Credit Card Processor Selection Guide for Small Businesses

Cash is no longer important to most shoppers when it comes to spending money. The majority of consumers prefer to use debit or credit cards for purchases. This means being able to accept these forms of payment is important for businesses today.

This guide explains how to choose the best credit card processor among the many options available on the market, including cost, processor type, and factors to consider.

What is credit card processing?

When a customer makes a purchase with a debit or credit card, the processor acts as an intermediary between the customer’s bank account and the merchant’s bank account. Although this process takes only a few minutes, it involves a complex series of steps between the credit card processor, the customer’s and merchant’s respective banks, and the credit card network. A credit card processor’s role includes verifying security, routing transactions, and acting as a clearing house for funds.

Who needs credit card processing?

Given that the majority of consumer purchases are made with debit and credit cards (and a decreasing proportion are made with cash), the majority of small businesses offer their customers a way to pay by card. need to do it. Most credit card processors offer several ways to accept payments. Consider a real-world credit card usage example.

• Brick-and-mortar convenience stores must use full-service cash registers to accept credit card payments by swipe, tip, or tap.
• Restaurant servers can use handheld point-of-sale (POS) terminals to accept card payments instantly at customers’ tables.
• E-commerce stores must have the ability to accept credit card information through online forms and checkout technology.
• Restaurants that take orders over the phone need a virtual terminal to manually enter credit card payment details.
• Small business owners at venues such as craft markets and trade shows can use card readers paired with mobile devices to accept payments on the go.

How much does it cost to process a credit card?

It’s important to understand the difference in pricing between credit card processing and other types of business services. The majority of credit card processors use either interchange-plus pricing or flat-rate processing, or a combination of both.

With interchange-plus pricing, the credit card processor takes a small percentage of each sale and charges a small fixed fee. The percentage of transactions varies from approximately 0.29% to more than 3.5%. Fixed fees can be as little as a few cents or increase to 25 cents or more. For some companies, this pricing structure is advantageous because there are no upfront costs. However, it can be difficult to implement in businesses with low profit margins.

Flat pricing, on the other hand, requires you to pay a fixed monthly subscription fee for unlimited credit card transactions. While this model eliminates concerns about credit card processors squeezing revenue, the high monthly fees can create financial challenges for startups. Flat fees typically range from $59 to $199 per month, and there are often high fixed fees per transaction.

Additionally, some credit card processors impose incidental and recurring fees, such as Payment Card Industry (PCI) compliance fees, payment gateway fees, network fees, monthly minimum fees, and statement fees. Business owners are strongly advised to carefully check the terms and conditions before engaging a processor.

Additionally, it’s important to note that accepting credit cards via swipe, tap, or chip methods requires specialized POS hardware. Some credit card processors offer free hardware, but this usually requires entering into a contractual agreement. Also note that certain processors offer their own POS equipment for purchase, while others rely on third-party vendors for equipment.

What are the benefits of credit card processing?

The main benefit of accepting credit cards is that it has a significant positive effect on sales. Most purchases are made using cards, and consumers are increasingly becoming cashless. For businesses that primarily operate online, the ability to accept credit cards is an absolute necessity. Beyond the obvious, credit card processing has many other benefits.

• Improved safety: Many businesses have completely eliminated cash payments and only accept card payments. This removes the incentive for criminals to target your business during a robbery, protecting your customers and employees.
• More efficiency: Busy small businesses like restaurants can process more sales without having to worry about cash payments or change.
• Better data management: Most credit card processors include software that collects and organizes transaction data. Gain insight into your business by generating easy-to-understand reports and summaries of your sales data.
• Streamlined accounting: Some credit card processors integrate directly with popular accounting software programs like QuickBooks and Xero, making it easy to import your data.
• Pay anywhere: Credit card processing allows you to accept payments remotely via emailed links, quick response (QR) codes, hosted web pages, and more.

What types of credit card processing equipment are there?

To accept credit cards, you need a device or program to enter credit card information at the POS. Both physical devices and digital solutions are available.

• Mobile reader: These devices pair with your smartphone, so you can accept payments on the go.
• handy terminal: Handheld terminals, often used in restaurants, are self-contained devices that print receipts.
• register: These fixed POS devices are located at the checkout or behind the restaurant counter. These are usually the most expensive option for business owners, but they are also packed with the most features.
• Virtual terminal: Virtual terminals allow you to manually enter credit card information into credit card processing apps.
• Online checkout: E-commerce customers use checkout forms to enter credit card information for online purchases.

