Updated June 2, 2024

Best Credit Card Processing for Small Business

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Explore top-rated small business credit card processors. Transparent pricing. Flexible terms. Outstanding features.

71% of consumers prefer to pay with a debit card or credit card.[1] As a small business owner, you're losing out on sales if you don't offer convenient ways to pay with card.

The best credit card processing company isn't just about getting the lowest fees. You also need to consider:

  • Your type and size of business
  • What features and tools you need
  • Quality of service


Before the detailed breakdown, here are the bottom-line recommendations for the best credit card processing companies for different business types.

  • 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.

  • If you're scaling your small business and it grows to a mid-volume business, you can opt for Chase Payment Solutions. They offer interchange-plus pricing for eligible transaction volumes.

  • If you're a high-volume business processing over $15,000 a month, use a subscription-based company like Payment Depot.

CreditDonkey PROCESS Rule: Pricing, Reliability, Options, Customer support, Ease of use, Security, Speed

The PROCESS rule helps businesses remember the key aspects to consider when choosing a credit card processing service:

  • Pricing: Ensure competitive and transparent pricing without hidden fees.
  • Reliability: Choose a service known for its reliability and uptime.
  • Options: Look for a variety of payment options and methods.
  • Customer support: Ensure there is strong customer support available.
  • Ease of use: The service should be user-friendly and easy to implement.
  • Security: Ensure robust security measures are in place to protect transactions.
  • Speed: Look for fast transaction processing times.

Keep reading to learn more in detail about these companies and our other top picks.

10+ Best Credit Card Processing for Small Businesses

What is the best payment processor?
Here are the best credit card processors for different businesses:

  1. Square for mobile credit card processing
  2. Chase Payment Solutions for scaling small businesses
  3. Dharma for $10,000+/month
  4. Payment Depot By Stax for $15,000+/month
  5. Stax Payments for $25,000+/month
  6. National Processing for restaurants & non-profits
  7. PayPal for accepting payPal & venmo
  8. Stripe for online businesses
  9. Clover for physical businesses
  10. Helcim for multi-channel businesses
  11. PaymentCloud for high-risk businesses

Square: Best for Small Mobile Businesses

With a free mobile card reader and simple flat-rate fees, Square is an easy and affordable option for new businesses. There's no approval process, so you can start accepting credit cards right away.

There is no contract or monthly fees. You only pay for what you process. If you don't have any sales that month, you don't pay anything. You can stop and go at any time.

That makes Square ideal for mobile shops or small businesses with sporadic sales (such as food trucks, seasonal sellers, market vendors, coffee shops, etc.).

Square also offers one of the most robust mobile POS apps. Even at the most basic level, it comes with tons of features to help run your business. Straight from the app, you can:

  • Accept swipe, chip, and contactless payments
  • Accept payments offline without Wi-Fi connection
  • Send custom invoices
  • Add tax and tip
  • Set discounts and issue refunds
  • Set installment plan for customers, but you're paid upfront
  • Manage customer database
  • Track employees and inventory
  • Get detailed reports and sales trends

  • Simple flat-rate pricing with no extra fees
  • Fast and easy to get started
  • Free mobile swipe reader
  • Great app with lots of features
  • Account holds and freezes
  • Poor customer service
  • Not for high-risk businesses

Square pricing:[2]

Swipe, chip, tap 2.6% + $.10
Online 2.9% + $0.30
Manual keyed-in 3.5% + 15¢

There are no other hidden fees. All accounts get a free virtual terminal, payment gateway, and online store. Square has no chargeback fees either.

The downside is that the processing fees can be high, especially if you have very small average ticket sizes. If your sales are usually $10, that's $0.36 in fees.

Square is an ideal entry-level option for new businesses. But as your business grows, a processor with a different pricing model will save you more money. Read on.

Square is a third-party payment services provider. This means you don't get your own dedicated merchant account. This makes it faster to get started, but there are some downsides, like risk of frozen funds. Learn more in our detailed guide on Square vs. merchant accounts.

Chase Payment Solutions: for Scaling Small Businesses

Chase Payment Solutions is a trusted and well-established merchant account provider. It can work with your business whether you're in the restaurant, retail, or e-commerce industry.

If you're a small business, you'll start with their flat-rate pricing. But what makes it convenient is that as you grow your transaction volume, you can be eligible for interchange-plus pricing.

This can lead to cheaper processing costs without having to switch providers. Also, your merchant account integrates with Authorize.net (payment gateway), which lets you accept U.S. and international payments.

Here are the other things you can do with Chase:

  • Accept payments from your mobile device (thru Chase Mobile app)
  • Take over the phone payments (thru Chase Virtual Terminal)
  • Take contactless payments and send payment links
  • Set up recurring billing for subscription services
  • Let customers save their payment and shipping information
  • Access same-day and next-day deposits with no extra charge (if you have a Chase Business Checking account)
  • Build or redesign your e-commerce website with BigCommerce integration

Pro tip: If you integrate your account with FreshBooks, you'll get 50% off this accounting and billing software. A BigCommerce integration will also get you a 15-day free trial.

