Small businesses in the retail sector often process a high volume of transactions each month, and, therefore, have ample choices when it comes to selecting a credit card processing company. Even large processors that typically work with corporations and financial institutions compete for this market segment and are willing to offer favorable terms and competitive pricing.
We selected First Data Merchant Services as the best retail credit card processor – it's an industry leader that high-volume retailers can negotiate with to get a good deal, it offers incentives to veterans, and it allows retailers in tourist towns to accept payments made using Alipay, a popular Chinese payment app.
First Data is one of the biggest credit card processing companies in the world. It provides its processing services to more than six million business locations in 100 countries. It processes more than 3,000 transactions per second, amounting to more than 33 billion transactions per year. Annually, these transactions are worth $2.4 trillion. It works with businesses of all sizes, from startups to multinational corporations, and across nearly every industry, including retail, food and beverage and professional services. It also owns the Clover brand of point-of-sale (POS) hardware and software, which is sold by more than 3,000 First Data resellers nationwide.
Visit our Best Picks page to see all our recommendations for credit card processing companies. If you're looking for the processor with the lowest overall pricing, see our pick for the best credit card processing company for small businesses.
Pricing and Terms
First Data doesn't post its rates, fees and contract terms on its website, which is inconvenient for merchants wanting to shop around for a good deal online without having to call companies. However, among full-service processors, this is a fairly common practice, as many prefer to customize quotes to prospective merchants, and consider several factors such as industry, monthly processing volume, and sales ticket averages to calculate your rates. As a result, you may find that the pricing quote First Data gives you is different than the pricing we received in our testing, and depending on the specifics of your business, you may be able to negotiate lower rates and fees than we received.
First Data offers all three of the main pricing models: flat, interchange-plus and tiered rates. When we spoke with the sales rep and asked for a pricing quote, she asked some questions about our business and provided us with a tiered pricing quote. We then asked for interchange-plus pricing and she provided that as well. Later, when she emailed us our quotes, she also included rates for flat-rate pricing. Having a choice of payment structure allows you to choose the method that best suits your business.
Industry experts prefer this pricing model for its transparency, and for most businesses, this is the most cost-effective plan. First Data's interchange-plus rate is higher than many of its competitors, as we were quoted 0.59 percent plus 19 cents above interchange. This rate is negotiable, though your rep may require manager approval to give you lower rates. In such cases, you may need to provide current processing statements or more information about your business.
This pricing model can be the best option for small businesses that have a lower monthly processing volume and new businesses that don't yet know what their processing average will be. Like other flat-rate plans, it includes all fees and can be a better option than the tiered pricing model if your customers prefer paying with rewards credit cards.
With First Data's Simplified Structure Rate, you pay 2.29 percent plus 19 cents per transaction on cards you accept in person using a card reader. Other transactions, such as those keyed in or accepted online, cost 3.29 percent plus 19 cents per transaction.
This pricing model isn't looked on favorably by industry experts because every company categorizes the tiers and what each includes differently. However, it can be a good choice for businesses whose customers prefer to pay using PIN debit and regular credit and debit cards.
For in-store transactions, regular credit and debit cards accepted using a card reader fall in the qualified tier and cost 1.89 percent plus 15 cents. Rewards credit and debit cards accepted using a card reader are nonqualified and cost 2.89 percent plus 15 cents. PIN debit transactions have special pricing, costing 39 cents per transaction.
Like most full-service merchant account providers, First Data charges account fees. You may be able to negotiate with your sales rep to have some of them waived. Fees include the following:
- Application fee. We were initially quoted $149 for this fee, but our sales rep later offered to waive it for us.
- Cancellation fee. All standard contracts include an early termination fee, but the sales rep we spoke with was willing to waive it.
- Monthly statement fee. This fee is $5.95, but it's also negotiable.
- Monthly minimum. This amount is based on the processing rates and fees you pay the processor for the transactions you process each month. First Data's minimum is $25, which is on par with what most companies charge.
- PCI compliance fee. First Data doesn't charge this fee but instead charges you $19.95 per month for TransArmor Security Solution, which includes tools to help you achieve and maintain PCI compliance.
First Data's standard contract has lengthy terms that automatically renew and an early cancellation fee. However, better terms are available if you ask. When you call for a price quote, don't be afraid to ask for month-to-month terms with no cancellation fee. In our testing, the sales rep offered to reduce the terms to 12 months and waive the cancellation fee.
