The Best Credit Card Processors of 2024: Pricing and Hardware

A credit card payment service, also called a credit card processor or payment processor, is a company merchants use to facilitate customer transactions and payments at the point of sale (POS). When a customer uses a credit card, debit card or digital wallet to purchase something, a payment processor communicates with the customer’s card-issuing bank and facilitates the transfer of money to the merchant.

[Read more in our complete  overview of credit card processing]

The main benefit of credit card processing is that it allows you to accept credit and debit cards and, in many instances, mobile wallets like Apple Pay and Google Pay. Acceptance of these payment types is increasingly important for nearly every type of business as many customers don’t carry cash anymore. Here are a few more key benefits for business owners:

• Sales analysis: Many credit card processors either connect with a POS system or provide an online dashboard that lets you run detailed reports.
• Accounting integration: Syncing your credit card processing software with your accounting software saves you the effort of manually entering transaction data, and also reduces the risk of error due to manually entered data.
• Multiple channels: Credit card processing allows you to accept credit cards in person, over the phone and online.
• Cryptocurrency: Some credit card companies offer partnerships with digital crypto wallets to accept cryptocurrency as payment.

A virtual terminal can be used to key-in transactions manually. Source: Clover

Credit card processing rates are typically expressed as a percentage of the sale plus a small per-transaction fee. Some credit card processors charge a flat monthly subscription. Here’s a breakdown of the three most common pricing models:

Credit Card Processing Pricing Models

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 and then sorting them into tiers. Tiered pricing is also referred to as “bundled pricing” or “bucket pricing.”

Most processors categorize these tiers as qualified, midqualified and nonqualified transactions, although some plans may have only two or up to 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 key it in manually.

Critics note a variance between processors as to which interchange rates fall into each tier, which makes it difficult to compare pricing between services. We found this to be true in our research as some processors categorize rewards cards as midqualified and others define them as nonqualified. 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 nonrewards 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.
• The tiered pricing model is 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. Also, 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 more 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.
• Interchange-plus pricing is best for most businesses, and it’s the pricing model 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 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 that offer this pricing structure set you up as a submerchant under their master merchant accounts, allowing for fast setup.
• Flat-rate pricing is best for businesses that have small sales tickets or process a low volume of credit card transactions each month.

In addition to processing rates, you’ll pay various fees to the credit card processor you choose. Some are one-time or per-occurrence fees, and others are charged monthly or annually.

Common Credit Card Processing 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, although this usually means 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, although some companies may prorate it and charge it monthly, sometimes including it into the monthly fee.
• The payment gateway fee varies by the payment gateway you use. Most are charged monthly, although some companies also charge 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 and 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 antifraud 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 a high monthly fee that you must pay if you fail to establish and maintain your PCI compliance. [Learn about other payment processing laws and regulations.]
• A nonsufficient 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. Some of the worst are cancellation fees, club or membership fees and fees for what the contract vaguely defines as “additional services.”

Hidden Fees

Again, it’s important to read the entire contract before you sign anything to make sure no fees are tucked away in the fine print. As you read the contract, note every fee it lists. Then, before you sign the contract, 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 this in writing, either in the contract or as an addendum.

Selecting the right credit card processor can make a big difference for your business’s bottom line. Follow this checklist to help you make the best choice.

1. Assess Your Business Needs

Determine the average number and size of transactions. This will tell you which credit card pricing model will give you the most bang for your buck. Consider any special needs related to your industry. E-commerce businesses will require the ability to accept credit cards through online checkout systems. High-risk businesses should also seek out credit card processors with high acceptance rates.

You should also evaluate your existing POS system and software needs. Does the credit card processor integrate with your systems?

2. Compare Processors and Fees

Carefully examine fee structures, including transaction fees, monthly fees, setup fees, and any additional charges. Look for hidden fees like chargeback fees, early termination fees, or monthly minimums.

3. Evaluate Customer Support and Security

Assess the processor’s customer support channels (phone, email, live chat) and response time. Ensure that the processor is PCI compliant and offers robust security measures to protect customer data. Also, you should assess the processor’s tools and support for handling chargebacks, which are a major source of frustration for some small businesses.

4. Read Reviews and Testimonials

Explore testimonials from third-party, user-generated review sites such as Trustpilot and TrustRadius. This can help gauge customer satisfaction and uncover the pros and cons.

5. Negotiate and Compare

Obtain quotes from multiple processors to compare pricing and features. Don’t hesitate to negotiate fees, especially if you have a high transaction volume. Lastly, carefully review the contract terms before signing.

Before you commit to a processor, consider what you will need for your business. Features that we considered for our best picks include the following:

• Pricing: We looked at processing rates and account fees to find out how much it costs to accept credit card payments with each company. We also considered the pricing model the company uses and how transparent it is about its pricing.
• Contracts and service terms: Standard processing contracts have lengthy terms and hefty early termination fees that make it difficult to switch providers. We looked for processors that offer month-to-month service with no cancellation fees, rather than locking you into a service.
• Selection of processing types: 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 automated clearing house 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 you 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.
• Tap-to-pay capabilities: The pandemic changed the way people pay for things. Cash and credit card transactions are declining in favor of contactless payment methods. With this payment method, customers tap their credit or debit card, wearable device or mobile phone on a contactless payment terminal to complete the transaction. This can speed up the checkout process and keep customers feeling safe. Most newer POS terminals have built-in tap-to-pay capabilities.
• Funds: We also considered how long it takes the processor to clear the account and deposit the transaction money in your business bank account and whether it offers additional funding options.

Many credit card processors resell Clover POS equipment. Source: Clover

Helcim

To choose the best credit card processors on the market, our team of financial analysts and business operations experts evaluated an initial list of 101 contenders. After whittling our list down to 35 contenders, we chose six credit card processors as our top recommendations. Our experts and analysts carefully studied each option and evaluated the processors on 27 factors.

To reach our final conclusion, we considered various factors categorized by importance. These categories reflect what business owners typically prioritize when selecting and purchasing business services.

• Rates: (30%): Our team crunched the numbers and compared processing rates and fees to bring you the most bang for your buck. We looked carefully at monthly subscription prices, as well as processing rates and fees.
• Features (25%): We looked for standard credit card processing functions like recurring billing, PCI compliance, reporting and management, and the availability of different payment methods. Our team also factored in additional POS features, mobile apps, and the availability of integrations with third-party business applications.
  
• Ease of Use and Acceptance (20%): We leveraged demos and free trials to test the processor’s ease of use and intuitiveness on the user-facing software interface. When applicable, we examined the POS hardware used for credit card acceptance. Our team also looked carefully at user feedback and the acceptance rate for different types of businesses.
  
• Customer Service: (15%): To ensure you’re well-supported, we assessed the range of customer service options offered by each processor. This included evaluating phone support availability across different plans and the quality of online resources for self-service.
• Expert Analysis (10%): Our recommendations are further bolstered by the insights of our in-house business operations experts. Their years of experience and hands-on testing credit card processors and analyzing rates ensure we only recommend the most effective solutions.

By evaluating these factors, we identified not only trustworthy credit card processing options, but also how each platform best fits specific business needs.  We recognized that some processors excel at certain tasks or cater to particular company types.  This analysis led to the “Best For” categories you see on this page, ensuring you can easily find the credit card processor that aligns perfectly with your business goals.

To learn more about our methodology, see our full editorial process.