  • Trusted by 5M businesses
  • Many branches and ATMs
  • Accept payments globally
  • Card readers and terminals available
  • Needs Chase Business Online to maximize the benefits
  • Relies on integrations for other features

Chase Payment Solutions pricing:[3][4]

In-person2.6% rate +10¢ per tap, dip and swiped transaction
Keyed-in3.5% rate +10¢ per keyed transaction
Online2.90% + 25¢ per eCommerce transaction and monthly fee starting at $9.95

If you're interested in interchange-plus pricing, you'll have to contact them and see if you meet their processing volume requirements.

For hardware options, here are what you can get with Chase:

Move 5000 (Credit card terminal)Starts at $40.95/month rental fee[5]
Desk 5000 (Credit card terminal)$28.95/month rental fee[6]
Mobile card reader$49.95[7]

Chase POS and Mobile apps are free to download.

Dharma Merchant Services: Best for $10k+ per month

Dharma charges some of the lowest credit card processing rates on the market. Compared to Payline, they offer lower processing fees. But they generally only work with larger businesses processing over $10,000 a month.

All accounts get the MX Merchant payment gateway, which also includes a virtual terminal, mobile processing, customer database, and reporting tools. It integrates with most major shopping carts.

  • Low interchange-plus pricing
  • No early termination fees
  • Gives back to charity
  • 2-day funding time
  • Usually only works with larger businesses
  • $49 account closure fee[8]

Dharma pricing:[9]

Storefront Interchange + 0.15% + $0.08
Restaurants Interchange + 0.15% + $0.08
Online Interchange + 0.20% + $0.11[10]
Monthly feeStarts at $15/month

Processing AMEX cards has a slightly higher markup. Dharma's fee for AMEX is 0.25% + $0.08 for in-person and 0.30% + $0.11 for online transactions.[11]

There are some fees for additional features. Invoicing and recurring billing is $10/month, and processing ACH transfers is $25/month. Other fees are clearly displayed on the website.

For very large businesses with over $100k/month in sales volume, Dharma offers a further discount.

Dharma is also known as a socially conscious company. Each year, it gives back to nonprofit organizations in the categories of social justice, education, environment, health, and animal welfare.

Payment Depot By Stax: Best for $15k+ per month

If you're consistently seeing five figure sales a month, a membership-based company like Payment Depot will be the most cost effective.

Compared to other subscription companies, Payment Depot has lower monthly costs. This makes it more accessible for smaller businesses making the leap to a subscription service.

On top of that, it only charges a low per-transaction fee with no added percentage markup.

All accounts get a free virtual terminal and payment gateway. Overall, Payment Depot offers a great balance of features and price.

  • Low transaction fees
  • No early termination fees
  • Different plans for different sized businesses
  • Next day funding
  • 20% restocking fee for returned equipment
  • Not for smaller businesses
  • Doesn't work with high-risk businesses

Payment Depot pricing:[12]
Payment Depot offers membership pricing plans with different processing limits, so you can choose the best fit. You can switch plans at any time as your business fluctuates.

Process up to $250,000/year start at $79/mo
Process more than $250,000/year Custom quote

Payment Depot qualifications: You must be in business for at least 6 months, have an average of $15,000 in gross monthly revenue over the last 3 months, and have a personal FICO credit score of 500.

Stax Payments: Best for $25k+ per month

Stax Payments is another subscription-based processing company. Compared to Payment Depot, it has higher monthly membership fees. So it's better for businesses with larger volume.

It also charges 0% markup. You only pay direct-cost interchange plus a very small fixed fee.

It also has a very robust Stax Pay payments platform. It's an all-in-one solution to help you run your business. Some features include:

  • Monitor and reconcile payments, refunds, and deposits
  • Invoicing and recurring billing
  • Inventory and customer management
  • Assign employee roles and permissions
  • Advanced analytics tools
  • Access monthly processing statements
  • Integrates with business apps like QuickBooks Online, Slack, Facebook Ads, Mailchimp and more

Stax even offers developer APIs to create your own custom shopping cart solution on your website, app, or software.

  • No per-transaction markup
  • No early termination fees
  • Robust platform
  • Extra add-on fees
  • Not for smaller businesses

Stax Pricing:[13]

  • processing up to $250,000/year - $99/month
  • $250,000-$500,000 in processing/year - $199/month
  • over $500,000 in processing/year - custom pricing

The lower tier doesn't include features like API key integration, Text2Pay mobile payments, and storing cards on file. Those can be added on for an extra cost if you need those features. Payment gateway also has an additional fee.

If you process over $500,000 in annual credit card transactions, you can talk to Stax about a custom rate.

