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The Best Merchant Account Services of 2022

By
Jennifer Dublino
,
business.com Contributing Writer
| Updated
Sep 29, 2022

See our expert and unbiased reviews of the top 10 merchant services. Compare 2022's top-ranked merchant account services for free at business.com.
Best for Flexible Pricing
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Support for low credit scores
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Digital payments
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Month-to-month contracts
Best for POS
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Industry-specific POS software
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Built-in marketing tools
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High ease of use
Best for Subscription Pricing
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Shopping cart integration
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Automatic card updater
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Robust software
Best for High-Risk Businesses
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Plan with zero processing fees
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Payment acceptance in 72 hours
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Free smart terminal
Best for High Transaction Volume
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Wholesale pricing
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Included merchant account
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Next-day funds
See our expert and unbiased reviews of the top 10 merchant services. Compare 2022's top-ranked merchant account services for free at business.com.

The Best Credit Card Processor Providers

Whether you accept credit card payments over the phone, from customers online, or in person, it’s important to be able to accept every payment type, which is why choosing the right merchant services provider is essential. You also want to work with a payment processing company that has transparent pricing, competitive rates and no lengthy contracts. With these qualities in mind, we researched merchant account service providers and payment gateways to help you find the best options for your business.

Check out our recommendations for the best merchant service providers for different business types below. If you process less than $3,000 per month, see our mobile credit card processing reviews. Otherwise, read on to learn more about the features, pricing and contracts you should look for in a merchant account provider for your business.

 

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Compare Our Best Picks

Company Use case Editor’s score Rate plans Contract length Fees Customer support Sales deposit speed Early termination fee E-commerce tools Reporting and analytics Various payment methods PCI compliance fee
Merchant One Flexible pricing 8.5/10 Monthly and interchange-plus 3 years Yes 24/7 Next business day Sometimes Yes Yes Yes No
ProMerchant High-risk businesses 8.6/10 Either monthly and interchange-plus or zero-cost plan Month to month Yes 24/7 email and chat support, limited phone support hours N/A No Yes Yes Yes Yes
Clover POS 8.8/10 Monthly plus flat rate Month to month Yes 24/7 1-3 days No Yes Yes Yes Yes
Stax Subscription pricing 8.4/10 Monthly and wholesale interchange-plus Month to month Yes 24/7 Next business day No Yes Yes, depending on plan Yes No
Payment Depot High transaction volume 8.5/10 Monthly and wholesale interchange-plus Month to month Yes 24/7 N/A No Yes Yes Yes No
Square Startups 8.4/10 Flat rate Month to month No Limited hours 2-3 business days No Yes Yes Yes No
Helcim All-in-one platform 9.2/10 Wholesale interchange-plus Month to month No Limited hours 1-2 business days No Yes Yes Yes No
National Processing Low processing rates 7.6/10 Monthly and interchange-plus Varies Yes 24/7 email and chat support, limited phone support hours Slow in the beginning, but then 1-3 business days Yes Yes Yes Yes Yes
Flagship Merchant Services Flexible contracts 7.8/10 Choice of flat rate or interchange-plus Month to month Yes Limited hours N/A No Yes Yes Yes Yes
Chase Merchant Services Quick payouts 7.8/10 Flat rate Month to month (unless you get a free reader) No 24/7 Next business day; same day for Chase account holders Only if you get a free reader Yes Yes Yes No
Paysafe E-commerce businesses 7.8/10 Monthly plus flat rate Month to month Yes Limited hours Undisclosed, but immediate with Rapid Cash and eCash transactions Yes Yes Yes, depending on plan Yes Yes

Our Reviews

Merchant One: Best Merchant Service for Flexible Pricing

pro
Merchant One has a 98% approval rate and a quick application process.
pro
It can work with businesses of all sizes and various credit scores.
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You must speak to a sales representative to get the exact transaction rates.

Merchant One has a unique approach to approving merchants. Whereas most other credit card processors categorically reject businesses with poor credit scores or in high-risk industries, Merchant One evaluates each on a case-to-case basis. With a high approval rate of 98%, it accepts nearly all merchants but adjusts the pricing to reflect the risk profile. If your business becomes less risky by, for example, being in business for a longer period or raising its credit score, you can ask for a rate adjustment.

Editor’s score: 8.5/10

Merchant One’s rates range from 0.29% to 1.99% for card-not-present transactions and from 0.29% to 1.55% for cards run through the reader, in addition to the interchange rates. There is also a monthly fee starting at $6.95 and an annual $99 fee.

Merchant One’s software platform is intuitive and easy to use, giving merchants various payment options such as a virtual terminal and invoicing. It also has comprehensive reporting and customer management tools. The software integrates with Clover equipment, both readers and point-of-sale (POS) systems, all of which are supported in-house.

Another standout feature is its 24/7 customer service with human representatives; some other processors rely on automated systems, web articles and other self-help at least some of the time. We also appreciated how quickly merchants can access their funds, which is the next business day. This can make a big difference for companies that are startups or otherwise experiencing cash flow issues.

Read Merchant One Review

Clover Credit Card Processing: Best Merchant Service for POS

pro
Clover has a full-featured POS system, with POS hardware resold by many other processors.
pro
The POS capabilities are also available on its mobile app and virtual terminal.
con
Clover has some added costs, such as a monthly platform fee and an application fee.

