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The Best Merchant Services of 2020

Lori Fairbanks
, writer
| Updated
Mar 09, 2020
Image Credit: YakobchukOlena / Getty Images
> Finance

Merchant Services and Payment Gateway Comparisons

Update: We've revised this page to include information from a PCI compliance survey.

Whether you accept payments from your customers online, over the phone, in person or a combination of the three, it's important that you can seamlessly accept every brand and type of credit and debit card your customers present – which is why it's important to choose the right merchant services provider. Additionally, you 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 your search for the right merchant account provider for your business.

February 2020: Visa is shaking up its published interchange rates. In a document seen by Bloomberg, the card network notified its banking partners of upcoming changes to its rate structure, saying, "Based on the most recent review in the U.S., Visa is adjusting its default U.S. interchange rate structure to optimize acceptance and usage and reflect the current value of Visa products." The card network notes that the interchange structure "has been largely unchanged for the past 10 years" It plans a two-part implementation process, set for April and October. Although rates for online purchases and other card-not-present transactions will increase, rates for businesses in education, healthcare and real estate will decrease. Visa will also include new categories for rent, vending machines and parking.

Best Picks


Editor's note: Looking for the right merchant service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Merchant Services Reviews

Here are all of our reviews for merchant account services and payment gateway providers. In addition to our best picks, we've reviewed other popular merchant processing services and payment gateways that you may wish to consider as you look for the best payment processor for your business. To find even more merchant accounts and payment gateways to select from, check out the Services section at the bottom of this page, where you can view a comprehensive list of providers and read summaries of the services each claims to provide.


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 each one's website and began narrowing our list based on the criteria in the section below. We then reached out to merchant service companies as a prospective customer requesting pricing quotes and contracts to review. We also asked the reps questions that new merchants might ask to help us evaluate customer service quality and gather details about the companies that we couldn't find on their websites.

The nine merchant account providers and payment gateway services that made our best picks are Fattmerchant, Fiserv, Flagship Merchant Services, Helcim, PayPal, Square, Stripe, TSYS and Worldpay. The 11 providers that made our short list are Authorize.Net, Braintree, Chase Merchant Services, Dharma Merchant Services, Elavon, EMSPlus, Global Payments, Moolah, Payline, Payment Depot and SumUp.

What to Expect in 2020

Many industries are making the customer experience a priority in 2020, and the payments industry is no exception. Customers have high expectations around payments, and merchants want to work with credit card processors that can help them meet these expectations. 

An Ingenico press release explained it well, saying, "Payment is a core element of commerce and the customer experience. Consumers only want one thing from payments: They need to be effortless, or totally unobtrusive, whilst still being fully under their control. By default, this means that the experience has got to be 100% secure." 

Security is always a top concern when it comes to credit card processing. Merchants worry about being hacked, and consumers worry about their card data being stolen. According to Mobile Payments Today, "every dollar of fraud creates approximately $3 in total losses for a business – not to mention the pricelessness of their reputation." 

Consumers aren't forgiving when it comes to fraud. In an Ekata report, 60% of the 7,000 North American and European consumers surveyed "believe that responsibility for avoiding fraud lies with the companies that have access to their personal data." If they experience fraud on a company's platform, 91% of them won't do business with that company again, and 86% of them will also tell others about their experience. 

Although EMV card readers have been extremely effective in deterring counterfeit fraud at the point of sale, online credit card fraud continues to rise. Juniper Research says that merchants will lose $130 billion to card-not-present fraud between 2018 and 2023. To combat this, payment processors are expected to spend close to $10 billion by 2023 on fraud detection and prevention efforts. 

In a TSYS blog post, Scott Talbott, senior vice president of government affairs at the Electronic Transactions Association, describes the fraud-fighting technology that processors are investing in: "These tools are powered by technological advancements like machine learning, biometrics, geolocation tools and artificial intelligence. They are critically important in the fight against increasingly sophisticated criminals." 

Explaining how this technology works, Mobile Payments Today said, "The most robust fraud prevention measures employ predictive modeling through real-time machine learning and artificial intelligence applied to both a specific business payment activity and to other businesses in the same industry segment. And successful implementation greatly depends on continuous data capture and analysis."

March 2020: Business owners should be checking their credit card processing statements in 2020. If you discover you are paying a PCI noncompliance fee, it's time to revalidate your certification so you can stop overpaying for your processing and do your part to prevent a data breach. 

According to the new ControlScan/MAC 2020 Acquiring Trends Report, merchant PCI compliance has fallen since 2018. Of the merchant acquirers surveyed, just 26% reported that 60% or more of their merchants are PCI compliant, and 23% reported compliance from less than 25% of their merchants.


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 with their pricing, clearly posting their rates, fees and processing hardware costs on their websites. Look for a merchant account service that offers interchange-plus pricing and doesn't charge setup fees, cancellation fees, or non-standard fees like quarterly technology fees and semiannual postage and handling fees.
  • Contracts: Choose a service provider that offers month-to-month or pay-as-you-go terms so you can move on 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 an extra register or even another location to your account.
  • Security: The credit card processing company providing your payment gateway and merchant account should comply with the Payment Card Industry Data Security Standard (PCI DSS). 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 like 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 like an e-commerce platform, POS system, CRM or accounting software, you'll want a merchant account or payment gateway that integrates with them so you can easily sync data instead of manually downloading and uploading it between systems.
  • Payouts: How and when you receive your money after a sale is an important consideration. 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. As part of our testing, we evaluated merchant payment services on how open their representatives were with important information, and we considered how complete and consistent the information was.
  • 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 certain limitations, such as monthly processing limits or vendors that only support one acceptance method, will be issues or not.

Merchant Services Pricing

Cost is often a top factor in which merchant service provider is best for your business. There are three types of costs you need to investigate:

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

The best merchant services and payment gateway providers post all of this information on their websites, but many companies require you to call and speak with a sales representative so they can make you an offer based on 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 "meet or beat" your current rates.

1. 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. Where it gets confusing is that different providers calculate these costs differently, which makes it difficult to compare pricing quotes. Before you start gathering pricing quotes, you need to understand what costs go into processing fees and what the different pricing models are.

Processing fees have three parts:

  • 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 charged by the card networks that every processing service provider pays the same amount for.
  • 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 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, it has the best pricing for most merchants.

When you're quoted this rate, it will look something like this:

  • 0.30% + $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 in person using a chip card reader, the interchange fees might be 1.65% + $0.10. The card association fee for Visa would be an additional 0.15% + $0.02. Adding up all three costs, the full rate you pay for this transaction would be 2.10% + $0.27.

The best merchant service companies offer this pricing model to all their merchants and are very upfront with their markup, posting it on their websites and volunteering it when you call for a quote. Some of the merchant service account representatives we spoke with in our testing only provided interchange-plus pricing if we specifically asked for it, and some reps were hesitant to fulfill this request. Some agents noted that interchange-plus pricing would only be an option for established merchants, meaning you must operate for a certain number of months with a tiered pricing model before you would be a candidate for an interchange-plus plan.

Other agents we spoke with advised our testers against the interchange-plus pricing model, cautioning that it's only beneficial for vendors processing large transactions or a very high volume of transactions each month. However, this advice directly contradicts the expert recommendations we encountered in our research.

Tiered pricing: Though this is the most common pricing model, industry experts criticize its lack of transparency. Other names for this model are bundled or 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, mid-qualified and non-qualified, 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 only apply to regular debit cards that you accept in person using a card reader. Mid-qualified transactions are usually rewards cards, and non-qualified transactions are most often business or foreign cards, though some also include premium rewards cards. Most merchant services offer three tiers, though some have as few as two or as many as six.

When you see this rate advertised, it looks something like this:

  • 0.39% + $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% + $0.21. If it's a rewards card, it would be downgraded from qualified to mid-qualified, which might add an extra 1% to the cost. So, for this example, the rate you pay would be 2.59% + $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. It's also important to 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.

Flat-rate pricing: Most of the merchant service 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:

  • 2.75%. Using the above scenario with the rewards Visa 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 what 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.

2. Merchant Account Fees

In addition to the processing rates you pay 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 from merchants who saw fees on their credit card processing statements that they weren't told about when they signed up for their accounts. 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 you'll be obligated to pay before signing up with any processor.

Here are some of the fees that most merchant services providers charge. For a detailed list of fees to look for as you read processing contracts, consult our article, "Credit Card Processing Fees: Small Business Guide."