National Processing: Best for Restaurants & Non-Profits

Restaurants already have tight margins. Non-profits need every cent they can get. Credit card processing fees cut into that even more.

National Processing offers separate plans for restaurants and non-profits with lower rates. No other merchant services provider competes with National's rates in these areas.

National has two pricing programs for different size businesses. Small businesses can start with interchange-plus pricing. Larger businesses can switch to subscription pricing with a lower markup rate.

It also has a unique Cash Discount program. Most cash discount programs are only for actual cash payments. But National gives you the same benefits for debit card payments. You can offer a lower price for customers who pay by debit, and in exchange, you pay no processing fees. It's a win-win for both parties.

  • Low interchange-plus or subscription rates
  • No contract
  • Next day funding
  • Conditions to waive termination fee
  • Cancellation fee if you were given free equipment
  • May have software fees

National pricing:[14]

Interchange-Plus (For small-medium businesses)
Retail Interchange + 0.18% + $0.10
Restaurants Interchange + 0.14% + $0.07
eCommerce Interchange + 0.29% + $0.15
Non-profit Interchange + 0.12% + $0.06
Monthly fee$9.95
Membership Plans(For large businesses)
Subscription$59/mo; Interchange + $0.09
Subscription Plus$199/mo; Interchange + $0.05

The only thing to watch out for is their free equipment deal. This may require a contract with an early cancellation fee. If you don't want to be tied down in any way, it's best to have your own equipment. They also offer a range of sleek Clover products for purchase.

There may also be some undisclosed software fees. You'll have to talk to a rep to get more details.

National Processing doesn't have a contract, but there are some conditions to waive the termination fee. You must have a lower competitor quote in writing. If National cannot match or beat the offer, then they won't charge you a termination fee.

For merchants processing at least $10,000 per month, National Processing has a promise that if they can't beat your current processing rates, they'll give you a $500 Visa gift card.

PayPal: Best for Accepting PayPal & Venmo

PayPal offers the best range of payment options to customers. You can accept all major cards, digital wallets, PayPal, and Venmo. With hundreds of millions of PayPal and Venmo users, it can be a big advantage to offer that payment method for customers.

PayPal is incredibly easy to set up. You can use it with most major ecommerce platforms. Within minutes, you can install a free online checkout button on your site.

If you take in-person payments, it offers a PayPal Zettle POS app that lets you take cards on your smartphone. You can even accept PayPal and Venmo payments via QR code scan.

If you have another POS that works better for your business, PayPal integrates with several partner point of sale systems. It integrates with Lightspeed, Revel, Vend, Touch Bistro, and more.

  • Accept PayPal & Venmo in-person and online
  • Fast and easy to get started
  • No contract
  • Cheaper in-person processing rates
  • Higher online processing rates
  • Account holds and freezes
  • Extra fees for additional features

PayPal pricing:[15]

Swipe, chip, tap 2.29% + $0.09
QR code transactions ($10.01 and above) 1.90% + $0.10
QR code transactions ($10 and under) 2.40% + $0.05
Online credit & debit 2.99% + $0.49
PayPal Checkout3.49% + $0.49
Manual keyed-in3.49% + $0.09
Virtual terminal3.09% + $0.49

PayPal also offers some special transaction rates for these types of businesses:
  • Nonprofits (online websites): 1.99% + $0.49
  • Micropayments plan: 4.99% + $0.09

Compared to Square, PayPal offers lower transaction rates for in-person payments (especially for QR code transactions over $10). But for online transactions, the rate is higher, though you do get the benefit of accepting PayPal and Venmo.

If you want to accept payments over the phone, the virtual terminal is only available under the PayPal Pro plan and costs $30/month. Recurring payments for subscriptions is an extra $10/month.[16]

PayPal used to offer the PayPal Here POS app and card reader. But that is no longer available to new merchants. Existing users can still continue to use it, along with the 2.7% per-swipe processing rate. New merchants can only sign up for PayPal Zettle.

Stripe: Best for Online Businesses

Stripe is the most powerful processor for online businesses. It's known for advanced API tools that allow for complete customization of your checkout experience. But you'd have to have a developer to make use of them.

Stripe is a good choice for subscription services, in-app purchases, online platforms, and B2B businesses. It may be too much if you just need basic checkout buttons. Look into PayPal or Shopify instead.

Some of Stripe's features include:

  • Integrates with dozens of online shopping carts
  • Supports 135+ currencies and dozens of global payment options[17]
  • Hundreds of apps and extensions
  • Stripe Billing for recurring billing and invoices: you can set trial periods, tiered pricing, and usage-based pricing
  • Stripe Connect for marketplaces and platforms: sellers can create their own accounts and get paid by customers

  • Advanced customization options
  • 450+ platforms and extensions
  • Accepts international cards
  • 24/7 support via phone, chat, and email
  • Need a developer to make use of tools
  • 2-day funding time[18]
  • Account holds and freezes

Stripe pricing:[19]

Online 2.9% + $0.30
International payments Additional 1%

Stripe also offers in-person processing for 2.7% + $0.05 per swipe. So it could also be good if you're a mostly online business that occasionally sells in-person.