Clover’s POS software has so many features that many other payment processors resell them. In addition to the payment processing and reporting that most payment backend platforms have, Clover’s POS software has robust functionality that allows business owners to use it to run nearly every aspect of their business. If you have a restaurant or retail business, Clover has industry-specific POS capabilities, such as menu creation, inventory management, and employee management and productivity tools. We also liked that the software integrates with over 500 third-party apps.

Editor’s score: 8.8/10

We were also impressed with Clover’s customer management and marketing tools. With Clover, you can create and manage customer profiles and email them personalized offers based on their purchase history. You can solicit customer feedback via the app. When customers agree to receive their purchase receipts by text, they automatically opt in to text message marketing, giving you a highly effective customer engagement tool. The software also supports gift cards.

Clover partners with Synchrony to offer a buy now pay later (BNPL) option for Clover merchants. This gives customers the ability to pay in installments, which could help businesses reach more customers. The Synchrony app is available on Clover’s app marketplace.

Clover charges a monthly fee, and merchants can choose one of three pricing plans, ranging from $9.95 to $49.90 per month. There is also a platform fee of $22.95 per month and a monthly fee of $9.95 for each additional POS station. Rates are 2.6% + $0.10 for card-present transactions and 3.5% + $0.10 for keyed-in transactions with the Starter Plan; this goes down to 2.3% + $0.10 for card-present transactions and remains at 3.5% + $0.10 for keyed-in transactions with the two higher plans.

Read Clover Credit Card Processing Review

Stax by Fattmerchant: Best Merchant Service for Subscription Pricing

pro
Stax offers a choice of membership-based wholesale pricing or a flat-rate plan.
pro
With e-commerce transactions, the payment type that is least expensive to the merchant is displayed first.
con
The monthly subscription rates can make processing expensive for lower-volume businesses.

While Stax’s monthly fees are higher than those of some other processors, its processing rates are very low, making it a good choice for businesses that want predictable costs. This type of pricing structure is a good choice for companies that process a high volume of credit card transactions, since it will result in overall lower costs. There are three monthly plans to choose from, ranging from $99 to $199 per month, which allows merchants to choose a plan and pricing that meets their needs.

Editor’s score: 8.4/10

We especially like the auto card updater feature, which keeps card information current, resulting in fewer declined transactions. Other impressive features are the reports that enable you to buy new inventory for the lowest cost and the data on customer aging and lifetime value. Additionally, some plans have invoicing capabilities. When a customer pays an invoice, the merchant gets an alert in real time, saving the hassle of having to go into the customer’s account to check. When selling online, Stax’s responsive payment pages automatically show the payment option with the lowest merchant fees first, encouraging customers to choose that method, which results in lower processing fees.

Read Stax by Fattmerchant Review

ProMerchant: Best Merchant Service for High-Risk Businesses

pro
High-risk businesses aren't turned away.
pro
You can choose between a flat rate and interchange-plus rates.
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ProMerchant's website doesn't list pricing.

Unlike most other credit card processors, ProMerchant accepts businesses in high-risk industries, such as credit repair and multilevel marketing. It is also willing to do business with companies that have never accepted credit cards in the past and have no payment processing history as well as business owners with a low credit score. It is easy to apply for a merchant services account with ProMerchant, and you can expect to get a decision within 24 hours. Once you are approved, your equipment is sent overnight, and you can start accepting payments within 72 hours.

Editor’s score: 8.6/10

There is no long-term commitment with ProMerchant; the agreement is month to month with no early cancellation fees. Choose from either interchange plus or, if you are in the restaurant or retail business, the Zero Cost plan. The Zero Cost plan is completely unique in the industry. It allows you to pass along 100% of the payment processing costs to the customer, eliminating that cost altogether (although the merchant would still need to pay any monthly or incidental fees).

ProMerchant has one of the fastest payouts in the industry: next-day access to funds for all transactions processed by 8:30 p.m. (ET). New merchants get a free smart terminal at sign-up. ProMerchant sells Clover hardware and POS systems.

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Payment Depot: Best Merchant Service for High Transaction Volume

pro
Payment Depot offers membership-based pricing, which can reduce processing fees for high-volume businesses.
pro
Payment Depot has month-to-month contracts with no early termination fee.
con
Because of the monthly fee, seasonal businesses could end up paying more when volume is down.

Businesses with a high transaction volume can save money with Payment Depot because there is only a small additional per-transaction charge on top of the interchange rates. The per-transaction rates depend on which of the plans you have chosen and range from $0.15 for the Starter plan to $0.07 for the Growth plan.

Editor’s score: 8.5/10

Each plan also includes a monthly fee: $59 for the Starter plan, $79 for the Starter Plus plan and $99 for the Growth plan. The plan you choose depends entirely on your monthly transaction volume rather than the level of services you require, as with many of the other payment processors with tiered plans. Because of the monthly fee, seasonal businesses or businesses with a lower volume may end up paying more in processing costs than with a payment processor that does not charge a monthly fee but has higher processing rates.

Payment Depot’s contract is month to month with no early cancellation fee. We like that merchants get a dedicated account representative as their main point of contact. When you have a business with a high transaction volume, it is important to be able to resolve problems quickly before they end up costing more money, so the dedicated customer service representative is a great feature.

