Compare payment processing services from the best credit card processors to find the right provider for your small business. The most popular solutions offer reliable customer support, low transaction fees, and transparent pricing models. In addition, many credit card processing companies have built-in point-of-sale (POS) systems and free payment gateway integration.
This round-up highlights the best small business payment processing options with information about each vendor’s credit card processing tools and fees. Learn how to choose the right provider by exploring the in-depth guide to comparing credit card processing services.
Guide to credit card processing
Consumers continue to embrace noncash payment methods and often expect small businesses to take the most widely accepted credit cards. Understanding the basics of payment processing, including credit card processing fees, payment methods, and merchant account services, can help you choose a credit card processor that supports your business model and future growth. This guide explores payment processing costs, compares interchange-plus vs. flat-rate pricing, and covers essential card processor features and tools.
How much does a credit card processor cost?
Typical credit card processing fees range from 1.3% to 3.5% per transaction, plus a fixed fee of 10 to 30 cents per sale. However, many small businesses start with the flat-rate pricing model, where the average in-person fee is around 2.6% per transaction and 2.9% for online payments. Companies that process over $10,000 monthly or negotiate rates through the interchange-plus pricing structure may pay lower processing fees.
Meanwhile, higher fees may apply to:
- Certain types of online payments, such as text-to-pay.
- Manually keyed-in payments, called card-not-present (CNP) transactions.
- Subscription billing and card-on-file payments.
- High-risk industries or companies with frequent chargebacks.
Factors that affect credit card processing rates
When getting quotes from payment processing providers, it helps to know what factors may influence your rates. You can also use this information to reduce your credit card processing fees as your business grows.
Payment processing costs vary based on the following factors:
- Transaction volumes: The interchange-plus pricing model typically offers lower rates to companies processing over $10,000 monthly.
- Business type: Some industries are more prone to fraud or other risks, which can increase credit card processing costs.
- Payment method: Most processors charge different rates for CNP transactions, like online or keyed-in payments versus in-person sales
- Card type: With interchange-plus pricing, all credit cards have different rates. A rewards or corporate card might have a higher fee than a debit card.
- Contract length: Some processors offer reduced processing rates for long-term contracts, but you lose your negotiating ability.
- Chargeback rates: If your business incurs many chargebacks, your transaction fees can increase as you pose a higher risk to the processor.
Credit card processing models: flat rate vs. interchange and more
A credit card processing model is how a payment processor charges your company for accepting electronic payments. Each pricing structure has pros and cons, so choosing the right one depends on how often you process payments, how your business operates, and what’s most cost-effective for you. Here’s a breakdown of the four main pricing structures.
Flat-rate pricing model
Flat-rate pricing is straightforward, like a subscription streaming service. You pay a fixed percentage per transaction, regardless of card type. For instance, purchases through your online store cost 2.9% plus 30 cents, no matter what.
- Pros: The predictable fees make it easier to budget processing costs, and most flat-rate pricing models don’t have extra fees because all expenses are bundled into the flat rate.
- Cons: Higher percentage-based fees are less cost-effective for companies that sell expensive products or services or those with many monthly transactions.
- Best for: Small businesses, freelancers, and startups with small transaction volumes or infrequent sales.
Interchange-plus pricing structure
Interchange-plus pricing is more transparent than flat-rate credit card processing structures because you can see exactly what you’re paying per transaction. You pay the actual cost from the card network (the interchange rate from Visa or Mastercard) plus a fixed markup from your processor. For example, an EMV chip card might cost the interchange fee plus 0.3% per transaction.
- Pros: You have more negotiating power and can reduce fees as processing volumes increase. The customer card usage data can help inform your payment strategies.
- Cons: Interchange fees vary widely, making budgeting more challenging, and merchant accounts with interchange-plus pricing may have different statement fees.
- Best for: Established companies with consistent sales or higher transaction volumes, and anyone wanting more pricing transparency.
Subscription-based model
Subscription pricing is like having a warehouse club membership. You pay a monthly fee in exchange for wholesale interchange rates without processor markups or ultra-low processor fees.