Larger businesses can talk with Stripe to get a custom interchange-plus pricing.

Did you know? Stripe users include Lyft, DoorDash, Slack, Instacart, and Booking.com.

Clover: Best for Physical Businesses

Clover has one of the most powerful point of sale systems. It offers POS systems for retail and restaurants. Besides its own set of robust features, it also allows for hundreds of app integrations. You can customize the system to your exact needs.

You've probably seen the beautiful, sleek Clover equipment. All their devices come fully integrated with the POS. However, the equipment prices are on the higher end.

Clover works a little differently. You can either get a direct processing plan through Clover itself. Or get Clover equipment through a reseller. This gives you more flexibility to choose the right credit card processor for you.

With either option, you need to be approved for a merchant account, so it's better for more established businesses.

Some popular Clover resellers include Dharma, Payment Depot, and National Processing.

  • Powerful POS
  • Customization
  • Flexibility to choose your provider
  • Monthly software fee
  • Expensive equipment

Clover pricing:[20]
If you purchase a plan through Clover directly, you get flat rate pricing:

Swipe, chip, tap starts at 2.6% + $0.10
Keyed-in transactions 3.5% + $0.10
Basic POS software feestarts at $14.95/mo
Advanced POS software fee$14.95 - $64.90/mo

The pricing depends on which Clover equipment you get. For Clover Mini and below, you get the standard swipe rate. If you get the Clover register, that comes with a more advanced POS and reduced processing fees.

If you get Clover through a reseller, that processor will determine the credit card processing rate, other fees, and contract terms. For example, if you get it through Dharma, they have lower rates.

But no matter where, you still have to pay the monthly Clover POS software fee.

Is Square or Clover better? Square is better for indie sellers and small businesses looking for a quick, cheap way to process credit card payments. Clover is better for small to medium retailers and restaurants looking for a more customized POS solution and better rates. Read more in our detailed Square vs Clover comparison guide.

Helcim: Best for Multi-Channel Businesses

Helcim offers one of the best set of tools for merchants. And they really mean it when they say "no hidden fees." All their merchant tools are free, unlike other companies that charge you for extra features.

This includes online ordering site, virtual terminal, invoicing, recurring billing, customer self-service portal, and more. It's a great choice if you sell in multiple ways.

It lets even new businesses set up a dedicated merchant account. As your monthly processing volume increases, you automatically get lower rates. You don't need to call Helcim to negotiate rates. It's good if your business is quickly growing and you don't want to keep on switching processors.

The only downside is that Helcim offers only 2 POS equipment (unlike Clover). It has a mobile card reader ($109) that doubles as a countertop terminal, and a smart terminal ($349). But you can also use your tablet or computer with the Helcim Payments app.

  • Robust merchant tools
  • No monthly fees
  • Volume discounts
  • Highly praised customer service
  • Limited equipment option
  • Doesn't work with high-risk businesses

Helcim pricing:[21]
Here are Helcim's markup fees over the standard Interchange rates:

Monthly Processing VolumeIn-personOnline & Keyed
$0 - $50,0000.40% + $0.080.50% + $0.25
$50,001 - $100,0000.35% + $0.070.45% + $0.20
$100,001 - $500,0000.25% + $0.070.35% + $0.20
$500,001 - $1,000,0000.20% + $0.060.25% + $0.15
$1,000,001 and more0.15% + $0.060.15% + $0.15

Helcim's processing fees are not the lowest. But all their merchant tools are available at no extra cost.

With great tools, transparency, and one of the best customer service, Helcim has strong overall value despite the slightly higher processing fee.

PaymentCloud: Best for High Risk Businesses

High-risk businesses often have a hard time finding a credit card processor. A lot of companies won't work with them because of the higher risk of fraud and/or failure.

PaymentCloud specializes in working with high-risk merchants. Whether you're in a risky industry or previously had a failed business, an experienced staff will work with your unique needs. They're there to support you for the entire life of your account.

PaymentCloud even works with "ultra" high-risk industries like adult, CBD, guns and firearms, nutraceuticals, and bail bonds.

High risk businesses often have a lot of chargebacks, which can be very troublesome and costly. PaymentCloud has a strong focus on fraud detection, so you can stop chargebacks before they occur.

However, the processing fees aren't disclosed on their website. You'll need to speak with a rep to get a personalized quote. Note that high-risk processing usually has higher rates and account fees. You may even have to agree to a long term contract.

  • Specializes in high-risk processing
  • Free rate review
  • Dedicated account manager
  • Fees not disclosed on website

High-risk doesn't just mean sketchy industries. Even businesses like memberships, electronics, financial services, web design services, and those with large average ticket size can be considered high risk.