With the Starter Plus or Growth plan, you get the ability to accept recurring payments for memberships or subscriptions, plus a text-to-pay capability. The Growth plan gives you an upgraded dashboard and expanded analytics, plus automatic card expiration date updates to reduce declined transactions.

Read Payment Depot Review

Square Merchant Services: Best Merchant Service for Startups

pro
There are no monthly or annual maintenance fees, only processing rates.
pro
You get access to a full suite of POS features through the iPhone and Android apps.
con
Square charges a per-transaction fee for in-person processing, which makes small tickets pricier to process.
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Square is a great choice for startup businesses because it is easy to get approved and the application process is quick and simple. The pricing is transparent – with a flat rate of 2.6% + $0.10 for in-person payments, 2.9% + $0.30 for online payments and 3.5% + $0.15 for keyed-in transactions – and there is no monthly or annual fee. Square doesn’t even have a chargeback fee, which is unique in the industry. There is also no minimum processing amount or any PCI compliance, early termination or application fees.

Editor’s score: 8.4/10

Square was the industry leader in mobile payments, but today it does much more than that. It provides a full-featured, free POS system that can be downloaded on both Apple and Android mobile devices. The POS system has payment processing as well as an inventory management system and the ability to integrate with third-party software. Square is easily integrated into e-commerce sites, and if you have a brick-and-mortar business, you can purchase Square’s proprietary POS hardware. Square’s mobile POS app also includes contactless mobile payment options for those using Apple’s Tap to Pay feature on their iPhone. This payment option requires no added hardware and helps business owners on a budget ensure they don’t miss an in-person sale.

If you have a retail or restaurant business, you can upgrade your software to Square’s specialized POS system at an additional cost to get industry-specific features. Other add-on services are appointment scheduling, invoicing, a customer loyalty program, marketing, payroll and employee management.

Square merchants can access their funds within one or two days but have the option of expedited deposits if they pay a fee of 1.5%.

For Spanish-speaking businesses, Square translated its entire U.S. suite of hardware, software, and services into Spanish. This could be a huge benefit for the 4.6 million U.S. small businesses owned by Hispanics. Square has also hired more Spanish-speaking reps for its customer service department.

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Helcim: Best Merchant Service with an All-in-One Platform

pro
Helcim gives its merchants free software that includes inventory, customer, and employee management and acts as a POS system.
pro
Helcim has interchange-plus pricing with no monthly fees.
con
The hardware offerings are limited, so you may need additional equipment from a third party.
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Most SMBs need little more than Helcim’s free software to run nearly every aspect of their operations, including inventory management, customer management, invoicing, recurring payments, marketing, and employee tracking and management. While other processors also offer these features, they are usually either associated with a more expensive monthly fee plan or available as an add-on paid service. With Helcim, it is available to all merchants for free.

Editor’s score: 9.2/10

There are no monthly fees for anything else either. The processing rates are 0.3% + $0.08 above interchange for in-person transactions through a reader and 0.5% + $0.25 above interchange for e-commerce, keyed-in, ACH and international transactions. A rate-lock guarantee protects merchants, and larger, more established companies can negotiate even lower rates. With low processing rates, no monthly fees and lower-than-average incidental fees, Helcim provides an excellent value.

While Helcim’s application process is easy, with next-day approval in many cases, it does not accept high-risk businesses. Helcim’s software can be easily used as a POS system, but the company does not sell a lot of hardware. In most cases, merchants will need to purchase their card readers and POS stations from a third party. If you have existing tablets or mobile devices, you can load the software on them.

Helcim also offers proprietary card reading hardware. The company recently released its card readers in pink, purple, and yellow, making it the only credit card processor to offer colored terminals. This can help businesses stand out from the competition at the point of sale.

Read Helcim Review

National Processing: Best Merchant Service for Low Processing Rates

pro
National Processing has low interchange-plus rates.
pro
Customers receive a rate-lock guarantee that ensures their rates don't increase.
con
National Processing charges a PCI compliance fee.

National Processing has interchange-plus pricing, which depends on the type of business you have. For example, subscription payments are charged 0% + $0.09 above interchange, while e-commerce payments are 0.29% + $0.15 above interchange. The difference is made up for with differing monthly fees. In contrast, subscriptions entail a monthly fee of either $59 or $199. E-commerce businesses pay only $9.95 per month on top of the processing fees. The company does provide a rate-lock guarantee, so your rate will stay the same the entire time you do business with them. Among the top companies we reviewed, National Processing was one of the few that provided a rate-lock guarantee.

Editor’s score: 7.6/10

National Processing sells hardware from a variety of different third-party vendors, including Clover. It also sells its own proprietary POS system.

In addition to its monthly fees by industry, National Processing charges all merchants a $10 fee for customer support and account maintenance, plus several other fees. These include a $10-per-month PCI compliance fee, a batch fee of $0.10 each day, a voice authorization fee of $2.50 per occurrence, a retrieval fee of $7 to retrieve a sales draft in case of a dispute, a chargeback fee of $19.95 each time and an early termination fee of $595. In some cases, the early termination fee can be waived.

Read National Processing Review

Flagship Merchant Services: Best Merchant Service for Flexible Contracts

pro
There are no long-term contracts or cancellation fees.
pro
Pricing is either interchange plus or tiered processing rates.
con
The pricing isn't transparent, and the 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.

