, Stripe doesn't provide you with your own merchant account, and, instead, sets you up as a submerchant under its master merchant account. This has some advantages, such as faster account setup that doesn't require a credit check and simplified PCI compliance with no PCI-related fees. However, Stripe and other merchant aggregators receive a lot of complaints online about frozen funds and sudden account terminations. You can reduce your chances of experiencing these issues by reading the service agreement and complying with its terms. 

You want to make sure that … 

  • Your business type and the products and services you sell aren't on Stripe's prohibited businesses.
  • You use Stripe's services as they're intended to be used. For example, you can't use Stripe Dashboard as a virtual terminal except in rare circumstances. Using it in this manner on a regular basis is specifically forbidden in the service agreement.
  • You comply with network rules and do your part to keep card data secure, in accordance with PCI standards. 

As Stripe explained in a letter to the Better Business Bureau, per its service agreement, Stripe reserves the right to hold your funds in a reserve account if it suspects there's a risk of loss or fraud, or if you have a lot of chargebacks. It may close your account if it determines your business is a fraud or credit risk, if you offer products or services on its prohibited businesses list, use the service in an unauthorized way or violate terms of the agreement. 

Features

Stripe says that it offers more than 100 features, and this wealth of capabilities allows many different business types and sizes to use Stripe as their online payment processing service. 

You can choose from premade solutions that you connect to with just a few clicks or payment flows custom-built by your development team. 

Stripe is regularly updated, and each month the company posts a changelog on its blog that shows new features or improvements to its existing capabilities. 

Here are some of the products and features Stripe offers. 

Integrations

The easiest way to use Stripe is to connect to it from one of the business applications you already use. Stripe offers hundreds of integrations across multiple categories so you can start accepting payments quickly, then automatically sync your sales data to the other programs you use. For example, if you use an e-commerce platform for your online store, you can choose Stripe as your payment processor and connect to your account with just a few clicks. You can then connect your Stripe account to many of the other programs you already use, such as your accounting, invoicing, inventory management, CRM and marketing software. Plugins for third-party services are also available. 

Checkout

The second easiest way to use Stripe is to embed Checkout, a premade checkout form, into your existing website. To do this, you copy and paste a few lines of JavaScript. The form redirects the customer to a Stripe-hosted payment page that you can customize with your branding and product images. Checkout is PCI compliant and tokenizes your customer's payment data so it's never stored on your server. 

Stripe Elements

If you have some coding skills, you can use Stripe's prebuilt UI elements – input fields and buttons – to create a customized checkout form that complements the look and feel of your website. As with Checkout, Elements is PCI compliant, and Stripe takes care of the heavy back-end coding – all you're doing is customizing the look and format of the checkout form. 

Stripe.js

This method for using Stipe to accept payments on your website requires more development know-how, as it allows you to use Stripe's JavaScript library and APIs to build a checkout form of your own. 

Stripe Billing

This API allows you to create a customized solution for recurring payments and subscription billing. You can decide how to charge customers, such as a flat recurring fee or a charge based on product usage or tiers. You can choose how frequently you bill your customers and offer discounts and trial periods. 

Stripe Connect

Stripe can provide payment services for marketplaces and platforms, taking care of onboarding users, managing payments, handling compliance issues, tax reporting and more. 

Stripe Terminal

You can now use Stripe to accept in-person. You can integrate Stripe Terminal into your existing checkout flow, or use its SDKs to create your own mobile or web-based app. The company offers two card readers to use with this payment method. Both are EMV-certified and support chip cards and contactless payments, including mobile wallets like Apple Pay and Google Pay.

  • The BBPOS Chipper 2X BT, which costs $59, is a mobile card reader that uses Bluetooth to connects to smartphones and tablets.
  • Verifone P400, which costs $299, is a countertop credit card terminal. 

Mobile Payment Options

If you have a mobile app, you can boost sales by adding in-app payments to it, letting your customers shop and complete purchases with it. Stripe payments are currently supported on iOS and Android devices. 

Digital Wallet Support

Stripe allows you to accept payments made using digital wallets. In addition to Apple Pay and Google Pay, it supports Visa Checkout, Masterpass by Mastercard, Amex Express Checkout, Microsoft Pay, Alipay and WeChat Pay. 

International Currency Support

For businesses with customers outside the U.S., Stripe is a good option because it allows your customers to pay with their local currency. Stripe then converts it, so you receive your funds in your currency. It supports more than 135 currencies. 

Dashboard App

Available for both Android phones and iPhones, the Stripe Dashboard app allows you to track your sales when you're away from the office. You can issue refunds, set alerts, and view daily summaries, reports and historical comparisons on the Android version. On the Apple version, you can also email customers, search transactions and create new customer subscriptions.  

Reporting

You can view your sales data and account balance history in the dashboard. It has several built-in reports, and you can export your data to CSV files. If you integrate Stripe with other programs, such as your accounting software, it automatically syncs to that application. If you want advanced reporting capabilities, you can use Stripe Sigma for an extra cost.  