Best Credit Card Processing Cost Comparisons

It can be hard to understand just how much credit card processing costs in real terms. To give you an idea, here is what you can expect to pay for a single transaction for the different companies.

Processing costs for a $20 transaction:

Company In-personOnline
Square $0.62 $0.88
PayPal $0.55 $1.08
Stripe $0.59 $0.88
Chase Payment Solutions $0.62 $0.83
Dharma $0.54 $0.64
Stax $0.51 $0.67
Payment Depot $0.51 $0.67
National Processing $0.57 $0.70

Processing costs for a $100 transaction:

Company In-personOnline
Square $2.70 $3.20
PayPal $2.38 $3.48
Stripe $2.75 $3.20
Chase Payment Solutions $2.70 $3.15
Dharma $1.98 $2.36
Stax $1.83 $2.23
Payment Depot $1.83 $2.23
National Processing $2.03 $2.49

Processing costs based on a Visa Rewards Traditional credit card (based on interchange rates as of 12/14/21).

Of course, don't only compare the processing costs per transaction. Also consider the monthly fees and other account fees. For example, Stax has the lowest per-transaction cost, but the monthly fee starts at $99/mo. So it may not work for smaller volume businesses.

How much does your business process per month?
57% Under $5,000 per month
43% More than $5,000 per month
Source: CreditDonkey poll, July 15, 2024

What Is Credit Card Processing?

Credit card processing allows you to accept credit and debit cards from customers. But you can't do that on your own, so you need the help of a payment processor.

A processing company offers the equipment, technology, and services required to accept credit card payments. It acts as a middleman between you (the merchant), the banks, and your customers.

The main services include:

  1. Accepting and processing credit card and debit card payments, as well as other forms of electronic payments.

  2. Providing the necessary hardware and software for processing, such as card readers, POS, payment gateways (for online payments), and virtual terminal.

  3. Maintaining PCI compliance to protect your customers' credit card data.

  4. Providing online tools to keep track of transactions, monitor employees and inventory, manage customer data, see sales trends, and more.

How Much Does Credit Card Processing Cost?

In general, you can expect the overall cost to be 2.5% - 3.5% of your processing volume. This means if you have $10,000 in credit card sales each month, your processing fees will be $250 - $350.

Your total credit card processing fees includes several components:

  • Interchange fee: Interchange fees are paid to the credit card companies / card issuing banks (like Chase, Bank of America, etc.) to cover operation costs and risk. These make up the major bulk of your processing fees.

    See the detailed breakdown of the current interchange fees.

  • Assessment fee: These are paid to the credit card networks (Visa, Mastercard, Discover, and Amex) for using their card brands.

  • Processor fee: These are fees your processing company charges. This is the commission they get for each transaction, plus any fees for services and features.

Interchange and assessment fees are set by the card associations.[22][23] They're the same no matter which credit card processing service you use. So when shopping around, you only need to compare the fees charged by the credit card processing company.

How to Choose the Best Credit Card Processing Company

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.

Here are some main things to consider when comparing companies.

Type of Processing Service

The first step is to decide which kind of company you want to use. This mostly depends on how new your business is and/or your sales volume. The two options are:

1. Merchant account provider
Merchant account providers are a full-service credit card processor. You get a unique merchant ID number and a dedicated merchant account just for your business.

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.

Merchant accounts usually offer lower processing costs, better account stability, and better customer support.

2. Payment service provider (PSP)
Third party payment service providers (like Square) are the simpler option. You don't get your own merchant account ID. Instead, your transactions are processed together with many other businesses into one huge shared merchant account.

These processors offer simple pricing and easy sign-up. Thus, they're better for new and micro-businesses.

But they usually have higher processing fees. And because there was no underwriting, your account is not as stable. Account holds and freezes are more common if they think a transaction seems suspicious.

Pricing Structure for Your Size Business

It's important to get the right pricing model for your business. Most credit card processing services specialize in one type of pricing, so that helps narrow down your search right away.

It will depend on your monthly transaction volume:

  • New or small business (under $5,000/month):
    It's best to get started with a flat-rate payment processor, like Square or PayPal. This kind of pricing is predictable and simple.

    The downside is that all the fees are blended together, so you don't really know how much the processor is charging. The fees tend to be higher in exchange for the simplicity and convenience.

    Ex: 2.6% + $0.10 per transaction

  • Low to mid-volume sales (up to $15,000/month):
    If you have steady sales between $5k and $15k per month, a merchant account provider with an interchange-plus pricing model (like Helcim) will allow you to save more.

    In interchange-plus, the interchange fees are clearly separated from the provider markups. So you know exactly how much commission is charged. This makes it easier to compare companies.