What are the main features to look out for in credit card processing?

No matter which processor you choose, it should have some important features. Card acceptance, security, hardware options, and basic POS tools are some features to look for during your search.

We accept any brand.

Make sure your credit card processor works with all major card brands, including Discover and American Express. This will ensure you don’t miss out on sales or frustrate your customers.

PCI compliant.

Credit card processors must be fully compliant with PCI data security standards, which helps maintain PCI compliance.

EMV compliant.

EMV-compliant card readers can help reduce your vulnerability to fraud and protect your business from liability in the event of a security breach.

Hardware options.

Make sure your credit card processor’s software works with the type of equipment you need to accept payments.

POS tools.

Most credit card processors include basic POS software. If you do not plan to purchase another he POS system, you should carefully check what features are included as part of the processor’s software.

What factors should I consider when choosing a credit card processor?

In addition to the above criteria, consider several other important factors when choosing a credit card processor, such as pricing, ease of use, third-party integrations, customer service, and features such as mobile apps. is needed.

Pricing.

Estimate how much monthly revenue your business generates and use that number to evaluate which pricing model makes the most economic sense. Whether you choose a processor that follows an interchange-plus pricing model or a flat-rate model depends on your profit margins and sales volume.

ease of use.

The best credit card processors have sleek, modern user interfaces (UIs) that are easy to learn and operate. If you accept direct payments, make sure your POS hardware is easy to use. The best equipment is plug-and-play and can accept credit cards right away. On the e-commerce side, we make sure the processor’s software is compatible with the existing technology stack to facilitate integration.

Third Party Integrations.

Some credit card processing software programs integrate with accounting, POS, human resources, and other business productivity software. Make a list of the apps you use for your business and check compatibility. Some processors also have open application programming interfaces that allow you to build custom solutions.

customer service.

Credit card processors vary widely in terms of customer service. While some user review sites stand out by offering top-notch technical support, others have low scores. Good customer service often offers 24/7 phone support and a dedicated account manager. Other options include live chat and email support. If being able to contact your company at any time is important to you, make sure your customer support options reflect that.

Additional features.

Many credit card processors specialize in servicing certain types of businesses. Some companies focus on providing tools for retail stores and restaurants, while others specialize in e-commerce businesses. Business owners who want to work on the go should make sure their processor offers a dedicated mobile app. When reading about the features of a credit card processor, think about what your business needs.

Who are the top credit card processor vendors?

Clover

Clover offers a variety of pricing plans for different industries, especially restaurants, retail stores, and reservation-based businesses. The company is best known for its wide range of POS hardware, including mobile readers, handheld terminals, and registers. Clover’s POS software integrates with over 500 third-party apps.

merchant one

Merchant One customizes plans to fit your individual business needs and provides highly rated customer service. With a low monthly subscription fee of $6.95 and integration with over 175 online shopping carts, we offer a cost-effective solution.

professional merchant

ProMerchant provides a fair deal to businesses that struggle to secure credit card processing services. The company stands out for its excellent customer support, which includes dedicated account representatives. ProMerchant’s willingness to work with all industries, including those with low credit scores, makes it a great choice for high-risk businesses.

Stax

Stax offers a subscription-based model where you don’t take a cut of the revenue, making it especially suitable for large businesses. With compatibility with a variety of POS hardware options and a mobile app for on-the-go transactions, Stax also offers great flexibility.

payment depot

Payment Depot’s membership-based model is ideal for businesses that want to avoid high processing speeds. Prices range from $59 to $99 per month, and Payment Depot doesn’t take a cut of your business’ sales. The company works with his SwipeSimple for its software needs and is compatible with many third-party POS device manufacturers.

tracking

Chase, one of the nation’s largest banks, leverages its vast treasure trove of credit card data to provide insights to business owners. Chase allows you to better target your customers using data such as demographics and purchasing habits. Chase also includes payment solutions for healthcare businesses that pay quickly, sync with financial services, and are Health Insurance Portability and Accountability Act compliant.

Helsim

Helcim’s comprehensive platform includes an intuitive UI, diverse payment options, and no contracts or monthly fees. Integration with third-party devices gives you flexibility as your business grows.

PayPal

PayPal’s brand name is widely recognized and trusted, providing a plug-and-play solution for online transactions. PayPal greatly simplifies the online payment process with a variety of ways for customers to send money and integration with popular business apps.