July 2020: Stripe has added a customer portal feature to Stripe Billing, its invoice and subscription billing service. With it, your customers can manage their billing details themselves – which can save you time, since your customers will be able to view their accounts to check their billing history, upgrade or downgrade their subscription, cancel their subscription, and update their payment method. This is a prebuilt solution, which means it's easy to set up, and Stripe hosts it to keep it secure. You can, however, customize it to match your brand by adding your logo, brand color and accent color, and you can add links to helpful information on your website, such as your terms of service.

Additional Considerations

Here's some additional information about Stripe to keep in mind as you select a payment processing company for your business. 

Security

Stripe takes data security seriously and has multiple security protocols in place to keep your customers' payment data secure. It uses tokenization technology, so no actual payment data is stored on your servers, and includes Radar, its fraud-prevention tool, with every account. 

PCI Compliance

Stripe is a PCI Service Provider Level 1, the highest certification available, but you're still required to comply with PCI data security standards and complete a self-assessment questionnaire each year. It doesn't charge a PCI compliance fee. 

Customer Support

 If you need help using Stripe, you can email the company or use its online resources, which include searchable documentation, reference guides, articles, tutorials and FAQs. 

Limitations

Stripe is unique in that it's designed for developers, and while this is one of the reasons it's such a versatile product, it can be overwhelming for small business owners who aren't developers. 

Even figuring out how to use Stripe and where to find its easy-to-use products, such as its integrations and Stripe Checkout, is challenging, and you may need to hire a developer if you want any customizations. 

Here are some additional points to consider before signing up with Stripe. 

  • Stripe doesn't provide inbound phone support. If you run into a problem while using Stripe, you'll have to email the company.
  • As discussed above, Stripe is like other merchant aggregators in that it's wary of risk compared to full-service processors. It may hold your funds or close your account if you have a lot of chargebacks or if there's something irregular about your transactions, such as an abnormally high sales ticket, that makes Stripe suspect fraudulent activity.

Buying Guide

Credit Card Processing Rates

Credit card processing rates are typically expressed as a percentage of the sale plus a small per-transaction fee. Most rates average 2% to 4% of each transaction. The processor considers several factors when determining the processing fees it charges you, including your monthly processing volume, your average ticket size, your business's industry and your processing history. It may also consider your business and personal credit. 

The credit card processing industry is very competitive. Companies want to work with you, especially if you've been in business a few years and process a high volume of payments each month. Many are open to negotiating a deal with you and advertise that they're willing to meet or beat your current rates. But first, you need to understand what costs go into credit card processing rates and which are negotiable. All rates have three parts: 

  • Interchange fees. This is a non-negotiable rate set by the card networks, and every processor pays the same amount. There are hundreds of rates, arranged by industry, card type, sales ticket amount and acceptance method. You can view interchange rate tables on the card networks' websites.
  • Assessment fees. Like interchange rates, these are non-negotiable, and every processor pays the same amount. These rates vary by card brand.
  • Processor's markup. This is the only negotiable part of the processing rate.

Here's why you need to know this information: 

 
  • If a company says it has lower interchange rates than other processors, it's not true. All processors pay the same amounts.
  • If a company posts links to interchange rate tables, indicating this is what you'll pay, you need to know that this is only a portion of the rates you'll pay the processor.

Second, you need to identify which pricing model is best for your business. For most businesses, industry experts recommend interchange-plus, but credit card processing companies prefer tiered pricing because they make more money with it. Some processors give you a choice of pricing models and may allow you to switch so you can evaluate for yourself which one provides the best savings for your business. Here are the three most common: 

Credit Card Processing Pricing Models

 

Tiered Pricing Interchange-Plus Pricing Flat Rate Pricing

Most plans include the following several tiers with different rates for debit and credit cards at each tier.

  • Qualified rate: Regular cards, swiped
  • Mid-qualified rate: Rewards, swiped
  • Non-qualified rate: Premium rewards, swiped rewards, keyed

Interchange-plus pricing has two parts:

  • Wholesale rate (interchange and assessment). These are not negotiable.
  • Processor's markup (the percentage and per-transaction fee). You may be able to negotiate this part of the rate.

Flat-rate pricing is expressed as one of the following:

  • Flat percentage of the transaction
  • Flat percentage plus a per-transaction fee

It's hard to know how much you're paying the processor – or if you're overpaying – because each processor decides which rates go into each tier.

You can see the processor's markup, which makes it easier to determine if you're getting a good deal. This is usually the most cost-effective pricing model.

Flat rates are higher than other pricing models but may save you money because most have no additional fees and no contract.

This pricing model is a good choice if your customers prefer paying with debit cards.

This is the pricing model most experts recommend for small businesses.

This is the best pricing model for businesses with small tickets or low monthly volume

 

Tiered Pricing

This is the most common pricing model, but it's widely criticized by industry experts because it's not as transparent as interchange-plus pricing. It attempts to simplify the interchange table by combining interchange rates, assessment fees, and markups together and then sorting them into tiers. Tiered pricing may also be referred to as "bundled pricing" or "bucket pricing."