    Ex: Interchange + 0.2% + $0.10 per transaction

  • Large business (over $15,000/month):
    For high volume businesses, you'll save the most with subscription pricing, like Stax or Payment Depot. The processor markups are very low, so your savings will more than justify the membership fee.

    Ex: Interchange + $0.10 per transaction; plus $100/mo

Choose the right processor for your needs right now. Of course, you hope your business grows over time. When you've outgrown it, you can switch to another company that fits better with your new situation.

If a company offers tiered pricing, stay away. This structure is the most confusing and can come out to the highest rates.

Other Account Fees

Every dollar matters to small business owners. Besides just looking at the transaction fees, pay attention to other account fees and miscellaneous charges.

You'll want to especially look out for the hidden fees. Watch out for:

  • Account setup fees
  • Monthly fee or annual fee
  • Monthly processing minimum
  • Payment gateway fee
  • Virtual terminal fee
  • PCI compliance fees
  • Chargeback fees
  • Statement fees

A lot of additional fees can increase your overall processing rate. You want to take all the fees into account when comparing payment processors.

Account Setup Speed

For new businesses and indie sellers, a payment services provider will let you get started very quickly. There's no approval process. You just sign yourself up and can get started right away.

On the other hand, opening a proper merchant account will require underwriting. But if you have good credit and your business is easily verified, you could be approved in as fast as 1-2 days.

If your business is considered high risk, there will be a more rigorous underwriting process. Opening an account could take a few weeks. It's best to work with a company that specializes in high-risk merchant accounts. You'll have better account stability, but be prepared for higher processing fees and stricter contract terms.

Contract & Early Termination Fees

Traditionally, merchant accounts required a contract (usually 3 years). But nowadays, a lot of companies have done away with contracts and offer month-to-month billing.

There should be no reason to choose a company with a contract. You should be able to cancel whenever you want with no termination fees.

Watch out for some tricky caveats. For example, a company may force you into a contract if you accept their free equipment offer.

Payment Methods

Consider all the ways you accept payments from customer:

  • On your phone while on-the-go
  • At a physical location
  • Online
  • Contactless
  • Digital wallets (like Apple Pay, Samsung Pay, or Google Pay)
  • PayPal / Venmo
  • Invoicing
  • Auto-recurring payments
  • By phone
  • ACH transfers
  • Global payment options (if you're international)

Make sure the processor supports your payment methods. And see if they charge extra for it. A lot of providers may have an extra fee for virtual terminal, recurring billing feature, and ACH platform.

Funding Time

It typically takes 2-3 business days for funds from your sales to show up in your business checking account. But many payment processors offer next-day funding. Some even offer same-day funding for an extra fee.

Cash flow can really make or break a small business. Being able to get money quickly from your sales helps to keep your business running and growing. So it's important to consider the funding options and make sure they work for you.


If you need equipment to process payments, see what options the company offers, and how much. If you already have your own POS hardware, see if they're able to reprogram it to work with their software.

If you really have your eye on specific equipment (like the Clover machines), then your options will be limited to providers that offer it.

Some processors offer free equipment. Ask in detail what the deal entails. Is there a contract in exchange for free equipment? Or fees when you return the equipment?

Some companies may have an option to lease equipment. But this is usually a terrible idea. You can end up paying way more over time than if you just bought it outright. Plus, leasing equipment often comes with long term contracts that's hard to break.

Customer Service

Quality of service is super important to your relationship with your processor. You want to be able to get help when you need it.

As you shop around, get a sense of how responsive and helpful their support staff is.

Generally, payment service providers have poorer customer service, and mostly rely on self-troubleshooting or email support. Merchant account providers offer better support. You often even get a dedicated account rep.

Is Credit Card Processing Secure?

Security is a big concern since you're handling customers' sensitive credit card data. All businesses that process credit cards must comply with Payment Card Industry Data Security Standards (PCI DSS).

This is a list of security requirements, such as proper encryptions, firewalls, anti-virus software, access controls, and more. The best way to meet these requirements is to work with a PCI-compliant payment processing company.

That means the processing provider takes care of PCI compliance for you. They ensure that their systems and equipment are compliant and up-to-date, so you can process cards securely. The companies on all our lists all include PCI compliance for free.

Another security concern for business owners is fraud. Fraud detection tools (such as CVV and address verification match) can help you prevent fraud so you minimize losses.

Merchants should upgrade to EMV-compliant processing equipment. Visa reports that merchants who upgraded to EMV readers have seen a counterfeit fraud drop by 76% since the U.S. payments industry began the shift to EMV chip.[24]

How Does Credit Card Processing Work?

There are two stages for processing credit (and debit) card transactions. There's the authorization stage and the settlement stage.

When a customer pays through a card, banks communicate in real-time to authorize the transaction. But you'll receive your money from the sale by the end of the settlement stage.

Let's first talk about how transactions are approved or denied.

