After conducting extensive research and analysis, we recommend Flagship Merchant Services as our pick for the best flexible terms credit card processor for small businesses in 2018. To understand how we selected our best picks, you can find our methodology and a comprehensive list of credit card processing companies on our best picks page.
Why Flagship Merchant Services?
Month-to-month terms and choice of pricing model
Flagship Merchant Services is our pick for the credit card processor with the best flexible terms, because it offers customers month-to-month service with no early termination fee. It also allows you to choose the pricing model that saves your business the most money. Flagship has a proven track record in the payment processing industry. It's been in business for more than 15 years and is used by brands such as Subway, Verizon, and Avon. It works with businesses of all sizes, including smaller merchants and startups.
When you're choosing a full-service credit card processing company, month-to-month service is an important feature to look for – it allows you to move on if the service isn't meeting your needs or you find a better deal somewhere else without having to pay an expensive penalty or wait months (or years!) for your contract to expire. By offering monthly terms to its merchants, Flagship shows its confidence in the quality of its services and in the value of its pricing.
Flagship allows you to choose between tiered or interchange-plus pricing. The sales representative we spoke with explained how these models work and provided price quotes for both. Industry experts prefer interchange-plus pricing because of its transparency, but businesses that run a high volume of PIN debit transactions may save money with tiered pricing, if the processor offers a special rate for this type of transaction.
As mentioned above, Flagship offers its services on a monthly basis to all its customers and there's no early-termination fee. Standard credit card processing contracts have three-year terms that automatically renew for additional two-year terms with only a 30- to 90-day cancellation window, making them difficult to exit. They also have early cancellation fees, sometimes with liquidated damages clauses, which can be very expensive. Not having to worry about being penalized if you're unhappy and wish to switch to a different vendor gives you peace of mind.
However, if you accept free equipment instead of purchasing it from Flagship, you'll be subject to a longer contract. For example, if you accept a basic terminal, you'll be under contract for one year. This is still much shorter than a standard contract, but it's better to purchase the equipment – which is very affordable, costing $148 – and keep the month-to-month terms.
Credit card processing rates are based on several factors, such as your type of business, ways you wish to accept credit cards, average monthly sales volume and more. Rates and fees may be negotiable, depending on your monthly sales volume. Here's how Flagship's two pricing structures work.
Flagship's default pricing model – tiered pricing – bundles different types of credit cards into three tiers each for debit and credit cards: qualified, mid-qualified and non-qualified. Each tier has a percentage rate and a per-transaction fee.
- Flagship's qualified tier is for regular cards, and costs 0.38 percent plus 19 cents for debit cards and 1.58 percent plus 19 cents for credit cards.
- Rewards cards usually fall in the mid-qualified tier and cost 1.36 percent plus 19 cents for debit cards and 2.56 percent plus 19 cents for credit cards.
- Non-qualified rates are for corporate and international cards, cost 2.36 percent plus 19 cents for debit cards and 3.56 percent plus 19 cents for credit cards. If you accept a high volume of these types of cards, this pricing model is a very costly option.
- PIN debit transactions have special pricing, costing only 25 cents each, which makes this pricing model worth considering if most of your customers prefer this payment method.
Also known as "wholesale pricing," "true pricing" and "cost plus," interchange-plus pricing gives small merchants access to the same low rates as big-box, high-volume stores. Flagship's interchange-plus rate is 0.30 percent plus 10 cents above interchange per transaction. If your customers prefer paying with rewards cards, this can be a significant discount over tiered pricing.
If you have a high monthly sales volume, you may be able to negotiate an even better rate – the higher your sales volume, the lower your rate. Flagship doesn't advertise interchange-plus pricing on its website or publicize its rates, as they may vary, depending on several factors unique to the type of business, its sales numbers and other information. To get a rate specific to your business, you can contact a Flagship sales representative for a custom quote.
In addition to swipe fees, Flagship generally charges a $7.95 monthly fee and a $7.95 monthly gateway access fee. The company also has a monthly minimum of $25, which is calculated against the number of transaction rates and fees you pay the company. For example, if you only process enough transactions to generates $20 in processing costs, you would pay the remaining $5 as a fee. Flagship also charges a Payment Card Industry (PCI) compliance fee, which typically costs $99 per year.
Some of these fees may be negotiable. For example, when we called, the sales rep quoted us $4.95 for the monthly fee and $10 for the monthly minimum. The PCI compliance fee wasn't initially volunteered, but when we asked about it, the rep waived it for the first year.
There's no application fee, and Flagship waives a handful of fees that other vendors charge. Customers receive the following products and services free:
- Merchant account setup
- Authorize.net payment gateway setup
- Mobile credit card reader
- Shopping-cart setup
- Sales tracking and reporting
Flagship is confident it can offer the lowest rates. Currently, the company is offering a $50 American Express gift card if it can't match a quote from a competing vendor. Don't be misled, though – this comparison applies only to the total processing package, not to transaction fees or other individual costs.