- Pros: It can eliminate or significantly reduce the processor’s fees, and there’s less pressure to negotiate rates continually.
- Cons: Business owners must evaluate transaction volumes and costs to ensure ongoing savings, especially if seasonal fluctuations occur.
- Best for: Companies with consistently high processing volumes.
Tiered-pricing structure
Tiered pricing is an unpredictable, less common pricing model that bases processing rates on the card type, card network, payment method, and the merchant’s financial profile. Transactions fall into three categories: qualified, mid-qualified, and nonqualified.
- Pros: Tiered pricing can offer competitive rates for certain card types, which is helpful for merchants in some industries.
- Cons: This model is less transparent and more risky than others, and less qualified businesses may have more transactions that fall into nonqualified categories.
- Best for: Established companies that process many debit and non-reward cards.
What to look for in credit card processors for a small business
Understanding your needs (and what your customers want) can help you find affordable credit card processing solutions that are convenient, scalable, and reliable. Here are the payment system features to consider when choosing a credit card processor.
Accepted payment methods
Consider what type of payment methods your customers use and find payment processing companies offering these options. The top credit card processors accept all major credit cards, including Visa, Mastercard, American Express, and Discover. Many also support mobile wallets, known as contactless payment solutions, like Apple Pay or Google Pay.
If you invoice your clients, look for low-cost merchant services offering electronic payment processing methods like ACH (Automated Clearing House). Alternatively, if you sell high-ticket items or want additional payment solutions to improve cash flow, some processors provide buy now, pay later (BNPL) or installment payment options.
Supported sales channels
Choose a credit card processor that helps you accept payments from anywhere your customers shop and pay. Convenient credit card processing tools and payment system features let you expand to new channels or offer customers alternatives without switching to a different processing provider.
Small business payment processing options include the following:
- In-person: POS systems, mobile payment apps, stand-alone card readers, or payment terminals.
- Phone payments: Virtual terminal services for manually entered transactions.
- Invoices: One-time and recurring billing solutions.
- Text-to-pay and QR codes: Pay links, QR codes, and SMS for contactless checkouts.
- Online payments: Hosted payment pages, checkout carts, and paid or free payment gateways.
Many credit card processors have online applications with near-instant approval times, allowing small businesses to take customer payments almost immediately.
Integration with accounting software and existing systems
Plug-and-play integrations streamline your setup process, and connected systems mean less manual effort all around. The best credit card processors provide no-code setup and detailed guides for integrating accounting software, e-commerce platforms, and POS systems.
Assistance with chargebacks and disputes
Managing chargebacks helps reduce costs, retain customers, and protect your brand reputation. Merchant account providers typically offer more control over the dispute and chargeback process. On the other hand, third-party processors often handle disputes on your behalf but may have stricter policies. Look for credit card processors with clear guidelines, ample resources, and online dispute portals.
Security and fraud prevention tools for merchants
Protect your business and help keep processing costs low by partnering with payment processors that meet industry standards for Payment Card Industry Data Security Standard (PCI DSS). The best credit card processing companies provide resources or handle PCI requirements for you.
Basic and advanced fraud prevention tools for merchants like CVV (card verification value), AVS (address verification service), and encryption can reduce chargebacks and fraudulent purchases. High-risk merchants can add fraud detection tools like 3D Secure (3DS) authentication to limit risks when selling online or internationally.
Credit card processing equipment: POS systems, terminals, and mobile readers
The cheapest way to accept credit card payments in person is usually through an EMV (Europay, MasterCard, and Visa) card reader. Through payment processors or third parties, you can buy or lease credit card machines, mobile readers, or POS systems.
Here’s what to look for when evaluating credit card processing services:
- Does the processor offer a free mobile credit card reader?
- Do mobile card readers and terminals support chip, tap, and swipe payments?
- Are the credit card machines compatible with your POS system?
- Can existing terminals be reprogrammed?
- What are the contract terms for hardware?