Most processors categorize these tiers as qualified, mid-qualified and non-qualified transactions, although some plans may have as little as two or as many as six tiers, with separate rates for credit and debit cards. The factors that determine the transaction category include the type of card (whether it's debit or credit and if it's a regular, rewards, corporate, government-issued or international card) and how the transaction is processed (whether you accept the card in person using a card reader, accept it online or manually key it in). Some processors have a special lower rate for PIN debit transactions.

Critics note a variance between processors as to which interchange rates fall into each tier, which makes it difficult to compare pricing when you're evaluating services. We found this to be true in our testing, as some processors categorize rewards cards as mid-qualified and others define them as non-qualified. This variance in tier categorization, sometimes referred to as "inconsistent buckets," makes it difficult to determine how much you can expect to pay above the set costs for your processing.

  • Low rates advertised on processor websites are usually qualified debit rates. These only apply to non-rewards debit cards accepted in person with a card reader.
  • Qualified debit and qualified credit may be the only rates the sales rep quotes you, so it's important to ask about the number of tiers, what they cost, which types of cards and acceptance methods each tier includes, and what actions may cause a transaction to be downgraded to a lower tier.
  • Best for businesses whose customers prefer paying by debit card.

Interchange-Plus Pricing

Most industry experts prefer this model because it promotes pricing transparency. The interchange-plus pricing model may also be called "pass-through pricing" or "cost-plus pricing," because the processor passes the interchange rates and assessment fees to you at cost and adds a markup.

The processor's markup stays the same no matter what card type your customers pay with, so you can see how much you're paying the processor. This makes it easier to spot savings when you're comparing services. Plus, many of the companies that offer interchange-plus pricing post their rates on their websites, which saves you time in gathering rates from the companies you're interested in learning about.

  • Many companies will quote you interchange-plus rates if you specifically request it, but some only offer this type of pricing to established customers, requiring you to process with them for a certain amount of time before you qualify. The best companies offer this pricing to all their customers.
  • The rate you're quoted is only the markup. You'll pay this amount in addition to the actual interchange rate and assessment fee.
  • Best for most businesses; recommended by industry experts.

Flat-Rate Pricing

This is the simplest pricing model. Most processors that use this model charge a fixed percentage rate for each sale, regardless of card type. Alternatively, some processors charge a fixed percentage rate and a per-transaction fee. There are usually different rates for cards accepted in person and online.

Mobile credit card processing companies commonly use this pricing model. There are typically no monthly or annual fees, making it a good option for very small businesses that don't process enough transactions to cover these costs. Most of the time, the only other fee is a chargeback fee, which is only triggered when a customer disputes a transaction.

  • If your business processes less than $2,500 per month, some credit card processors will refer you to a processor with flat-rate pricing.
  • Most companies offering this pricing structure set you up as a submerchant under their master merchant accounts, allowing for fast setup.
  • Best for businesses that have small sales tickets or process a low volume of credit card transactions each month.

Credit Card Processing Fees

In addition to processing rates, you'll pay a variety of fees to whichever credit card processor you choose. Some of these are one-time or per-occurrence fees, and others are charged monthly or annually. 

It's important to read through the application and the terms of service to learn about the fees that accompany your small business credit card processing account. For a complete list and explanation of fees, including nonstandard fees that you should never pay, see our small business guide to credit card processing fees.   

Common Credit Card Processing Fees

Most credit card processing companies charge these recurring fees: 

  • The monthly fee (sometimes called a statement fee) usually ranges from $5 to $15. It may be higher if it includes PCI compliance and gateway fees.
  • The monthly minimum fee is normally $25, though this usually refers to the amount you pay in processing costs, not the minimum dollar amount of sales you must process per month.
  • PCI compliance is $100 per year, on average, though some companies may prorate it and charge it monthly, sometimes baked into the monthly fee.
  • The payment gateway fee varies by the payment gateway you use. Most are charged monthly, though some also come with a small per-transaction fee.
  • Various network fees, such as Mastercard's Merchant Location Fee and Visa's Fixed Acquirer Network Fee, may be passed on to you as either monthly or annual fees.
 

These fees are also common but only charged per occurrence: 

  • Batch fees are nominal, daily fees that you pay when you close out the day's sales, costing 10 to 30 cents (usually the same amount as your per-transaction fee).
  • Address Verification Service (AVS) fees are usually a few cents per transaction when you use this anti-fraud tool to verify the address and ZIP code of the cardholder.
  • Voice authorization is another anti-fraud tool with a small per-use fee. It's rarely required, but you're charged for each occurrence.
  • Chargeback fees are usually $15 or $20 per incident but may be as much as $45.
  • PCI noncompliance is an expensive monthly fee that you must pay if you fail to establish and maintain your PCI compliance.
  • A non-sufficient funds (NSF) fee is charged if you don't have enough money in your business bank account to pay the fees you owe the processor.

Fees to Avoid

Some processors charge a variety of miscellaneous fees in addition to the standard fees listed above. The worst include cancellation fees, club or membership fees, and fees for what the contract vaguely defines as "additional services." 