As with all credit card processing companies, you want to read the contract before signing the application and make sure that you're aware of all possible fees. You also want to opt out of any Additional Service clauses, as these often carry additional monthly fees for services you may not need or want.
Flagship is a full-service processor so you can choose the acceptance methods that make sense for your business. For instance, you may need a credit card terminal or point-of-sale (POS) system for your physical store, a payment gateway for your online store, a virtual terminal for phone orders and a mobile card reader for on-the-go sales.
Because you're working with a single company to accept payments across all of your sales channels, all of your funds go into a single merchant account, which streamlines your sales and accounting processes. Here are the multiple ways you can accept credit cards:
- Credit card terminal. If you have a low sales volume and you need just a simple way to accept credit cards, you can get Flagship's Verifone credit card terminal that has a built-in printer and PIN pad so you can easily process credit cards in person at a checkout counter.
- Mobile card reader. Accept credit cards on the go with Flagship's mobile credit card reader – a dongle that attaches to Android and Apple smartphones and tablets – and mobile app.
- Point-of-sale system. This service gives retailers and restaurants access to the popular Clover line of full-featured POS systems.
- Payment gateway and shopping cart. Flagship's payment gateway service lets you accept credit card payments online via Authorize.net. It also provides a shopping cart for your e-commerce website.
- Virtual terminal. Accept credit cards over the phone or by mail order by manually entering payment information into your computer.
Flagship's credit card readers are EMV compliant so you can accept chip cards and avoid liability in the event that counterfeit fraud occurs at your point of sale. They're also NFC-enabled so you can accept payments made using contactless cards and mobile wallets such as Apple Pay and Google Pay. [See Related Story: Credit Card Machines: Answers to Frequently Asked Questions]
To keep your customers' and your business's information safe, Flagship strictly adheres to the debit and credit card industry's PCI Data Security Standard, as required by Visa, MasterCard, Discover and American Express.
A Flagship sales rep confirmed to us that all merchants using Flagship must be PCI-compliant, regardless of sales volume. You're required to complete an annual PCI self-assessment, after which you'll be issued a compliance certificate.
In addition to 24/7 phone support, Flagship assigns each merchant a dedicated sales rep. When you first contact Flagship, you'll be connected to a sales rep, who asks about your business, walks you through your options and discusses rates and fees. You'll work with the same representative each time you need help or have problems with the service. The benefit of this is that each time you call for support, you'll speak to someone who already knows you and is familiar with your history as a customer.
In our own experience, we had a pleasant conversation with Flagship's customer support. We called the company using the toll-free number on Flagship's site, and we were able to speak with a sales rep right away. We posed as a small business owner and asked a long list of questions about the company's products and services.
Like many small business owners who are easily overwhelmed by fees, policies and other puzzling aspects of credit card processing, we had a lot of questions about Flagship's services and terms. The sales rep was very patient when explaining all of the details. The answers were direct, and we didn't feel pressured to sign up during the presale process.
Although we had a positive experience with Flagship's customer service, we know others might not have. One of Flagship's biggest drawbacks is that, after being around for 15 years and serving tens of thousands of customers, the company has its share of negative reviews. Many of these complaints have to do with undisclosed PCI fees, long turnaround times to process requests and difficulty contacting a representative during off-business hours.
To help alleviate this problem, Flagship has improved its customer service in recent years and has become more upfront about its fees during the application process. The company also has been more active online, responding to reviews and helping customers who have posted their questions and complaints.
Like many full-service processors, Flagship doesn't post its rates, fees and contract online, which is inconvenient for merchants who prefer to find this information on a company's website instead calling a sales representative. It also lacks online resources, such as a knowledgebase and how-to guides, for customers wanting to find answers to their questions online.
Finally, if you want to get started ASAP, Flagship Merchant Services is not the credit card processor for you. Although the company offers same-day setup once your application has been approved, there are several steps you need to take before actually becoming a customer. You'll need to apply for a merchant account, consult with a sales rep, and wait for approval, equipment, and activation before you can use the service.
If you need to start accepting credit cards immediately, app-based credit card processors that don't require a merchant account – such as PayPal and Square – would be a better choice for your business.
Additional reporting by Sara Angeles.
Ready to choose a credit card processing company? Here's a breakdown of our complete coverage:
- Best Credit Card Processors 2018
- How to Accept Credit Cards Online, In-Store or Anywhere
- Best Small Business Credit Card Processor
- Best High-Volume Credit Card Processor
- Best Low-Volume Credit Card Processor
- Best Credit Card Processor for Flexible Terms
- Best Mobile Credit Card Processor
- Best Online Credit Card Processor