Depending on how your business operates, it could benefit from either an interchange-plus pricing plan or flat-rate pricing. With Flagship Merchant Services, you get to choose the one that makes the most financial sense for your business. For example, if you have a business with a high transaction volume, you might want to choose the interchange-plus plan to minimize your processing costs. 

Editor’s score: 7.8/10

Unfortunately, Flagship does not publish its interchange-plus or tiered processing rates. To get the details, you will need to talk to a representative. However, the company is so confident that its rates are competitive that it offers a $200 American Express gift card if it cannot meet or beat competitive processing rates.

Flagship gives merchants the option to use branded gift cards, as well as the ability to launch a customer loyalty rewards program to improve customer retention, which is something that not all payment processors support.

Flagship Merchant Services does not have its own proprietary hardware, but it sells third-party hardware from Clover and Verifone. New merchants can get either a Clover Mini POS unit or a terminal for free. If you accept the free equipment, however, you will be subject to the early termination fee, so be sure to read the contract carefully. 

Flagship does not provide 24/7 customer service, unlike many of the other credit card processing companies profiled here, but it does have how-to videos and other self-service options that are accessible via its iAccess software interface. 

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Chase Payment Solutions: Best Merchant Service for Quick Payouts

pro
Since it is an acquiring bank, Chase has the fastest payouts in the industry.
pro
Chase caters to the healthcare field with HIPAA-compliant payment solutions and integration with practice management software.
con
Chase's rates are higher than many other credit card processors' rates.
visit site

Unlike any of the other credit card processors we have reviewed, Chase Payment Solutions is both a merchant bank (one that processes payments) and an acquiring bank (one that issues credit cards). In fact, Chase is such a huge acquiring bank that almost half of Americans have a Chase account.

The benefit of dealing with a bank this size is that it can quickly process payments. If you have a Chase business checking account, you could have access to some of your funds the same day for those transactions processed by 5 p.m. (PT) at no additional fee. Most payment processors give merchants access to their deposits within one to three business days or charge a percentage for faster deposits.

Editor’s score: 7.8/10

Chase’s rates are 2.6% + $0.10 for in-person transactions, 2.9% + $0.25 for online transactions and 3.5% + $0.10 for keyed-in transactions, which are higher than those of a lot of other payment processors. However, if you process a high volume of transactions each month, you have the ability to negotiate lower rates.

Chase has its own credit card readers, including the Chase QuickAccept mobile reader. The benefit of using this reader is that it gives you same-day access to funds (as long as you have a Chase business checking account), and you get the in-person rate rather than the higher keyed-in rate if you entered the card information into the mobile app.

In addition to in-person and e-commerce payments, Chase supports invoicing. It has excellent functionality for healthcare businesses in a specialized payment solution called InstaMed. While all credit card processors are required to have security measures in place, InstaMed’s security covers not just payment information, but also the medical services provided to each patient, making it HIPAA-compliant. This is a feature that is unique in the industry.

Read Chase Payment Solutions Review

Paysafe: Best Merchant Service for E-commerce Businesses

pro
Paysafe supports e-cash payments.
pro
You get POS solutions, including the ability to make recurring payments and send invoices.
con
The website doesn't list pricing, so you have to call a sales representative.

All of the credit card processors reviewed here allow merchants to accept credit cards, most allow merchants to accept digital wallets like Apple Pay and Google Pay, and a few allow merchants to accept ACH payments. However, not all customers have a credit card or even a bank account. Paysafe is the only processor that offers a contactless way for merchants to accept cash. 

Editor’s score: 7.8/10

One such program is eCash, which lets customers pay either in person or online with a prepaid account and a 16-digit code. With eCash, payments are 100% guaranteed, and there is no possibility of chargebacks. Another cash program Paysafe has is called Rapid Transfer. With Rapid Transfer, customers can securely log in to their online bank account without leaving the merchant’s website and use the funds from their bank account to pay. This is easier than paying via ACH since the customer needs the bank login information only, not a routing number and account number like for ACH payments.

Paysafe is also a good solution if you do a lot of international business. You can accept PayPal, Skrill, Neteller and more than 100 currencies. You can also do online invoicing and set up recurring payments and subscriptions. While the service seems to cater more to e-commerce businesses, it does have payment processing hardware from Clover for brick-and-mortar businesses.

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Pricing

Cost is often a top factor when you’re looking for the right merchant account services for your business. If you process a lot of card payments each month, it can be expensive if you go with the wrong provider. There are three types of costs you need to investigate:

  1. Processing fees
  2. Account fees
  3. Equipment costs

Many of the best merchant services and payment gateway providers post pricing on their websites. However, more commonly, you’ll have to speak with a sales representative. During these calls, the rep will ask about the specifics of your business, such as your transaction volume, average ticket size, industry and creditworthiness. If you’re already processing, many reps will ask you to send them a recent statement so they can try to meet or beat your current rates.

Processing Fees

Whether you accept credit card payments online or in person, you pay a small fee for every transaction, which is expressed as a percentage of the sale plus a few cents. However, providers calculate these costs differently, which makes it difficult to compare prices. To make an accurate comparison, you need to know the types of processing fees and pricing models.