Stage 1: Authorization

This stage begins when a customer pays through a card either in-person or online. The card information and transaction details are first sent to the merchant bank.

The merchant or acquiring bank will forward the details to the card network. Then, the card network shall send the information to the bank of the customer. The customer's bank (or the issuing bank) will confirm the details such as:

  • Card number
  • Card verification value (CVV)
  • Credit or funds available in the account

The issuing bank will then send a response to the acquiring bank through the card network, approving or denying the transaction. The response will be shown at the screen of the POS equipment used. This response also comes with an authorization code.

Now, it's time to get your money from those sales.

Stage 2: Settlement

This step no longer involves the customer. It will instead revolve around you, the merchant, your credit card processor, the concerning banks and card networks.

Authorizations are stored in your POS. You can send them to the merchant bank at the end of the business day. Settlement begins when you send the batch of approved transactions.

Although you don't technically need to, it's always best to send the batch within 24 hours to get the lowest interchange rate. The later you submit a batch, the higher the fees. Keep in mind that authorizations typically expire within 3 to 8 weeks.

The merchant bank sends the information to the issuing bank to verify the transactions. After verification, the funds are sent to the merchant bank, then forwarded to the merchant's bank account minus the processing fees.

Settlements can be processed within a day, but others could take up to 7 business days.

What is the difference between a payment processor and a payment gateway?

A payment processor or a credit card processing company lets you accept credit card payments. It provides the platform and equipment for you to do so.

A payment gateway is part of the processor's payment solution. It lets you collect customer information to approve or deny a transaction. It also encrypts the card information, which the payment processor uses to charge the customer's bank.

Customers can pay through an in-person payment gateway, such as a credit card terminal, or an online payment gateway. Online payment gateways are used in online stores or mobile apps.

Watch out for additional fees when using third-party payment gateways. Using an all-in-one POS can help you save on costs. Sometimes, using an in-house payment processing come with discounts. If you're shopping for a POS system, here's a guide on how much to budget.

Fees of credit card processing companies add to the total of your payment processing costs. But there are ways to lessen those fees. Let's talk about how in detail.

How to Lower Your Credit Card Processing Fees?

Credit card processing fees aren't set in stone. Let's talk about 5 ways on how you can lower them.

1. Negotiate your card processing rates and non-processing fees

When shopping for a payment processor, be sure to ask about their processing rates. If you're a merchant with a high volume of sales, you're considered an important client to them. Thus, you can negotiate your rates according to your sales.

If you're already working with a payment processor, you can still negotiate your card processing rates. You can ask for a change if you've seen an increase in the volume of your credit card sales.

Some payment processors also have non-processing fees. This includes the monthly or annual fees, PCI compliance fee, minimum processing fees, etc. You can ask if they can waive certain fees, or just look for options without them.

Also, take note if you're overpaying for processing fees. You can do so by computing for your effective rate.

Credit Card Processing Effective Rate
The "effective rate" is your average credit card processing rate. You get it by dividing the total card processing fees by the total card sales for a specific period.

Here's a calculator you can use to get your effective rate:

Effective Credit Card Processing Rate Calculator

Keep in mind that monthly fees and costs on add-ons are also included in the total processing fees. If $100 is your total processing fee with $5,000 in total card sales, then your effective rate is 2%. That said, getting a lower rate can mean a better deal.

Learn more about good effective rates through our Credit Card Processing Fee Calculator.

2. Reduce risks of fraud

The higher the security risks, the higher the processing fees. But you can reduce these risks by doing three things:

  • Swiping cards instead of entering card information manually
  • Entering security information
  • Using an address verification service (AVS)

Card networks usually charge higher rates for keyed-in transactions because they pose higher risks. AVS helps reduce risks as it verifies the cardholder's billing address. Therefore, you can get a lower interchange rate if you use AVS.

For in-person sales, you can use signature-required receipts and ID checks to reduce these risks.

3. Review your merchant statement

Reviewing your merchant processing statement is a good habit to build. The statement shows the transactions you've had throughout the month and the fees that come with them. If anything's unclear to you, you can ask for clarifications.

It's especially advisable for tiered and interchange-plus statements. Tiered pricing can be confusing. While interchange-plus statements have transparent pricing, you might get confused with the rates set by different card networks.

4. Make sure you've set up your account properly

Speaking of pricing models, the model you choose should be suited to your business type and the number of transactions you have. You might incur a high processing fee with incorrect information.

To make sure you got it right from the get-go, you can consult with an expert.

Consult with an expert
If you're not sure of what to look for in a payment processor, you can always ask a credit card processing expert. That way, you can gain knowledge specific to your business. This can help you avoid costly mistakes.

Experts can also help you get lower rates if they have good relationships with credit card processing companies.

5. Consider passing the processing costs to your customers

Some businesses pass the processing costs to their customers through a convenience fee. These are fees placed on modes of payments not typically used by a business. For example, if you normally accept cash payments, you can place a convenience fee for credit card payments.