Again, it's important that you read the entire contract before signing anything to make sure you're aware of every fee you'll be obligated to pay. Ask your sales rep what each fee is for, how much it costs, how frequently it's charged and if it can be waived. If the sales rep agrees to waive a fee, be sure to get it in writing, either noted on the contract or as an addendum.

What Features Do You Need?

No matter which credit card processing service you select, you should expect it to provide the basic services that you need to accept payments. The processor should …

  • Allow you to accept all major cards, including Discover and American Express, so you don't lose sales from users of certain cards.
  • Comply fully with the the Payment Card Industry Data Security Standard (PCI DSS) and help you attain PCI compliance.
  • Offer EMV-compliant card readers to reduce your vulnerability to fraud and to ensure that, in the event of a security breach, you aren't held liable for using outdated equipment. Visa recently announced a "76% dip in card-present (CP) counterfeit payment fraud" for merchants who accept chip cards.
  • Provide readily accessible customer support that you can reach by phone 24/7 so that, no matter what hours your business keeps, you can immediately get the assistance you need to continue accepting payments or to resolve an issue.

In addition to these criteria, we considered the following factors to evaluate each processing company: 

  • Pricing. We looked at processing rates and account fees to find out how much it costs to accept credit card payments. We also considered the pricing model the company uses and whether it practices pricing transparency.
  • Contracts and service terms. Standard processing contracts have lengthy terms and expensive early termination fees that make it difficult to switch providers. We looked for processors that offer month-to-month service with no cancellation fees, so you aren't locked in to a service.
  • Types of processing offered. Many small businesses want to accept payments wherever their customers are, so we considered whether the processor offers multiple processing methods. We looked for those that allow you to accept PayPal and ACH payments in addition to all major credit cards.
  • Processing equipment options. This industry is notorious for bad leasing contracts, so we looked for processors that allow merchants to purchase credit card terminals and other processing equipment upfront. Also, whether you need a countertop credit card terminal or a mobile card reader, the processing equipment should allow you to accept chip cards, contactless cards and mobile wallets.
  • Third-party integrations. Because the ability to integrate with POS systems, accounting software and other commonly used business software saves you valuable time, it was one of the features we looked for in a processor.
  • Payouts and reporting. We considered how long it takes the processor to clear the account and deposit transaction money in your business bank account and whether it offers additional funding options.
  • Additional features and benefits or service limitations. We looked for other features that would contribute to a merchant's satisfaction or dissatisfaction with a processor.

Contracts

When you ask a processor to send you the contract to look over, the rep usually sends a "merchant application," "merchant agreement" or even a "pre-application form" for you to fill out. The term "application" is misleading, because it's actually part of the contract, and signing the application is signing the contract.

Although some applications include the terms and conditions and act as a full contract, most don't. Some applications include links in the fine print to the terms and conditions and the program guide, but in most cases, you'll have to specifically ask your rep for these additional documents.

You want to read the full contract so you know exactly what you're agreeing to and can verify that the rates, fees and terms you were quoted are accurate.

  • Don't enter your bank account information on an application until you're ready to sign up with a company.
  • Don't sign the application until you've thoroughly read the full contract and verified that the rates and fees are correct, waivers are noted, and you understand the term length and cancellation policy.
  • Contracts usually have three parts: the merchant application, terms and conditions (or terms of service), and the program guide (or merchant operating guide). Make sure you get the full contract to review!

When you receive the program guide, you may feel overwhelmed at the thought of reading it, because these documents are often more than 50 pages long and delve into the minutiae of processing.

However, you don't want to sign the application until you've read it, because it contains important details that can cost you money. For example, it often includes information on early termination fees and the instructions you need to follow if you cancel your account, which may involve providing a written notice to the processor within a certain timeframe.

Here are some factors to look for as you review contracts.

Term Length

The industry is shifting away from three-year contracts in favor of month-to-month agreements, and all the best processors offer this as an option. A processor should be confident enough in the quality of its service and the competitive value of its pricing that it doesn't require its customers to sign lengthy contracts.

The only exception that justifies a contract is if you accept free equipment, in which case it's reasonable for a company to expect you to remain a customer long enough for it to recoup its costs. We recommend purchasing your equipment instead, so you can avoid long-term contracts, but if you decide to sign a contract for this reason, the contract length shouldn't be excessive and shouldn't automatically renew for additional lengthy terms. For example, a non-excessive term would be no longer than a year with a month-to-month renewal. An excessive contract would span three years or longer and renew for additional two-year terms.

Even if the processor advertises, or the sales rep tells you, that the service plan is month to month and there are no cancellation fees, it's still important that you read the contract and make sure this information is consistent with the information in the contract.

  • If the contract says the term is for three years or there's an early termination fee (ETF), ask for a waiver or amendment that stipulates the service is provided on a month-to-month basis and waives all ETFs.
  • If the processor you want to work with has a lengthy contract, it's worth trying to negotiate for better terms. Be sure to ask the rep if they can give you a waiver or amendment that puts you on a month-to-month plan and waives all ETFs.

Automatic Renewals

If, for some reason, you choose a company with a traditional three-year contract, be aware that these contracts typically automatically renew for additional one- or two-year terms. It's worth your time to ask for a waiver that puts you on a month-to-month plan after the initial term ends.