Processing fees have three parts: the interchange rate, the card-brand fee and the processor’s markup.

  • The interchange rate: This is a non-negotiable cost set by the card brands (American Express, Discover, Mastercard and Visa), and every service provider pays the same amount. Each card brand has its own rate table with different interchange rates based on the type of card (credit or debit, regular or rewards, etc.), your industry, the size of the sales ticket and how the card is accepted (in person or online, using a chip card reader or swiper, etc.).
  • The card-brand fee: This is also a non-negotiable fee that the card networks charge; every processing service provider pays the same amount.
  • The processor’s markup: This portion of the fee is negotiable.

Recognizing how confusing this is, many processors try to simplify processing rates and how they communicate them to their merchants. Most use one or more of these three pricing models: interchange-plus pricing, tiered pricing and flat-rate pricing.

Interchange-plus pricing: Industry experts favor this pricing model – sometimes called interchange pass-through pricing or cost-plus pricing – because it’s the only pricing model that shows you exactly what the processor’s markup is. This is significant because the markup is the only part of the cost that you can negotiate. As a result, this model has the best pricing for most merchants.

  • When you’re quoted this rate, it will look something like this: 0.3% plus $0.15. Remember, this is only the processor’s markup; you still must pay the interchange and assessment fees. For example, if you have a retail business and you accept a rewards Visa card in person using a chip card reader, the interchange fees might be 1.65% plus $0.10. The card association fee for Visa would be an additional 0.15% plus $0.02. Adding up all three costs, the full rate you would pay for this transaction would be 2.1% plus $0.27.

Tiered pricing: Though this is the most common pricing model, industry experts criticize its lack of transparency. Other names for this model include bundled pricing and bucket pricing, because it attempts to bundle interchange fees, card-brand fees and markups, and then segment transactions into tiers, or buckets. These tiers are often sorted into qualified, midqualified and nonqualified, with separate tiers for debit and credit card transactions.

The low teaser rates that many companies advertise are usually qualified debit transactions, which means they apply only to regular debit cards that you accept in person using a card reader. Midqualified transactions are usually rewards cards, and nonqualified transactions are most often business or foreign cards, though some also include premium rewards cards. Most merchant service providers offer three tiers, but some have as few as two or as many as six.

  • When you see this rate advertised, it looks something like this: 1.39% plus $0.21. However, this rate is only for debit cards accepted in person, so if you accept a credit card, you’ll pay a different rate, perhaps 1.59% plus $0.21. If it’s a rewards card, it would be downgraded from qualified to midqualified, which might add another 1% to the cost. So, for this example, the rate would be 2.59% plus $0.21.

If you’re quoted tiered rates, it’s important to ask how many tiers there are and which types of cards and acceptance methods apply to each. Make sure you know which types of cards your customers use most so you can judge whether this pricing model is cost-effective for your business. If the majority of your customers use regular debit cards and you accept cards in person, this processing model may be worth considering; otherwise, you should look for a processor that offers one of the other pricing models.

TipTip: If you go with a tiered pricing plan, find out how many tiers there are and which types of cards and payment methods apply to each tier.

Flat-rate pricing: Most of the merchant services companies that use this simple pricing model charge a single fixed percentage rate per transaction, though some also charge a per-transaction fee. This pricing model is popular with mobile merchant service providers, and it may be the most cost-effective option for small businesses that process less than $3,000 per month or have small tickets. This type of transaction rate is noticeably higher than those from the other two pricing models, but there usually are no other account fees; all you pay are the processing fees for each transaction, which is why it’s such an attractive option for new and very small businesses.

  • When you see this rate advertised, it looks something like this: 75%. Using the above scenario with the rewards credit card, this is the processing fee you would pay. It is higher than the other two pricing models’ fee percentages, but there aren’t any other fees for your account, which may make it less expensive overall, depending on how much you process each month and which types of cards your customers prefer. The consistent rate makes it easy for you to calculate exactly how much you’ll pay in processing fees each month.

Merchant Account Fees

In addition to the processing rates for each transaction, you’ll pay account maintenance fees if you’re working with a full-service merchant account provider or payment gateway service. These typically use the interchange-plus or tiered pricing models. Generally, providers that use the flat-rate processing model don’t charge account maintenance fees.

When you ask about account fees, most sales reps will tell you about the monthly fee, but there are a lot of complaints online about surprise fees on credit card processing statements. For this reason, it’s important to read the full contract (application, terms of service and program guide) to ensure you’re aware of every fee.

Here are some of the fees most merchant services providers charge. For a detailed list of fees to look for as you read processing contracts, see our guide to credit card processing fees.