Real-time dashboards, data analytics, and reporting
Small businesses can track payment trends to enhance sales strategies and reduce fraud. Consider top credit card processors offering real-time access to transaction reports and dashboards for monitoring chargebacks, refunds, and sales patterns. Your provider should make it easy to download reports for tax and accounting purposes.
Customer support in payment processors
The quality and availability of customer support from your credit card processor affect your small business and your clients. When customers are frustrated because a refund hasn’t been returned to their account, you need answers fast. Likewise, you must reach a live customer support agent if your payment processing equipment doesn’t work or next-day deposits haven’t come through.
Look for credit card processing companies that offer ample customer support availability through phone, live chat, and email or ticketing. Check out user reviews and test response times before signing up with a payment processing service.
International payments and multicurrency processing
Many small business payment processing solutions allow you to accept major credit cards from most international locations. However, if you’re considering expanding globally, consider choosing processors that support multicurrency transactions and region-specific payment methods. Review foreign transaction fees and currency conversion costs to understand how international processing fees differ.
Additional payment system features and considerations
Modern credit card processing services now offer advanced financial technology tools that streamline payment processing, helping small businesses improve checkout experiences and increase sales. Partnering with a payment processor or merchant account provider can provide many benefits beyond basic credit card processing.
Consider these factors when researching credit card payment processing solutions:
- Ease of use: Employees and customers use your payment processing services. The user interfaces, checkout features, and administrative tools should be easy to navigate.
- Scalability: As your company expands, your processor should accommodate additional sales channels, payment methods, and higher transaction volumes.
- Payment system features: Advanced analytics, built-in POS software, and subscription tools can help contractors and small businesses run leaner until they need stand-alone solutions.
- Reputation: Check how the processor handles customer support, disputes, security, and funding. Look for reliable, secure payment system providers.
- Contracts: Review agreements for processing services and hardware. Small businesses may benefit from month-to-month solutions over agreements with high termination fees.
How do you start using a credit card processor?
Credit card processing solutions exist for anyone who wants to accept credit card payments by phone, in QuickBooks, or through traditional methods. Indeed, many credit card processors have online applications with near-instant approval times, allowing small businesses to take customer payments almost immediately. Take the following steps to choose, sign up, and configure your payment processing services.
Choose the best credit card processor for your needs
Start with a thorough understanding of your transaction volumes, customer preferences, and integration needs. Next, compare payment system features and processing fees to choose the right payment processing company.
When gathering information about merchant services and payment processors, consider the following:
- Use an interchange-plus pricing calculator to estimate your processing costs.
- Confirm the processor is reputable before sharing personal information.
- Ask if the credit card processor can calculate processing costs based on your transaction data.
- Request samples of a payment processing agreement and monthly statement.
- Verify that payment processing tools integrate with accounting, POS, and e-commerce platforms.
Apply for a credit processing or merchant account
If you process less than $10,000 monthly and want to start with a third-party processor, you can sign up online with basic business information. Most accounts are approved instantly. To apply for a merchant account, you must provide additional details and submit an application. The approval timeline varies, but the top credit card processors usually finish the underwriting process within a few days.
Set up your payment processing tools
Many processors offer onboarding guides and tools with step-by-step instructions for setting up your systems. In most cases, you’ll begin by downloading payment apps for your smartphone so you can monitor transactions. Next, configure your online processing account, sales channels, and integrations.
Review your security and compliance settings
PCI-compliant credit card processing solutions often provide a checklist and resources to help merchants get started with PCI compliance and security. Look over the provider’s fraud prevention guidelines to see if you need to enable CVV verification, AVS, or 3DS manually. Now is also a great time to review your processor’s chargeback management tools and update your return policies and credit card authorization forms.
Start accepting payments and monitoring processing systems
With everything set up, you can test your system to ensure it works and begin promoting your new payment methods. Review your payment processor’s performance to ensure checkout processes run smoothly, deposits hit your account quickly, and hidden fees don’t appear on your statements.
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