Early Termination Fees

There's usually a very short window before a term expires in which you can cancel your account without incurring an ETF. Most early cancellation fees are a few hundred dollars; however, some are very expensive.

Scour any contract you sign for liquidated damages, which is either a percentage or the full amount of the projected revenue the processor expected to make on your account; this is a very punitive fee that can be exorbitant. The ETF may be disguised as an "early deconversion fee" (EDF), so you want to look for this term in the contract text as well.

Personal Guarantees

Most application forms include personal guarantee clauses that grant the processor the right to perform credit checks. This guarantee also gives the processor the right to collect money from you personally if, for any reason, your business is unable to meet its obligations. In addition to holding you personally responsible for all expenses, some of these clauses hold your successors and heirs responsible for your debt if you die.

Additional Service Clauses

These indicate that the processor may sign you up for various additional services that have additional fees, and you have a very short period, typically 30 days, to cancel or opt out. Again, you may be automatically enrolled in additional services, and you must figure out what they are and how to cancel them or you will be charged for them. Approximately one-quarter of the companies we reviewed include this clause in their contracts.

Frequently Asked Questions About Credit Card Processing

How can I save money on credit card processing?

If you're currently with one processor and want better rates, it may be worth your time to contact your account manager and ask if they can help you reduce your costs. Also, by reviewing your statement on a regular basis, you may be able to identify costs or fees that you're overpaying. Here are five steps you can take to ensure you're getting the best pricing on your credit card processing service. 

1. Review your statement every month. Credit card processing contracts rarely include pricing guarantees, so it's important to closely monitor your statements so you know what's going on with your account. Regularly review your rates and fees so you get a feel for what you can expect to pay on average for processing each month.

Also, watch for notifications about rate increases, new fees and reminders about PCI compliance requirements, such as the annual questionnaire that you need to take to avoid costly noncompliance fees. If you notice a change in your pricing, if there are fees that you don't understand or if you receive a notification about your compliance, call your rep to discuss your account.

2. Request a pricing review. If you're an established merchant and you want lower fees, you may be able to request a pricing review or audit to see if you qualify for lower pricing. Requesting an account analysis can be particularly worthwhile if your business has grown since you signed up with the processor and your transaction volume exceeds your initial estimates, as you may be eligible for lower rates.

3. Request interchange-plus pricing. If you're currently processing on a tiered pricing plan, ask your processor if it can switch your account to interchange-plus pricing. Many processors allow you to switch to a different pricing model so that you see for yourself which pricing model works best for your business. If you do this, be sure to ask if the new plan triggers any different fees or requirements. For example, ask about the new plan's monthly minimum and how much you need to process to meet that requirement.

4. Ask if fees can be waived. Some fees are negotiable, and your rep may be able to waive or lower them for you. For example, if your business is seasonal and you're having trouble meeting the monthly minimum in the offseason, your rep may be willing to waive or lower it for you. Your rep may also waive the PCI compliance fee after you complete the annual questionnaire.

5. Shop around and renegotiate your rates. If you've been with your processor for a year or longer, consider shopping around to see if your rates are still competitive. As with car insurance, it's beneficial to take the time to look for better deals every year or two. This is particularly important if your rates have increased over time or if you've been with your processor for several years and you don't know what pricing is available elsewhere.

If you find better pricing from another processor, don't be afraid to contact your rep to see if they can renegotiate your rates. You have more negotiation power if your service is provided on a month-to-month basis and you own your equipment, since you can switch to a new service without penalty. If you're under contract, the rep may be less willing to renegotiate, but it's still worth a try.

If you're overpaying for your processing and the rep won't renegotiate your rates, you want to read your contract to find out the procedure you need to follow to switch processors when your contract finally expires. Be aware that most contracts automatically renew, that you have a very short window in which you may cancel without penalty, and that you may need to begin the cancellation process well in advance of the contract's expiration date.

Card readers, terminals and POS systems: What should I use to accept credit cards?

You have several options for the processing hardware you use to accept credit cards at your business. Which one is the best credit card reader for your business depends on how and where you plan to accept cards, and whether you want something basic and inexpensive or a solution built into a larger system.

You should be able to accept magstripe cards, chip cards, contactless cards and mobile wallets. No matter which style of card reader you choose, you want it to be EMV compliant so you can accept chip cards and avoid liability for fraud occurring at the point of sale. This also allows you to skip signature authorization, which speeds up checkout.

If you're purchasing new equipment, you also want it to include near-field communication (NFC) technology so you can accept mobile wallets like Apple Pay and Google Pay as well as contactless cards, saving you the expense of updating your equipment later as these payment methods grow in popularity.

Consider choosing a device with a built-in keypad or a connected PIN pad if your customers prefer paying with debit cards, as many full-service processors offer special low rates for debit PIN transactions.

Before buying processing equipment from a third-party vendor, check with your credit card processing company to make sure it will be compatible. Here are three types of equipment, along with some of the top brands for each.