  • Monthly fee: Most merchant service companies charge a monthly fee, sometimes called a statement fee, that covers the cost of preparing your monthly billing statement and providing customer support. This fee usually ranges from $5 to $15. Some providers may charge more if they roll other regular account fees into this charge.
  • Gateway fee: A payment gateway is necessary if you intend to accept credit cards online. Small business owners with an online shop need a gateway because it encrypts and securely transmits credit card data from your website to the processor. Pricing varies; some processors charge a monthly fee of around $10 for this service, some charge a per-transaction fee ranging from $0.10 to $0.25, and some charge both.
  • PCI compliance fee: If you work with a standard processor that gives you your own merchant account, you’re required to be PCI-compliant. That designation means you adhere to the Payment Card Industry (PCI) Data Security Standard, which was developed to help merchants prevent data theft and fraud. Most processors that charge this fee offer to help you complete the annual questionnaire that is required to demonstrate your compliance. Your rep may call or email to remind you to take the assessment each year, or the processor may note it on your statement. On average, this fee is $99 annually.
  • PCI noncompliance fee: Even if the processor doesn’t require you to pay an annual PCI compliance fee, it may charge you a monthly noncompliance fee if you fail to establish compliance by filling out the annual questionnaire. You can easily avoid this fee by staying up to date with your PCI responsibilities. This fee can be very high, ranging from $20 to $60 per month, as it is meant to discourage you from letting your PCI compliance lapse.
  • Chargeback fee: If a customer disputes a charge and requests their money back, the processor charges you this fee. Chargeback fees are usually $15 to $25. Chargebacks are more common when you accept credit cards online versus in person, because typical reasons for chargebacks include delivery failures, technical errors, fraud and customer dissatisfaction. Another common cause of chargebacks is if your store name is different from the name on your merchant account and your customer doesn’t recognize your merchant name on their credit card statement.

Some processors charge application and setup fees for your merchant account, a payment gateway setup fee to connect the payment gateway with your website, and an early termination fee if you want to close your account before the contract’s term expires. The best providers don’t charge these fees, though, so you should ask them to waive these fees if they’re included in your quote or look for a provider that doesn’t tack them on.

TipTip: Avoid merchant account providers that charge an application or setup fee. The best providers won’t hit you with these extra expenses.

Processing Equipment Costs

If you accept credit cards in person, you need to purchase a card reader or terminal. Here are the three most popular options:

  • Mobile card readers: This is the cheapest option, as many providers give you a free swiper when you sign up for an account. If you want to purchase a mobile card reader that also accepts EMV chip cards, contactless cards and mobile payments, these cost less than $100.
  • Credit card terminals: This is the midrange option. These devices cost $150 to $600, depending on whether you choose a countertop or wireless unit. They have built-in keypads and receipt printers, and all new models can accept both chip cards and contactless payments.
  • POS systems: This may be the most expensive option, but cost will depend on the type of system you choose. Tablet POS systems are often the least expensive, and they work with mobile card readers.

The most important thing to know about processing hardware is to avoid leasing it, because you can’t cancel a leasing contract and, in most cases, you’ll pay much more over the long term than if you purchase it outright. It’s enough of a problem that the Federal Trade Commission cautions against it, noting that businesses that lease may pay thousands of dollars for equipment that costs just a few hundred dollars.

Buying Guide

Features

Whether you work with a merchant services provider, a payment gateway provider or a credit card processing company that provides you with both a merchant account and a payment gateway, the company you choose should be up to date with industry standards and allow you to accept all major cards (American Express, Discover, Mastercard and Visa). Here are more qualities you should consider as you look for a merchant processor for your small business:

  • Pricing: The best service providers are transparent about pricing, either by clearly posting their rates, fees and processing hardware costs on their websites, or by making it easy to get a quote from a company representative. Look for a merchant account service that offers interchange-plus pricing and doesn’t charge setup fees, cancellation fees or nonstandard fees, like quarterly technology fees or semiannual postage and handling fees.
  • Contracts: Choose a service provider that offers month-to-month or pay-as-you-go terms so you can cancel without penalty if you find a better deal elsewhere. Standard payment processing contracts have three-year terms and charge hefty early termination fees; some even have liquidated damages clauses.
  • Scalability: As your business expands, you may want to accept credit cards online in addition to in-store and on the go, so look for a company that offers multiple ways to accept payments. You should also be able to add registers, or even locations, to your account.
  • Security: The credit card processing company providing your payment gateway and merchant account should comply with the PCI Data Security Standard. It should also help you become PCI-compliant.
  • Processing hardware: The services provider should offer card readers or terminals that are EMV- and NFC-capable so you can securely accept chip cards, contactless cards and mobile payments such as Apple Pay and Google Pay. It should also allow you to purchase the hardware upfront so you can avoid bad leasing contracts and the headaches that come with them.
  • Integrations: If you have a website or use other business software – such as an e-commerce platform, a top POS system, highly rated customer relationship management software or accounting software – you’ll want a merchant account or payment gateway that integrates with those platforms so you can easily sync data instead of manually downloading and uploading it between systems.
  • Payouts: It’s important to consider how and when you receive your money after a sale. Most service providers offer next-day funding, taking one or two days to deposit your money into your business bank account, and some can do it even faster, offering same-day or instant funding for a fee. Some providers give you the option of having your money loaded onto a business debit card.
  • Customer support: The company’s customer service team should be readily accessible. The best providers offer 24/7 customer service so you can resolve issues no matter when you call.
  • Other benefits or service limitations: If there are certain features you need – for example, a virtual terminal so you can accept payments using a computer with internet access – make sure to look for them before selecting a processor. Also consider whether there are certain limitations, such as monthly processing limits or vendors that support only one acceptance method.

Payment Processing Contracts

The best merchant account contracts have month-to-month terms with no early termination fees. However, the standard merchant account contract has a three-year term that automatically renews for an additional one or two years. If the processing service provider you want to work with has a lengthy contract, ask the sales rep if they can give you month-to-month terms. They want your business, and many are willing to negotiate.