Keep in mind that convenience fees should be stated at the point of sale. It should be stated on your website if you sell online. It's also only allowed if another mode of payment is available.

Convenience fees can be mixed up with surcharges. But these are two different fees.

Convenience fees vs. Surcharges
Credit card surcharges are fees charged for the use of credit cards. These are legal in most states, but there are some rules you have to follow. Convenience fees, on the other hand, are legal in all states.

Convenience fees can also be applied in other modes of payment. But you cannot require surcharges for debit cards.

Pro tip: Understand your customers before opting for a convenience fee. Are most of your sales from credit card transactions? Or are most of them done through cash payment? You might not need to set a convenience fee if transactions don't incur a high processing cost.

Credit card processing can get really expensive. That's why some merchants decide on passing the costs to their customers.

You might think that it's better to just not accept credit cards. But that could also be a costly mistake. Let's discuss the benefits of credit card processing.

Why Credit Card Processing is Important?

Processing credit cards will increase your customer base. A lot of people prefer to pay with plastic nowadays. Mobile wallets such as Apple Pay and Google Pay are also getting increasingly popular.

If you don't adapt to how customers pay, you could lose a lot of sales.

It can also be beneficial as a business owner. Customers tend to spend more when they shop with a card rather than cash. According to a 2016 study by Boston Fed, the average amount spent for cash transactions was $22, but it was $112 for non-cash transactions.


To find the best credit card processing companies, we first considered the different types of businesses out there. New businesses have different needs than established companies. Online startups have different needs than retail.

Once we established different business categories, we compared processing companies to find the best fit for that category. We looked at these factors:

  • Competitive pricing
  • Transparency
  • No contract
  • Setup and ease of use
  • Good, well-rounded features
  • PCI compliance

We finally narrowed down the list by picking companies with the best balance of fees against features offered (except for PaymentCloud for high-risk processing, since rates depend on your unique situation).

What Experts Say

CreditDonkey assembled a panel of industry experts to answer readers' most pressing questions:

  • Should business owners pass on credit card fees to customers?
  • How do sellers benefit from allowing customers to use credit cards?
  • What's at risk when business owners accept credit cards?

Here's what they said:

Bottom Line

Ultimately, the best credit card processing for you will mostly depend on your business size.

New businesses have more limited options. It's best to start with a flat-rate payment processing service like Square or PayPal. They're easier to set up and offer simpler, more predictable pricing.

As your business grows, you'll find much cheaper rates with interchange-plus or subscription pricing.

Just like with any product, carefully compare and shop around. Get a few quotes from different companies. Make sure you get a full disclosure of all the potential fees. This way, you can compare which one offers the best overall value.

Additional Resources


  1. ^ FRBSF, 2020 Findings from the Diary of Consumer Payment Choice, Retrieved 8/26/23
  2. ^ Square Pricing, Retrieved 8/26/2023
  3. ^ Chase. In-person Payments, Retrieved 08/16/2023
  4. ^ Chase. Online Payments, Retrieved 08/16/23
  5. ^ Chase. Move 5000, Retrieved 8/26/23
  6. ^ Chase. Desk 5000, Retrieved 8/26/23
  7. ^ Chase. QuickAccept, Retrieved 8/26/23
  8. ^ Dharma. Account Closure Fee, Retrieved 8/26/23
  9. ^ Dharma Merchant Services Rates, Retrieved 8/26/23
  10. ^ Dharma Merchant Services. Virtual & Online Rates, Retrieved 8/26/23
  11. ^ Dharma Merchant Services. American Express OptBlue, Retrieved 8/26/23
  12. ^ Payment Depot Pricing Plans, Retrieved 8/26/23
  13. ^ Stax Pricing & Payments for Platforms, Retrieved 8/26/23
  14. ^ National Processing Pricing, Retrieved 8/26/23
  15. ^ PayPal Merchant Fees, Retrieved 8/26/23
  16. ^ Paypal. Paypal Pro, Retrieved 8/26/23
  17. ^ Stripe. Currencies, Retrieved 8/26/23
  18. ^ Stripe. ACH Direct Debit payment settlement time, Retrieved 8/26/23
  19. ^ Stripe Pricing, Retrieved 8/26/23
  20. ^ Clover Pricing, Retrieved 8/26/23
  21. ^ Helcim Pricing & Fees, Retrieved 8/10/2023
  22. ^ Visa. Visa USA Interchange Reimbursement Fees, Retrieved 8/26/23
  23. ^ Mastercard. Mastercard 2023–2024 U.S. Region Interchange Programs and Rates, Retrieved 8/26/23
  24. ^ Visa. Chip technology helps reduce counterfeit fraud by 76 percent, Retrieved 8/26/23

Write to Anna G at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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About CreditDonkey
CreditDonkey is a credit card processing comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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