1. Mobile credit card readers are the most affordable option. Prices typically range from free to $100. These card readers connect to your phone or tablet through the headphone jack or Bluetooth and work using a credit card payment app that you've installed on your device.

Many processors offer free magstripe card readers to their new customers – no strings attached. However, in most cases, you'll want to upgrade to one that accepts chip cards or splurge for a model that supports all three acceptance methods: magstripe, EMV chip and NFC contactless payments.

The best mobile credit card reader brands include Clover, Ingenico, PayPal, QuickBooks Payments and Square. Mobile card readers are available from both full-service and mobile credit card processing companies. See our mobile credit card processing review to learn more.

2. Stand-alone and wireless terminals are the next cheapest options, usually costing $150 to $600. These countertop credit card readers have built-in receipt printers and keypads. Most connect using either dial-up or Ethernet, and wireless models connect with 3G, GPRS or Wi-Fi via Bluetooth. All new terminals are EMV compliant and allow you to accept both magstripe and chip cards. Many also accept NFC payments.

Top terminal brands include Dejavoo, Ingenico, Pax and Verifone.

3. Point-of-sale systems are usually the most expensive option, though there's a wide range of prices, depending on the type you choose. If you plan to use a specific POS system, you want to check with the company to find out which processors the system is compatible with, as some only integrate with a few. Others are proprietary and require you to use the POS company as your payment processor. Tablet-based systems are the cheapest and work with mobile card readers.

POS systems with built-in card readers cost $1,000 to $1,500. Top brands include Clover, Square and NCR Silver. See our POS systems review to learn more.

Should I buy, lease or accept free processing equipment?

Nearly every credit card processing company has some sort of free equipment offer. Some processors give you a terminal if you sign a contract, while others have a free placement program in which you borrow the equipment.

Accepting free equipment sounds like a great way to save money, but as a perceptive businessperson, you know that "free" often isn't really free, and you need to do the math to determine whether the free option is actually the best option for your small business.

Purchasing credit card processing equipment: Buying processing hardware outright is nearly always your best bet. Although it may be an expensive upfront cost, over time it's less expensive and less restrictive than other equipment options. You can keep your purchasing costs low by shopping around for the best price, choosing a basic terminal instead of a fancy POS system and asking if used equipment is available for purchase.

As you shop around for equipment, you want to find out if the equipment is proprietary or "locked." This is an important consideration, because you don't want your purchased equipment to be unusable if you switch processors. If you already own unlocked equipment or decide to shop for new or used equipment online, check with your new processor to see how much it charges to reprogram the equipment, including shipping and handling costs, and how long the process takes. Many processors offer this as a free service.

Free credit card terminals: Although free sounds fantastic, even the best processors may require you to sign a contract in return for free equipment. The best contract terms for free equipment are one year long and then go forward on a month-to-month basis. Most free equipment contracts last for three years, and many automatically renew for two-year terms. Some companies require you to sign up for a different pricing plan if you choose to accept free equipment.

Another thing to be aware of if you accept free equipment is that some processors may charge you the full price of the terminal in addition to an early termination fee if you end your relationship with the company before your contract expires. Before accepting free equipment, consider whether being tied to a contract or accepting higher processing costs is worth the purchase price of the equipment.

Free placement programs: These may initially sound like a good deal, and many processors offer this option, but as with free equipment offers, you may be required to sign a long-term contract. However, when your contract expires or you switch processors, you're required to return the equipment.

Many free placement programs come with monthly fees and may include additional monthly minimum requirements that you must meet to avoid penalty fees. Be sure to request the contract and a list of all the fees associated with the program – such as insurance or maintenance fees – to read over before you agree to accept such an arrangement.

Leasing equipment: Many processors encourage you to accept a lease on equipment because it's a very lucrative arrangement for them. Some reps give persuasive reasons for leasing equipment, such as "it's like a cell phone plan" or "many customers choose to lease for tax reasons." However, carefully consider every other option before you lease equipment, as this is generally one of the worst decisions a small business can make when setting up credit card processing.

Consider the following leasing myths and truths. 

Leasing myth No. 1: It's like getting a cell phone, which means that if equipment breaks, the processor will replace it.

Truth: While technically true, most equipment comes with a manufacturer's warranty, and you may be able to purchase an extended warranty or insurance. If your purchased equipment breaks while under warranty or while insured, the manufacturer replaces the equipment anyway, according to the terms of the warranty or insurance. 

Leasing myth No. 2: It's easier to update to the newest model if you lease your equipment.

Truth: This myth assumes that if you purchase equipment, you probably keep it longer than the four-year term of your lease. The processor expects that when your lease expires, instead of purchasing your existing equipment, you'll take out a new lease on new equipment. However, the money that you save by purchasing the equipment outright puts you in a better position to buy new equipment when it becomes available. 

Leasing myth No. 3: Leasing is better for tax write-offs, since you'll have an expense that you can write off yearly instead of just a one-time purchase.

Truth: The long-term expense of leasing is still higher than purchasing equipment outright, even if you factor in the tax write-offs you expect to receive. If you're considering leasing for these tax reasons, you want to do the math to verify that the costs and savings are in fact what they're purported to be.