With a standard merchant account contract, you have a very short window at the end of the term, usually 30 days, in which to cancel your account without penalty if you don’t wish to renew. Most providers require you to submit a cancellation request in writing.

If you miss this window or decide to close your account early, the company may charge you an early termination fee, which is usually a few hundred dollars. Some contracts also have liquidated damages clauses, which can make it very expensive to get out of your contract.

No matter which service provider you choose, it’s important to read the entire contract (the application, the terms of service and the program guide) before you sign anything or give the company your bank account information and Social Security number. Be aware of all the fees listed in the contract, as you will be expected to pay them even if they weren’t disclosed by a sales rep. If the sales rep offers to reduce or waive the term length or certain fees, get that in writing by amending the contract or receiving a written waiver.

TipTip: Avoid merchant account providers that try to lock you into a long-term contract. Most of our best picks charge you on a month-to-month basis.

Methodology

Our first step in choosing the best merchant services and payment gateway companies was to compile a list of providers. We considered credit card processing companies that small business owners told us they liked, companies that asked us to consider them, those we were already familiar with and those we found on well-known websites. This list of more than 100 payment processing providers included large banks and industry leaders, as well as small companies and those new to the industry.

We then researched the companies on our list by studying the information and resources on their websites and began narrowing our list based on the criteria in the section below. We selected 10 merchant account providers and payment gateway services as our best picks: Stax, Square, Payment Depot, National Processing, Clover, ProMerchant, Merchant One, Flagship Merchant Services, Chase Merchant Services and Paysafe.

Frequently Asked Questions About Merchant Services

WHAT IS A MERCHANT ACCOUNT?

A merchant account is a type of bank account that allows you to accept payments from your customers using credit and debit cards. The credit card processing company sets it up for you and assigns you a merchant ID number. Once you start accepting credit card payments, the company holds your funds until settlement, when they are transferred to your business bank account.

DO I NEED A MERCHANT ACCOUNT TO ACCEPT CREDIT CARDS?

If you sign up for a processing account with a payment facilitator (PayFac) or aggregator like Square or PayPal, you don’t need your own merchant account. Instead, you sign up as a submerchant under the provider’s master merchant account.

The benefit of working with a PayFac is that it’s faster and easier to set up your account, service is provided on a pay-as-you-go basis, and there are usually no account maintenance fees. But there are some limitations. Most aggregators don’t work with high-risk merchants, so if your business is in a high-risk industry, you’ll need to get your own merchant account. PayFacs are also more risk-averse than full-service payment processors, which means that your funds could be held if something about a transaction raises a red flag.

There are also some advantages of having your own merchant account. You can often get lower rates and better customer service, and the likelihood of having your money held or your account frozen is lower. There are account maintenance fees, but if your processing volume is high enough, they’re offset by the lower transaction rates.

WHAT IS A PAYMENT GATEWAY?

A payment gateway is the technology that creates a secure connection between your website or browser and the credit card processing company, encrypting payment data for each credit card transaction. Some merchant services companies have proprietary payment gateways, but most set you up with a third-party payment gateway, such as those from Authorize.net and NMI.

The advantage of setting up a payment gateway through your merchant account provider is that it reduces the likelihood of compatibility issues and, in some cases, can be less expensive. For instance, you may not be required to pay a gateway setup fee if you go through your service provider instead of going direct. Also, depending on your processing contract, there may be an exclusivity clause that requires you to go through your merchant account provider.

HOW DOES A PAYMENT GATEWAY WORK?

Each time you run a transaction online or a customer makes a purchase on your website, the credit card information enters the payment gateway, where it’s encrypted and routed through a secure connection to the credit card processor, the card network, the bank that issued the card and your business’s bank account. Your customer’s card is charged for the transaction amount, and you receive the funds from the sale, minus the processing costs.

DO I NEED BOTH A MERCHANT ACCOUNT AND A PAYMENT GATEWAY?

It depends. If you want to accept credit cards online and in person, you will need both a merchant account and a payment gateway. If you accept credit and debit cards exclusively using a credit card terminal, you won’t need a payment gateway. But you will need one if you use your computer as a virtual terminal or accept cards through your website.

WHAT ARE THE BENEFITS OF ACCEPTING CREDIT CARDS ONLINE?

The main benefit of accepting credit cards online is that it gives you more ways to accept payments from your customers. According to Visa, “78% of consumers surveyed rank a digital payment method, such as paying with a card or mobile device, as their No. 1 preferred payment option.”

Even a business that has brick-and-mortar locations – whether it’s a retail store, restaurant, office, salon or other type of establishment – may benefit from accepting credit cards online, as Visa notes that “52% of consumers surveyed say they would prefer to shop exclusively online.”

Merchant account providers offer several e-commerce solutions that can help you accept credit cards online, such as hosted payment pages, buy buttons and forms that can be added to existing websites, and integrations with e-commerce platforms. Some can also help you accept payments from customers through your social media pages.

If your business invoices its customers, you can use online invoicing to make it easy for them to pay you on time. All they’ll have to do to pay you is click a link in the invoice and enter their credit card information. Many payment processors can also help you accept ACH payments if your customers prefer to pay invoices by e-check.

