Do You Really Know About Credit Card Processing? U S. Small Business Administration


Certain types of transactions can cost more and it’s not easily transparent how much or which types of transactions are burdened with these price hikes. Credit card processing simply describes your ability to accept credit cards. This is usually done through a processing provider that works with credit card companies to pay interchange rates and stay PCI compliant. The largest credit card processing companies in the United States are direct processors such as Fiserv , Global Payments, and FIS Worldpay.


She also wrote a syndicated column about millennials and how to log in as an accountant, and covered personal loans and consumer credit and debt. Amrita has a master’s degree in journalism from the University ofMissouri. Requires a long-term contract, and there are early termination fees . Diverse selection of hardware to flex to your business needs. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.

Clover: Best for Physical Businesses

Square keeps things simple for business owners with flat credit card processing rates based on the type of sale, regardless of the credit card used. Square also doesn’t charge any startup, refund, cancellation or PCI-compliance fees. Funds from transactions are available in one to two business days or instantly for a 1.5% fee per transfer. Payment service providers group card transactions from multiple companies into a merchant account and then transfer funds to the appropriate business. Setup is significantly faster than with a merchant account provider because the upfront vetting process is less rigorous. However, a business generally has less control when compared with a merchant account and may face more ongoing scrutiny by the payment service provider over transactions.

However, these providers typically have higher flat-rate processing fees that can cost more compared to processors that combine monthly fees with lower rates. We gave preference to credit card processing companies with no or low monthly fees and transparent payment processing fees. Providers with high monthly fees were considered if they offered very low processing fees or added value with sales and business management tools, such as POS systems and online stores. Credit card processing fees typically range between 1.5% and 3.5% per transaction. For example, on a $100 sale, a business could pay $1.50 to $3.50 in credit card processing fees.

These types of accounts require underwriting to approve you as a client. They will thoroughly review your business to determine how risky you are. Oftentimes, they only want to work with established businesses with a history of steady sales. If you’re a new or small business with processing less than $5,000 a month, Square is the best option. It has simple flat-rate pricing and you can get set up quickly. 71% of consumers prefer to pay with a debit card or credit card.

Choose a plan, complete the application and start processing. However, is perhaps more famous for its merchant account gateway, and while that option retains the monthly fee, transaction fees are reduced in a big way if you go this route. Note that once you sign up for a merchant account you will be charged for it – whether you are actively using it or not.

Offers several good integrations for accounting, online selling and shopping carts. Includes access to a free virtual terminal and online reporting. Brian has over 30 years publishing experience as a writer and editor across a range of computing, technology, and marketing titles. He has been interviewed multiple times for the BBC and been a speaker at international conferences.

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Payment Depot’s rates make it a cost-efficient option to consider if you are a medium- or high-volume merchant. There are various fees, such as a monthly fee on top of processing fees, plus other fees for additional features if you require them. It’s a good idea to head to the PaySimple website and look up their Starter pricing page, as well as the more expensive Standard pricing pages.

QuickBooks Payments

Our top pick is Square because of its abundance of small-business functionality at a great price. There are hundreds of payment processing companies, so to make your job easier, we’ve rounded up seven of the best payment processing companies operating today. Once authenticated, the merchant’s system receives the approval message and finalizes the transaction. A temporary hold is placed on the funds in the customer’s account for the transaction amount. Afterward, the processor/acquiring bank communicates with the issuing bank to collect the funds from the customer and deposit them into the merchant’s bank account.


Also called contactless payments, NFC technology allows customers to pay with smartphones and other devices using software like Apple Pay and Google Pay. An increase in sales volume occurs because more payment options will be available to your clients. is a leading authority on technology, delivering lab-based, independent reviews of the latest products and services. Our expert industry analysis and practical solutions help you make better buying decisions and get more from technology.

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Merchants can accept credit card transactions in person or online. Another category of transactions, mobile payments, has become more popular in recent years as wireless terminals and mobile card readers have enabled businesses to accept payments anywhere. Interchange refers to the fees assessed by the credit card company every time a transaction is made. Processing companies pay these fees to credit card companies on your behalf.

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Try it today and find out how it can save you time and money. Determining eligibility, calculating, and claiming the ERC can be overwhelming, but it’s worth the time and effort. Small business owners, just like you, are putting thousands of dollars back into their pockets by claiming this tax credit. And if the task seems too burdensome, there are plenty of tax pros and financial experts ready to help you claim the money you’re owed. The address of where you mail your IRS form depends on the state in which you are located.

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It’s also one of the few merchant services providers that includes free web hosting for eCommerce businesses as a standard account feature. Increased pricing is one way to increase income to help cover fees. Passing the fee to the customer using a “convenience fee” upcharge is becoming popular now that more credit card processing companies offer this service. Statistics show this works well in retail store settings where merchants can offer a cash discount option at checkout. Flat-rate pricing can be a good option for businesses with low average transaction amounts, especially when considering free perks such as POS systems, online gateways and card readers. However, higher-volume sellers can save on credit card processing costs with interchange-plus or tiered pricing.

To find the right credit card payment processor for you, don’t only look at the cost. You want to find a company with the best processing fees while providing the services you need. As more stores add mobile options, you may have kiosks or mobile payment devices available in your store, along with a card terminal at your checkout counter. Since 2010, Stripe has been a top-rated online payment service provider. With flat rates and plenty of ways to customize, Stripe easily wins the category for best e-commerce processors.


You’ll enjoy true month-to-month billing, exclusive interchange-plus pricing, a minimum of account fees, and top-notch customer support. Be aware, however, that the company doesn’t recommend its services to businesses processing less than $10,000/month and doesn’t accept high-risk merchants. Host Merchant Services offers a robust variety of proprietary and third-party services for just about any business. The company fully discloses its pricing on its website, eliminating the need to negotiate these terms when setting up your account. Host’s transparent interchange-plus pricing rates will save most high-volume businesses a significant amount of money if they use a Clover system. Prominent third-party features include the popular Authorize.Net payment gateway and the full line of Clover terminals and POS systems.

After plugging the total monthly cost into the formula, the effective rate is a whopping 4.2%. We compared features and tools such as built-in POS systems, software integrations, data exports, online invoicing and a reporting dashboard when making comparisons. Pricing varies by card type for manually keyed transactions. 3.5% plus 15 cents for manually keyed transactions or card-on-file invoices.

Clover POS has a range of options to choose from and gets consistently praised for offering simple to use but powerful hardware that just works. You can subsequently mate the kit with either a Clover merchant account or use one from a merchant services provider. Clover is also sold by the likes of Bank of America, BBVA, Citi, PNC, SunTrust and Wells Fargo.

As we mentioned, interchange fees are fixed by the credit card companies and all processors pay the same amount. However, different types of cards can have higher fees, such as corporate cards and the more exclusive rewards cards. Another unavoidable fee is chargebacks, which vary from processor to processor. When a customer or credit card company reports a potentially fraudulent charge, the processor must manually verify the fraud and arbitrate between the merchant and the credit company. A virtual terminal is a software application that turns your computer into a credit card terminal. Mail order and phone ordering businesses use them to manually enter their customers’ credit card data.

But with a myriad of payment options hitting the market, deciding which service will serve you best is difficult. Until just a few years ago, retail merchants relied on monthly paper statements to track their transactions, with any data analysis done manually by the business owner. Today, almost every provider offers a cloud-based online dashboard that allows you to track sales data in real time. Even a retail-only business without a website or online sales channel can benefit from this service. With cash payments declining in popularity and more people using credit and debit cards than ever before, it is essential for most businesses today to accept these types of payments.

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