  • 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. It usually costs $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 online shops need a gateway because it encrypts and securely transmits credit card data from your website to the processor. Pricing varies, as some processors charge a monthly fee of around $10 for this service, some charge a per-transaction fee ranging from 10 to 25 cents, 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, which means that you adhere to the data security standards the Payment Card Industry 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 it each year, or the processor may note it on your statement. On average, this fee is $99.
  • 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 usually cost $15 to $25. Chargebacks are more common when you accept credit cards online than 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 a setup or application fee 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 to waive them if they're included in your pricing quote or look for a provider that doesn't charge them.

3. 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, it costs 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 can be the most expensive option, though costs depend on the type of system you choose. Tablet POS systems are often the least expensive and work with mobile card readers. Models with built-in card readers cost $1,000 to $1,500.

The most important thing you need to know about processing hardware is to avoid leasing it, as leasing contracts are noncancelable and, in most cases, you'll pay much more for the equipment than it would cost to buy it upfront. It's enough of a problem that the FTC cautions against it, noting that businesses that lease may pay thousands of dollars for equipment that costs just a few hundred dollars to purchase.

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 charges 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 and before you give the company your bank account and Social Security numbers. You should make sure you're aware of all the fees listed in the contract, as you will be expected to pay them even if the sales rep didn't tell you about them. If the sales rep offers to reduce or waive the term length or certain fees, you need to make sure those changes have been amended in the contract or that you receive a written waiver.

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 (MID). Once you start accepting credit card payments, it 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 to having your own merchant account. You can often get better 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 service companies have proprietary payment gateways, but most set you up with a third-party payment gateway, such as the popular Authorize.Net and NMI gateways.

The advantage to 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 exclusively accept credit and debit cards 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 on 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.

Common Merchant Services Questions & Answers

Have a merchant service question of your own?
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How much should I expect to pay for merchant services?

23 responses
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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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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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John - You said "Umbrella Corp" so I want to clarify something first. I don't use that term anymore because I could have a consolidated group of corporations or a corporate entity that owns 100% of several LLC's. So... If you have a situation like those I just described, go by the Legal structure and tax I'd number. If you have multiple legal entities, each should have its own bank account to properly collect its own income. If you commingle collections in any of the above scenarios,...

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Downloadable Guides

More Customers? Increased Revenue?
More Customers?  Increased Revenue?

Yes, Please!

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It’s become fact that businesses see increased traffic and revenue when they accept credit cards as a form of online or in-store payment.  Furthermore, new technologies are making it easier and more affordable to include credit card payments.  Don’t miss out on the chance to increase your bottom line – find out who you’re losing and how you can gain from adding credit cards to your payment mix.

Our Benefits to Credit Card Processing infographic is completely free. Simply register your email to download it now.

Overview of Credit Card Processing
Overview of Credit Card Processing

Consumers expect to be able to pay for anything with plastic. Our guide to credit card processing makes it easy for you to make this happen.

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There’s a television commercial for a major credit card
company that shows people zipping through a checkout
line to make purchases. Then along comes some guy
trying to pay with cash, and everything slows down,
causing the cashier considerable angst’not to mention
the customers at the back of the line.

These days, almost everybody uses plastic to pay for
even the smallest items. There was a time when you
couldn’t use a credit card to buy anything under $10.
Now, you can buy a pack of gum and put it on your
card. Consumers are so used to the convenience of
credit and debit cards that it’s no longer an option for a
merchant to take plastic-it’s a necessity.

Credit Card Processing Fees
Credit Card Processing Fees

The Ultimate Guide to Understanding Your Fees (and How to Find the Best Rates)

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When you accept credit cards, you lose part of every sale to the credit card processing company’s fees. Do you know what elements make up those fees or how the banks decide how much to charge you? In this whitepaper, you’ll learn what types of charges make up your credit card processing fees and what you can do to make sure your business is paying the lowest possible rate.

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Mobile Payments: What every small and mid-sized business should know


In this report, we will examine all facets of mobile payment processing, beginning with a very brief history of mobile payments and forecasts for the future. We will then explore the benefits of mobility for small and mid-sized businesses, the ease of processing mobile payments, the equipment required and the issues small and mid-sized businesses should take into consideration when taking your business mobile.