HOW CAN YOU AVOID CREDIT CARD PROCESSING FEES?

Because credit card processing fees are how credit card companies generate revenue, it’s extremely unlikely you’ll be able to completely avoid this cost. Through negotiation during the initial application process, however, you can attempt to ensure the rate is favorable.

There are also other ways you can offset your credit card processing fees. For example, some businesses push the fees onto the customer in the form of a surcharge or offer a small discount to customers who pay with cash. This tactic is generally seen at gas stations, where it costs more to pay with a credit card than with cash. While this method eliminates the credit card processing fee levied against your business, it could be a double-edged sword because it could push credit card users away from your business. The credit card networks have strict rules around surcharging, so make sure your policy is in line with their recommendations.

Alternatively, you can set a minimum purchase amount for all credit card transactions. By requiring a minimum of $5 or $10 for each credit card purchase, you can ensure that the transaction is worth paying the credit card processing fee. This option is widely used by many businesses since it’s easily understood by customers and doesn’t feel as punitive as other options. The credit card networks have rules about minimum purchase amounts as well, so again, it’s important to make sure that your policy complies with their guidelines.

In both instances, you could alienate potential customers who prefer to pay with credit cards. The number of people who don’t carry cash is growing, so you ultimately have to weigh the potential savings on credit card fees against the risk of losing sales.

WHAT DO YOU NEED TO OPEN A MERCHANT ACCOUNT?

When signing up for a merchant account, you should have several things on hand to make the process move smoothly. Most credit card processing companies require some general information on your business so they can determine whether you are a high or low risk.

A business’s risk level depends on factors such as its potential to be a victim of credit card fraud or experience a high rate of returns. Payment processors also consider how long a business has been in operation, since they are reluctant to lend money to what may amount to a fly-by-night operation. [Related article: Credit Card Processing in High-Risk Industries]

Most payment processors also want information on the business’s history, including any bankruptcies, defaults or previous merchant accounts on its record. In addition, most processors want information on the business owner, including their personal credit history, as many contracts require the business owner to sign a personal guarantee.

Some merchant account providers charge application and setup fees, but this is unusual among the best processors. You may want to consider other options if the company charges these fees.

IS THERE A WAY TO AVOID MERCHANT FEES?

Few things in this world are free, so avoiding merchant fees altogether isn’t realistic. That being said, there are ways to limit your costs. A good opportunity to do so is by looking for a service that offers a subscription pricing model. This ensures your interchange rates don’t fluctuate, and it may remove some of the added fees.

CAN I MAKE CUSTOMERS PAY EXTRA WHEN THEY USE A CREDIT CARD TO MAKE A PURCHASE?

You certainly can pass on the added cost of using a credit card to your customers. This added surcharge however will likely not be appreciated by your customers and could ultimately result in a loss of business from those who would rather pay less somewhere else. Before instituting this surcharge, you should carefully consider how much you will actually be saving and whether the savings will offset the cost of losing a chunk of your customer base.

What to Expect in 2022

We expect businesses, especially small businesses, to pay close attention to the fees merchant services providers are charging them. One result of the COVID-19 pandemic on the merchant side has been an increase in digital payments. The use of cash was already declining, but the pandemic has seemed to accelerate this process.

With shoppers and diners making more digital payments, businesses and restaurants are seeing an increase in how much they are paying for their credit card processing fees. A study by the Canadian Federation of Independent Businesses found that nearly 80% of the businesses surveyed said their credit card processing fees are unaffordable. It stands to reason that businesses will be shopping around for the best deal they can find for these services and for a partner that can support an increase in transaction volume.

Improving the customer experience will continue to be a priority in 2022 for those in the payment industry. Giving people the ability to pay when, where and how they want will be merchant services providers’ focus in the coming year. The pandemic has shown that consumers now want many options regarding how and when they pay for goods and services. It will be up to those in the payment industry to deliver these choices.

“It’s not enough anymore to just offer payment solutions that are tailored to consumers; now, payments need to be taken right to them,” said Michel Léger, executive vice president of global sales and marketing at Ingenico, in a statement.

An Ekata survey of more than 7,000 consumers throughout North America and Europe revealed that 92% expect a secure, fast and frictionless payment experience, while more than 70% believe that online shopping account creation should be instantaneous.

To support those desires, mobile payments will continue to be paramount for merchant services providers. Finding better ways to support mobile shopping, mobile wallets and mobile checkouts will be a top priority for payment providers this year.

In addition to accepting mobile payments, you should focus on finding ways to let your customers pay with mobile wallets and contactless cards that use near-field communication (NFC) technology in 2022, as this type of payment is growing in popularity. According to CPA Practice Advisor, digital payments were poised to hit $6.6 trillion during 2021 and reach $10.5 trillion over the next four years.

Jennifer Dublino
Jennifer Dublino
business.com Contributing Writer
Jennifer Dublino is a prolific researcher, writer, and editor, specializing in topical, engaging, and informative content. She has written numerous e-books, slideshows, websites, landing pages, sales pages, email campaigns, blog posts, press releases and thought leadership articles. Topics include consumer financial services, home buying and finance, general business topics, health and wellness, neuroscience and neuromarketing, and B2B industrial products.
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YakobchukOlena / Getty Images

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