The rep will send you a pre-application form to fill out that asks for information about your business before providing you with the full contract to review. The rep we spoke with noted that we didn't need to sign it or provide our personal information (bank account and Social Security numbers).
When you receive the merchant application, be aware that this is part of the contract and by signing it, you're actually signing the contract. Make sure you receive the other parts of the contract as well – the terms and conditions and the program guide – and that you read them. You want to verify that the rates you and fees were quoted match the those on the application, that you're aware of all possible fees, and that you understand the cancellation policy.
You also want to make sure you have a written waiver or that the contract was updated to reflect reduced or waived fees promised to you by the rep. As with any processing contract, you don't want to sign it or provide your bank account and social security numbers until you've read the full contract and understand your obligations.
As a full-service payment processing company, First Data can help you accept credit and debit across multiple channels, so you can sell your products in your brick-and-mortar store, on your website, over the phone, and on the go. You can accept paper checks, ACH payments and gift cards. It also offers loyalty programs that you can use to offer incentives to your regular customers.
Multiple processing equipment options
First Data offers its Clover line of processing equipment to its small business merchants. There are several options, ranging from Clover Go, a mobile card reader that plugs into your phone or tablet, to Clover Station, a full-featured POS system that includes a monitor, card reader and printer. Every option allows you to accept magnetic stripe cards, chip, and contactless cards as well as mobile wallets like Google Pay, and Apple Pay.
EMV and PCI compliance are the two main security factors to look for in credit card processor. No matter what type of processing hardware you choose, it should be EMV compliant, so you can accept chip cards properly and avoid liability for counterfeit fraud occurring at your POS. All of First Data's Clover processing equipment is now EMV compliant.
If you have a merchant account, you're required to be PCI compliant. The processor you choose should provide assistance in achieving this security certificate, and most charge a monthly or annual fee to do so.
First Data helps you establish PCI compliance using its TransArmor security software and charges a monthly fee for it. The software simplifies PCI compliance with its PCI Rapid Comply questionnaire wizard and prevents fraud using tokenization technology to encrypt each transaction, ensuring sensitive card data is safely transmitted to the processor and never stored in your system. It also monitors your hardware and software for tampering and includes a $100,000 liability waiver against card association costs that could be incurred if your data is breached.
First Data's customer support team is available 24/7 by phone or via live chat during extended business hours. You can also reach out via email. Or, if you prefer to find the information you're looking for online, you can search the company's knowledgebase. The company also provides webinars, white papers, newsletters, videos and infographics if you want to learn about First Data, Clover or processing topics like fraud prevention.
First Data works with nearly every business type, and industry-specific solutions are available for healthcare, corporate billing, financial analysis, gambling and gaming, government and education. Here are some of the programs offered by First Data:
- First Data Salutes is a company-wide program that supports the military community with career opportunities and business solutions. The magazine, "Military Times," and other organizations have recognized First Data as a top veteran employer. For its new merchants who are veterans or military spouses, it provides a free Clover Mobile or Clover Mini POS device.
- First Data merchants that use Clover processing equipment can accept payments made using Alipay, a popular Chinese payment app. Merchants located in tourist towns or near travel destinations that have a lot of Chinese travelers can use this feature to cater to a growing customer segment.
Because it has literally millions of merchant customers, First Data has a lot of negative reviews. Many of the complaints are due to its equipment leasing division, First Data Global Leasing, which has lengthy, noncancelable contracts. Other complaints are from merchants who were surprised to see more fees on their bills than they bargained for, complaining that sales reps didn't disclose them.
You can avoid these problems by purchasing your equipment rather than leasing it and reading the full contract before you sign up with First Data (or any other processor). This is important, because it's the only way you can verify that the waivers you were promised are documented, that you're aware of all rates and fees, and that you know how long the term is and how to cancel without penalty if you choose to do so. Below are some additional drawbacks to keep in mind before signing up with this company.
- Even though First Data offers its services to small businesses and is very interested in working with this market segment, small businesses that have a low processing volume may find less-expensive processing services elsewhere. Experienced merchants that have a higher processing volume may be able to negotiate better rates, fewer fees and month-to-month terms.
- Although you need to review the contract in full before filling out First Data's application, you may need to fill out the company's pre-application form to get it, according to the rep we spoke with. She noted that we could withhold our personal information (bank account and Social Security numbers) but did need to provide business information.
- You can't view First Data's pricing information online, which is inconvenient if you want to gauge whether it's in your price range. You'll need to call the company for a pricing quote specific to your business. You can, however, use First Data's live chat service if you're more comfortable with that communication channel.
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