Remember, leasing is short-term cheap and long-term expensive. You'll often find that for the amount of money you pay over the life of the lease, you could purchase the equipment several times over. Additionally, most equipment leasing contracts are noncancelable, which means that you can't return the equipment and, further, you pay a fee to get out of it. Even if your business fails, you return the equipment and you get out of your processing contract, you'll still be held personally responsible for the remaining time on your equipment lease.

Should I work with a direct processor, ISO/MSP or a payment facilitator?

There are three main types of companies that provide payment processing services:

  • Direct processors that provide merchant accounts and have relationships with the banks and credit card brands
  • ISO/MSPs, which are independent sales organizations (ISO) and member service providers (MSPs) that resell merchant accounts
  • Payment facilitators (also called PayFacs or merchant aggregators) that have master merchant accounts and provide submerchant accounts

Traditionally, ISO/MSPs are considered the best choice for small businesses – they cater to this market, offering a high level of service, low rates, few fees and favorable contract terms. PayFacs are also popular with small businesses, providing processing services on a pay-as-you-go basis that allow even very small businesses to accept credit card payments.

However, big processors want your business too. They're making efforts to tailor their processing services to small businesses by offering more competitive pricing, developing technology that makes it easier for you to run your business and providing industry-specific processing solutions.

What this means for you, the small business owner, is that you have a wealth of choices for credit card processors. We included all three types in our best picks. Read on to learn more which companies we recommend and the qualities we looked for in each use case.

How can I protect my business from credit card fraud?

Data security is a huge issue in the credit card processing industry. Although the large breaches that you read about in the news, such as those sustained by Home Depot and Target, may lead you to believe that your business is too small for criminals to be interested in, that isn't the case. In fact, small businesses are often the preferred targets of security attacks.

According to the PCI Security Standards Council, 71% of cybersecurity attacks are aimed at small businesses. Even more grim is the success that criminals have with their small business targets. Security experts estimate that 90% of data breaches affect small merchants. Criminals target small businesses because many business owners fail to prioritize data security. As a result, the data often isn't as secure as it is with large companies that have the resources and personnel to put stronger security protocols in place.

You can take two important steps to increase security, protect data and reduce fraud. First, comply with PCI DSS. PCI DSS measures have proven successful in discouraging attacks, as 96% of merchants that sustained data breaches in 2011 were not PCI DSS compliant. Second, if you haven't done so already, upgrade to EMV-compliant processing equipment. Visa reports that EMV-compliant merchants have seen counterfeit fraud drop by 76% since the liability shift of 2015.

Methodology

We began our search for the best credit card processing companies by asking small business owners which processors they currently use and their experience with these services. Starting with a list of the processors they mentioned, we added companies we were already familiar with and those that had reached out to us asking to be considered for review. We then added credit card processors we found on reputable online sources such as business, industry and review websites. 

With this list in hand, we started our research. We narrowed the list down based on different use cases (our best picks categories) using the criteria listed below. Our research included studying each company's website, examining help resources and how-to guides, and watching videos tutorials when available. We reached out to the companies as small business owners and asked sales reps and customer service agents questions to gauge the quality of service and gather information that wasn't available online. 

From our list of over 100 credit card processing companies, nine made our best picks list: Fattmerchant, Fiserv, Flagship Merchant Services, Helcim, PayPal, Square, Stripe, TSYS and Worldpay. Eleven more processors made onto our short list: Authorize.Net, Braintree, Chase Merchant Services, Dharma Merchant Services, Elavon, EMSPlus, Global Payments, Moolah, Payline, Payment Depot and SumUp.

 

What to Expect in 2020

In 2020, we'll see several familiar themes continue to develop in the payments industry, but the overarching theme, and one that multiple industry experts talk about, is improving the customer experience. 

As Michel Léger, executive vice president of innovation at Ingenico, explained in a recent press release, "Now, everyone can pay when they want, where they want and how they want ... It's not enough anymore to just offer payment solutions that are tailored to consumers: Now, payments need to be taken right to them." 

Consumer expectations surrounding payments are exceptionally high. A recent Ekata report that surveyed more than 7,000 consumers in North America and Europe found this data: 

  • 92% of respondents expect a "fast, frictionless experience" that is also secure.
  • Over 70% say account creation for online shopping should be instantaneous. 

One of the most obvious ways to take customer payments is via mobile. Mobile continues to gain importance in the payments industry: for mobile shopping (customers make purchases online using their smartphones), mobile wallet and contactless card acceptance (customers use an app on their smartphones like Apple Pay or a contactless credit card to make an in-store purchase), and mobile checkout (you use a mobile device and card reader to accept payments, allowing you to take payments wherever your customer is). 

  • Mobile shopping is an increasingly important payment feature for merchants to offer. Adobe Analytics reported that on Cyber Monday 2019, of the record-breaking $9.4 billion consumers spent, 32% of purchases (that's more than $3 billion in sales) were made on a smartphone. What this means for merchants is that if you haven't yet optimized your website for mobile, now is the time to do so.

