Credit card processing companies, also known as credit card processors, payment processors, or CC processing companies, are companies that facilitate all your credit and debit card transactions. Credit card processor companies acts as an intermediary between your business and your customer’s credit card/debit card provider, enabling you to seamlessly and instantly collect payments.
Here’s how the top payment processors help you accept credit card payments:
The best credit card processing companies for small business make this happen in the blink of an eye.
Not all credit card processors for small business offer merchant services, but all merchant services providers offer credit card processing. A merchant services provider (MSPs) is an umbrella term for a company that offers services to merchants (businesses), including: credit card processing, business financing, gift card programs, loyalty programs, and website design. The terms ‘merchant services provider’ and ‘credit card processing company’ are used interchangeably, but it’s important to remember that credit card processing is only one of many services offered by MSPs.
If you’re the sort of business owner who enjoys the convenience of a one-stop shop, then the best payment processors for you may be ones also that offers a variety of merchant services. But if your main goal is to accept payments and pay the lowest credit card processing fees, then you can freely choose the best credit card processors without having to worry about whether they offer additional services.
Credit card processing fees can be complicated; the best credit card processing rates for small business depend on your type of business and sales volume. The most important fee to know about is the interchange fee, which is the fee you pay for each transaction. Depending on your credit card processing company, you could be subject to any number of other fees and charges. According to Square, one of the top credit card processors, the average cost of processing payments for an American business earning $10,000 to $250,000 in annual payments volume is between 2.87% to 4.35% per transaction.
Some credit card payment processing companies charge the interchange/transaction fee and little else, while others charge dozens of fees. There is no right or wrong. However, one thing is for sure: the best credit card processing for small business involves transparent fees and charges. Before locking yourself into an agreement with a credit card processing company, always read the fine print to be sure you know what you’re being charged. Obviously, the fee structure needs to suit your sales volume; the best payment processor for small business isn’t necessarily the same as for a large business. Whatever constitutes the lowest credit card processing fees for one business may not be lowest for another business.
Here are the main types of fees and rates to know about before running your own credit card processing rates comparison:
Interchange is a wholesale fee that accounts for most of the cost of processing credit card purchases. Technically speaking, each card provider (e.g. Mastercard, Visa) sets its own interchange fees. However, the best small business credit card processing companies charge the same interchange fee regardless of card provider, making it a lot easier for you to know what you’re paying. An interchange fee comprises two parts: a percentage of the transaction amount plus a flat fee, e.g. 2.5% + $0.10 per transaction. Additional fees apply for foreign currency transactions.
Some, but not all, credit card processor companies charge a flat monthly fee for using their services.
Some credit card processing services for small business charge a percentage of your estimated monthly sales volume, e.g., 0.1% of sales up to 1,000 sales, then 0.11% of the next 1,000 sales, etc.
To accept credit card payments, you need a physical terminal like a countertop register or mobile EMV. Your credit card company can sell or lease you the equipment, or you can purchase the equipment from a third party. Separate costs generally apply for leasing/buying bigger hardware. However, the best mobile credit card processing solutions involve a free mobile card reader that lets your customers chip, swipe or tap their card onto your mobile device.
If you don’t reach the minimum amount of annual transactions agreed to with the credit card processor, you may be charged an additional fee.
Even among the top credit card processors, you may find additional fees such as these:
Online payments are an important source of income for many businesses. Credit card processors facilitate online payments through what is known as a payment gateway or virtual terminal. The best online payment processing solutions securely encrypt the customer’s data and send it to the payment processor. At the back end, the process works the same as with physical credit or debit card transactions, all the way up to the issuing of a receipt to the customer.
Here are things to consider when looking for the best online credit card processing gateways:
Getting approved for credit card processing is straightforward. As long as you can show you’re a legitimate, lawful business, you shouldn’t have too much trouble opening an account. Charges generally depend on how much you earn each month or year. If you fail to make the amount agreed upon with company you choose for processing credit card transactions, then you may be subject to additional fees.
The one group that can have trouble getting approved for credit card processing is what’s known as high-risk merchants: businesses that typically have lots of chargebacks or that do business in multiple currencies.
High-risk merchants can include:
If you fall into this category, then you shouldn’t exclusively search for the best credit card processor for small business. What you actually need is a credit card processing company that caters to high-risk businesses. Many of the names on our list of credit card processing companies serve high-risk businesses. Note: this may mean you don’t receive the cheapest credit card processing rates.
Every business has different sales volumes and different needs, so it’s fair to say what counts as the best payment processing for one small business may not be the case for another business. If you run a small business, then your needs will naturally be different from a large bricks-and-mortar retailer. Which credit card processing is cheapest for small business? It varies, but the simple answer is one that charges low setup fees and doesn’t tie you into contracts with unrealistic monthly sales commitments.
Here are some things to look for when building your credit card processing comparison chart: