Whatever business you might be into, the ability to accept card payments is a must today. Cash has been on the decline for years and currently accounts for only 32% of all payments in the US. Now seen as germ-ridden in the face of COVID, we can only expect the trend toward contactless payment methods (NFC) and credit cards to increase.
But, when it comes to choosing a credit card processing solution, the choice isn’t quite easy for small business owners. There are many options out there. But you need to choose one that best fits your business needs and scope while looking out for hidden fees and markups.
To help you with that, we’ve put together this handy guide to choosing the right payment processor for your small business. So, let’s get started.
How to choose credit card processing services for small businesses
Credit card payment processors charge in a few different ways. The size of your business, the merchant services on offer, and your most common transaction type will determine which merchant services providers are likely to suit you best.
The primary EMV brands (those with chips) are Mastercard, Visa, and Discover. All of these usually fit under the same interchange rate, while American Express often charges a higher fee.
Here are the things you need to consider before you start looking at your options:
Rates, fees, and equipment costs
Exorbitant rates and processing fees can bury small businesses. So, make sure to check the rates and fees on offer. You should also make sure that there are no hidden costs involved. Finally, check for any chargeback fees.
If you have an ecommerce business, you’ll need a virtual terminal or a payment gateway like Authorize.net to accept payments. For in-store payments, you can choose between a point-of-sale system (POS) or a credit card terminal.
So, when it comes to equipment, consider what you really need from your payment services provider. Does a mobile app do the trick, or do you need one of their credit card terminals, mobile devices, or other POS payment systems? Make sure the functionality suits your needs and check for ongoing costs like upgrades.
Transparency and hidden charges
Always look for a payment provider that offers transparent pricing. If you can’t understand their fee structure, steer clear of them.
Contracts or commitments
Check how you will receive money in your bank account. How many business days will the processing take? Also, check if you’re able to make changes to your contact as you grow.
You also want to be aware of your commitments. Always take your contracts seriously and look for flexible providers.
Safety, security, and reputation
All transactions made electronically come with a level of risk. Do not transact with any payment processor that doesn’t meet PCI compliance. This will protect your transactions and your business. If you’re unsure of their reputation, read a few reviews and what customers have said about them.
The best credit card processing companies for small businesses
When it comes to choosing the right payment processor for your business, you must consider your business size, scope, and needs. Here are our top picks for the best credit card payment processors that operate within the small business space.
1. Payment Depot
Payment Depot is a subscription-based credit card processor designed for small businesses. We bring low costs to small businesses by offering a clearly defined wholesale pricing model.
Payment Depot is an omnichannel payment processor. We offer transparent interchange plus pricing, making it easier to predict monthly charges.
We’re also super flexible. There are no lengthy contracts and no early termination fees.
Best suited for
Established and growing small businesses.
Costs, equipment, and terms
At Payment Depot, we offer a range of terminals, including countertop payment terminals, mobile credit card machines, and more. This equipment is not proprietary, so even if you cancel with Payment Depot, you can continue to use the equipment. You can also reprogram their existing equipment at no cost. Here’s a partial list of the payment terminals and equipment you can use with Payment Depot.
Getting started
Contact our Payment Depot team to explore their plans and check which option is best for your business.
2. PayPal
PayPal is undoubtedly the most familiar brand for online payments. It has more than 346 million customers and is trusted by individuals and businesses across the globe. It’s also the owner of Venmo, so it’s fair to assume that most Americans have a PayPal account.
As it’s already widely used by individuals, PayPal is an attractive solution for businesses wanting to accept payments online.
Best suited for
Online businesses, nonprofits.
Costs, equipment, and terms
For credit card processing payments, PayPal charges a base rate of 2.9% + $0.30 per transaction. Depending on where in the world your payments are coming from, these fees can differ.
Businesses simply need a merchant account, and customers can use their PayPal account or a debit or credit card. For ecommerce sites, you will just need to check whether PayPal checkout is compatible with your site or not. This can be confirmed through your shopping cart provider or ecommerce platform.
There are no monthly fees or contracts to use PayPal.
Getting started
Check their fees and simply sign up to start accepting payments through PayPal.
Final verdict
PayPal has a strong reputation and offers easy setup besides accepting international transactions. But, it has very limited customer service solutions. It also turns out to be quite costly for high transaction volumes.
3. Stripe
Stripe is an online payment service provider that suits both card-present and online solutions. They have hundreds of features and integrations making them an excellent option for ecommerce merchants.
Best suited for
Ecommerce businesses.
Costs, equipment, and terms
Stripe offers flat rates for credit card transactions and digital payments. For in-person payments, it’s 2.7% + 5 cents per transaction. For local payments from both debit and credit cards, it’s 2.9% + 30 cents per transaction. ACH debit transfers are at 0.8% with a $5 cap.
If you need equipment, Stripe has mobile credit card readers available. Prices range between $59 to $299. They also offer a range of business solutions, including Stripe Billing, Stripe Connect, Stripe Sigma, etc.
As they only charge per transaction, there are no monthly fees and no minimum volumes. If businesses bring in more than $100,000 per month, they offer custom pricing to reduce the rates.
Getting started
Visit the Stripe website to check out which solutions best suit your business.
Final verdict
Stripe offers a number of benefits for small businesses. It accepts mobile wallet payments and offers hundreds of business software integrations besides online security. But, payments can be slow for high-risk businesses and their phone support is only available by request. Also, funds can be withheld if any fraudulent activity is suspected.
4. Helcim
Helcim is an omnichannel payment processor helping small businesses and retailers accept debit and credit card payments. They have solutions that cover in-person payments, virtual terminals, invoicing, online stores, and recurring payments.
Best suited for
Established small businesses.
Costs, equipment, and terms
They have just one plan which comes in at $20 per month, plus interchange-plus pricing. These fees change depending on the transaction volume and whether the transaction was in-person, keyed, or online. You can find the full fee structure here. With these fees, Helcim rewards higher transaction volumes.
If you need equipment, Helcim has a card reader for $299. Otherwise, you can access their wide range of software to accept payments.
What’s great about their terms is that they waive your monthly fee automatically if you don’t process a payment that month.
Helcim has no binding contracts.
Getting started
Visit the Helcim website to check out their interchange-plus rates and then simply sign up online.
Final verdict
Helcim offers easy online signup, strong support, and volume-based discounts. But, it offers only one plan and hardware option which might not be suitable for every business.
5. QuickBooks Payments
QuickBooks Payments is a payment gateway that was designed to complement the QuickBooks accounting software.
QuickBooks Payments allows small businesses to accept credit and debit payments in-store and online. If you use it on its own, this can be done through your ecommerce site. Alternatively, those using QuickBooks accounting software can send invoices to your customers through this solution.
Best suited for
Small businesses using QuickBooks.
Costs, equipment, and terms
QuickBooks Payments offers a few different options, including a pay-as-you-go $0 membership and a $20 monthly membership which gives you lower rates in exchange for the membership.
If you go for the pay-as-you-go option, QuickBooks Payments charges a 2.4% swipe fee, 3.5% keyed rate, and 30 cent transaction fee. The $20 monthly subscription will reduce these to a 1.6% swipe fee, 3.3% keyed rate, but the 30 cent transaction fee remains.
When you sign up for QuickBooks Payments, you get a free QuickBooks Chip and Magstripe Card Reader that accepts everything but mobile payments. If you need mobile payments (Apple Pay and similar wallet payment options), you can purchase their $49 reader. Once you sign up, you have access to all of their software solutions.
QuickBooks Payments doesn’t charge anything upfront (unless you need the all-in-one reader), and they have no termination fees.
Getting started
Visit their website to check which solution works best for your business and go through the setup prompts.
Final verdict
QuickBooks Payments has a wide range of integrations and complements QuickBooks accounting software. But, they offer online support rather than phone support.
6. Shopify Payments
Shopify is one of the most recognized brands in the ecommerce world. Their range of solutions literally takes businesses from startup to payment processing. And they also offer in-store POS.
A software platform first and then a hardware provider, they have a wide range of integrated solutions to help small businesses accept debit and credit card payments.
Best suited for
Ecommerce businesses.
Costs, equipment, and terms
Shopify offers basic plans starting at $29 per month to advanced ones at $299 per month. All plans come with fraud analysis to keep your payments safe. Plus, the higher your plan, the cheaper the rates.
The Basic charges 2.9% for online credit card transactions + 30 cents. In-person then attracts 2.7% and 0 cents. The Advanced then charges 2.4% + 30 cents for online transactions. In-person credit card rates are 2.4% with 0 cents.
If you need hardware, they have a range of POS systems. But, they’re best known for their online solutions for ecommerce platforms.
They also have no early termination fee.
Getting started
Visit the Shopify Payments site to look at their plans and integrations. Then simply sign up for a trial or go all in and get started.
Final verdict
Shopify Payments offers a wide range of integrations and accepts multiple currencies. But, their solution is best suited for ecommerce sites.
Final verdict
Payment Depot offers a high degree of transparency and flexibility. We allow the use of non-proprietary equipment and offer online processing fees that are the same as in-person. Plus, our wholesale pricing can help small businesses save more than $800 a month in credit card processing fees.
7. Square
Square was one of the first companies to transform mobile phones into point-of-sale credit card readers. Today, they offer a range of software and hardware solutions depending on your business needs. Through their suite of products, Square covers payroll and terminal needs.
Best suited for
Startups and small businesses.
Costs, equipment, and terms
Square’s pricing is pretty straightforward in that it only charges per transaction. No membership fees or other costs. Transaction fees are 2.6% for in-person taps, swipes, or dips. And 3.5% + 15 cents for keyed-in transactions which account for online and over-the-phone purchases.
All customers get access to their free POS app, virtual terminal, online store, and invoicing software. They also have a range of readers you can choose from. The cheapest one comes at $49, accepting contactless (NFC) and chipped cards. The most robust equipment, the Square Register, sells for $799 plus 2.6% and 10 cents per transaction.
Because they only charge per transaction, there is no cost for businesses who stop processing payments through Square.
Getting started
Visit their website to explore plans, software, and hardware. Then check which option is best for your business.
Final verdict
Square offers easy setup, flat-rate pricing, and strong customer support. The software is compatible with both Android & iOS and can run in offline mode. But, its fees add up significantly for larger businesses and it only accepts the local currency.
Enjoy the card revolution
No matter the size of your small business, accepting debit cards and credit cards is a must. But, before you choose a payment processor, consider what your business needs to process payments with ease and meet your goals. Then, explore the credit card payment processors that offer the best solutions to help you get there.
Quick FAQs about Best Credit Card Payment Option
Q: What are the essential factors to consider when choosing a credit card payment processor for a small business?
To choose the right credit card payment processor, small businesses should consider transaction fees, monthly charges, types of accepted payments, the ease of integration with existing systems, and customer support. It’s also important to evaluate the transparency of the pricing structure, the security measures in place, and whether the processor meets PCI compliance standards.
Q: Why is accepting credit card payments important for small businesses?
Accepting credit card payments is crucial for small businesses as it caters to customer preferences, enhances cash flow, and increases sales. With the decline of cash usage and the rise of contactless payments, providing multiple payment options can help small businesses stay competitive in the market.
Q: What are the different types of credit card processing fees small businesses should be aware of?
Small businesses should be aware of several types of fees, including transaction fees, monthly fees, chargeback fees, and potential hidden costs. It’s essential to read the terms carefully and choose a provider with transparent pricing to avoid unexpected expenses.
Q: How do transaction fees differ among credit card processing companies?
Transaction fees can vary widely among processors. Some charge a flat rate per transaction, while others offer interchange-plus pricing. The fees may also differ based on whether the transaction is in-person, online, or keyed. Comparing these fees based on your business’s specific needs is important.
Q: What equipment might a small business need from a credit card processor?
Depending on your business model, you might need a point-of-sale (POS) system, mobile credit card readers, or virtual terminals. Some processors offer proprietary equipment, while others allow the use of non-proprietary devices. Consider what equipment best meets your operational requirements.
Q: Can small businesses negotiate rates with credit card processing companies?
Yes, some credit card processing companies are open to negotiating rates, especially if your business processes a high volume of transactions. It’s worthwhile to discuss your needs and see if the provider can offer a better deal tailored to your business.
Q: What is PCI compliance, and why is it important in credit card processing?
PCI compliance refers to the Payment Card Industry Data Security Standard (PCI DSS), which is a set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment. Compliance is crucial to protect your business and customers from data breaches and fraud.
Q: Are there credit card processing solutions that don’t require long-term contracts?
Yes, many credit card processing companies offer flexible terms without long-term contracts. Providers like Square, Stripe, and PayPal typically offer pay-as-you-go models that allow businesses to avoid lengthy commitments and termination fees.
Q: How can a small business ensure the security of credit card transactions?
To ensure transaction security, choose a payment processor that complies with PCI DSS standards, offers encryption, and provides fraud detection tools. Regularly review security protocols, train staff on handling data securely, and keep software and systems updated.