  • Mobile wallets and contactless cards that use near-field communication (NFC) technology to "tap and go" should still be on your radar. Even though mobile wallet adoption has been much slower than anticipated, Mobile Payments Today says that nearly one-third of the U.S. adult population used a mobile wallet or app to make a payment or transfer money in 2019. Contactless cards, though, may take off much faster. This is largely due to Visa's push to get them into consumers' hands and give them new ways to use them. Visa partnered with Chase and New York's Metropolitan Transport Authority to accept contactless payments, and by the end of 2020, all rail lines and buses will be able to accept them. Visa exceeded its 2019 goal of getting 100 million contactless cards into the market and hopes to get 300 million contactless cards out in 2020.

  • Mobile checkout technology may be seeing an update. The Payment Card Industry's new standards for contactless payments hint that card readers may not be needed in the near future. Instead, merchants may be able to accept payments using a mobile device and a payments app only. In a press release, PCI SSC Senior Vice President Troy Leach said that the new PCI standards and program for contactless payments "now provide merchants the option to use validated solutions that require no additional hardware to accept contactless transactions." 

Finally, security continues to be a hot topic in the payments industry, and the stakes are high. Although EMV adoption has been highly successful in reducing card-present fraud, card-not-present (CNP) fraud continues to rise. Juniper Research predicts that it will cause retailers to lose $130 billion between 2018 and 2023. Consumers are also worried about fraud – 90% of them, according to the Ekata report – and over 60% of them feel that the businesses accessing their personal data are responsible for fraud prevention. When that doesn't happen, 91% of consumers who experience fraud will not do business with that company again, and 86% of them will warn others about their experiences. 

The credit card processing companies are proactively combating fraud, and Juniper researchers say that payment processors will spend nearly $10 billion to detect and prevent fraud by 2023. 

March 2020: Your business's PCI compliance status is another thing you should look into in 2020. New data from the ControlScan/MAC 2020 Acquiring Trends Report revealed that PCI compliance rates are falling among merchants. That's not good for you or your customers, since noncompliant merchants are more vulnerable to hackers and you may be paying an expensive noncompliance fee each month (some are more than $50 per month). Just 26% of the merchant acquirers surveyed reported merchant compliance rates above 60%, and 23% reported compliance rates below 25%.

Lori Fairbanks: Staff
Lori Fairbanks,
business.com Writer
Lori Fairbanks has years of experience writing and editing for both print and online publications. After graduating from Brigham Young University with a Bachelor of Arts in English, she worked as a magazine editor and then as a freelance writer and editor for a variety of companies, including marketing firms and a medical university. She now writes for business.com and Business News Daily about financial systems and services for small businesses, such as accounting software, credit card processing and point-of-sale systems.

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What's the best online credit card processing with SSL?
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Eric Waddell
Eric Waddell
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Depending on your needs, you can either adapt a Shopping Cart system or go "custom". Custom allows you the greatest flexibility. If you go that route, you can backend to just about any provider. Personally, I've found Elavon the easiest to build an interface. (Elavon is the provider-of-cfhoice through COSTCO.) And, yes, SSL is a definite must. You should note that SSL has really nothing to do with e-commerce. You can use it for anything. Essentially, SSL encrypts all communications...
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How much should I expect to pay for merchant services?
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Brad Marcus
Brad Marcus
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Fees depend on a number of variables including size of average transactions, number of transactions, and annual/monthly volume. The industry is highly competitive. I am a member of Costco they offer On Site and In Store 1.38%¹ Plus 19¢ per transaction, Online 1.99%¹ Plus 25¢ per transaction and On-the-Go 2.49%¹ $0 per transaction. Service is sponsored through Elavon.
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Steven Freeman
Steven Freeman
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Speak to your local banks and see what they can offer. Once you obtain a competitive rate (lot better than Paypal for example) with all required inclusions you can then hook it into a credit card gateway provider which in turn can connect to your website or shopping cart.
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Other Services Considered

Payroc, which acquired iTransact and Integrity Payment Systems, offers in-store credit card processing services that can be used with POS systems and standalone terminals. It resells merchant services from Chase Merchant Services, First Data, TSYS and Worldpay, and offers processing equipment from multiple major brands. It also has compliant surcharging and cash-discount programs.

Payline provides cost-effective credit card processing solutions with no lengthy contracts to businesses of all sizes. It has multiple plans, each featuring interchange-plus pricing with rates transparently posted on its website. Custom solutions are also available. Payline offers in-store, online, mobile and ACH payment processing, subscription billing services and more. Read Review.

Chase Merchant Services, formerly known as Chase Paymentech, is one of the largest processors in the industry. It offers a wide range of products to help small businesses accept credit cards in person, online and on the go. Its processing services comes with advanced fraud protection, data encryption and other security tools to make sure your business and customers stay protected from cyberattacks. Read Review.

Helcim makes credit card processing simple and affordable for small businesses. It offers retail, mobile, and virtual credit card processing solutions with transparent pricing and month-to-month terms. All merchants receive volume-based interchange-plus pricing, and you can view complete rates and fees online. Discounted rates are available for nonprofits.
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