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6 Confusing Things About Accepting Credit Cards

Updated Feb 22, 2024

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The fine print on personal credit cards can drive anyone crazy, and the terms for accepting credit cards at your business aren’t any different. You don’t need to be a contract lawyer to understand the terms and conditions from your credit card processor, but you do need to thoroughly read the contract so you understand how it will affect your business’s bottom line.

If you’re a small business owner looking to accept credit cards as a method of payment, confusing credit card processing rates, lengthy service contracts, and complicated compliance issues might leave your head spinning. To help you make sense of accepting credit cards, we’ll go over six of the most confusing things about accepting credit cards and ways to make the process simpler.

1. Credit card processing quotes

The most confusing part of accepting credit cards is the pricing, said Deborah Winick, principal and merchant services advisor at credit card processing company BankCard Services. She said most businesses don’t really know what a competitive price quote is and rely on the integrity of sales reps.

“Most business owners are very busy, so they do what seems like the best choice [and] reach out to their bank, expecting quality service,” Winick said. However, this isn’t always what businesses get. “The banks, for the most part, outsource merchant services … as funny as it seems, they really do not know much about the industry.”

Instead, Winick advises businesses to find sales reps with at least two years of experience, get two or three quotes from vendors, and ask for full disclosures of all rates and fees in writing.

Did you know that more than a third of small businesses in a Weave study said they overpay for credit card transaction fees? This could be because the processor they chose has a fee structure that is not optimal for their type of business. Different fee structures benefit different types of businesses. 

For example, a flat percentage with no per-transaction fee is best for companies that make many small sales, like cafes. A lower percentage with a per-transaction fee is best for companies that make less frequent sales on higher-ticket items, such as furniture retailers. Look for a processor with the pricing model that will cost your business less overall. 

Although you can change credit card processors if you are not satisfied with their service and fees, the process is a hassle that can result in downtime and the need to purchase new equipment and possibly a new POS system. Try to choose a processor that can serve your needs as you grow. You may be able to start out with one pricing structure and move to another as your volume increases.


When assessing card processors, compare not just the fees themselves, but the services provided for that fee. Some credit card processors have a no-frills fee that looks like a bargain until you start adding services that carry an additional monthly charge.

Editor’s note: Looking for the right credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

2. Pricing models

The pricing for credit card processing also often confuses business owners because there are so many pricing models.

“There are several different pricing methods, but the two most popular are tiered pricing and interchange-plus,” said Amad Ebrahimi, founder of merchant accounts comparison site Merchant Maverick.

In tiered pricing, merchants qualify for different vendor-determined rates, while interchange-plus uses rates set by the credit card brand, such as Visa or Mastercard.

“Interchange-plus is a much more transparent model of pricing, but it also leads to more confusion if the business owner does not understand what the pricing entails,” Ebrahimi said.

You should research the type of pricing credit card processors offer and determine whether you can afford those fees, given your cash flow and customer base. Ebrahimi also advises business owners to gather as much specific information as possible about the processor’s rates to avoid surprises later on. [Check out five tips to reduce your credit card processing fees.]

Did You Know?Did you know

Interchange rates depend on the type of card used. Companies whose customers primarily use personal Visa or Mastercard debit cards benefit from the lowest rate charged by interchange-plus processors. Businesses with more complex card use may be better off with a tiered pricing model.

3. Contract terms

No one likes to read lengthy contracts, but it’s necessary in business. The contract is also one of the most important and confusing aspects of signing up with a credit card processor. Failure to completely understand your service contract could lead to some unpleasant surprises.

“These contracts can be very long, so unless the business owner takes the time to read through every line, they may be caught by surprise,” Ebrahimi said.

That happens partly because you can’t always trust what sales representatives say.

“There is really no regulation to be an agent for a merchant service provider, so there are agents out there telling a small business owner what they want to hear rather than speaking with knowledge and integrity,” said Cindy Bender, owner of Bender Merchant Services.

By not reading through contracts yourself, you risk the shock and hindrance of hidden fees and service limitations. In particular, you should ask how long the contract lasts and whether you are leasing the equipment, Ebrahimi said. Watch out for fees, including early termination, annual, setup, monthly, monthly minimum and Payment Card Industry (PCI) compliance fees, he added.


Be wary of credit card processors that lock you into lengthy contracts and charge fees for statements, early termination, batch processing, and customer service. These are all red flags. If you see a questionable fee in the contract, ask the processor to remove it, or move on to the next payment processor.

4. PCI compliance

Credit card processing security is no joke. Failure to protect customers’ data won’t just harm your business’s reputation, it can also accrue significant costs in government and banking fines, lawsuits, and more. But PCI compliance, a set of credit card processing security standards, is another area of confusion for small business owners.

The problem is that business owners either assume that the credit card processor will handle PCI compliance or don’t know enough about security to verify whether their credit card processor is compliant. Large companies aren’t the only ones that get hacked; small businesses actually have six times the incidents of card security breaches compared to their larger counterparts, according to the Verizon Payment Security Report.

Ebrahimi urges business owners to verify PCI compliance with the processor they are considering. “Card data security is of utmost importance to your customers, so it’s essential to understand this area.”

As with pricing and fees, the best way to prevent confusion is to ask questions. Ebrahimi recommends asking vendors if their terminals and software are in fact PCI compliant.

FYIDid you know

Even when working with a PCI-compliant processor, you are obligated to do your part to ensure your customers’ card data is safe. For full compliance with PCI, card numbers cannot be written down, networks must be protected from intrusion, and payment data must be encrypted, among other requirements.

5. Nonpayments

Subscriptions and recurring charges provide a great way for businesses to automate repeat business, but one major drawback happens when payments get declined.

“One thing [that] I found most confusing, and is usually a cause for lost profits, is dealing with expired or canceled credit cards for recurring charges,” said Mike Salem, co-founder and CEO of Vorex, a professional services automation provider. “Many small businesses do not have a mechanism or the technological capacity to automatically stop a service until the customer updates his or her credit card information.”

Declined payments essentially become free services, Salem added. “Many small businesses must manually monitor credit card activities on a daily basis and might not notice a nonpayment before several days have passed after a charge has been declined, which means giving out a service for free. Trying to retroactively recoup the charges for unpaid days can be frustrating.”


Activate the account updater feature in your merchant account to update customer payment data for expired cards. Avoid unnecessary chargeback fees and lost revenue by notifying payment processors of recurring charges before you process them so the processors can make sure the card is valid.

6. E-commerce compatibility

Technology lets merchants conduct business anytime and anywhere, which is both a blessing and a curse. This flexibility creates several types of confusion for processing credit cards because not all credit card processors are compatible with all merchant services.

“Some business owners need to know that their merchant account will work seamlessly across all sales channels, like retail, e-commerce and mobile,” Ebrahimi said. “It can get confusing trying to make sure all channels can play well with each other.”

This is particularly the case with accepting credit card payments at self-hosted online stores.

“Up until recently, accepting credit cards for online payments has been a surprisingly complicated and painful process,” said Yarin Kessler, founder of online PDF conversion service PDF Buddy. “It required setting up a merchant account with a bank, signing up with a payment gateway, and then using any number of payment software solutions to integrate with your app. This meant multiple applications, fees and accounts just to get set up.”

Some credit card processing companies have made the process easier for merchants. For example, web payments company Stripe takes care of payments end to end, eliminating the need for separate merchant accounts and payment gateways, Kessler said.

“Since then, other companies like Braintree and PayPal have followed Stripe’s lead by simplifying their own processes for accepting credit card payments on the web,” he said. “Consequently, it is now vastly easier to accept credit cards for an online business than it was a few short years ago.”


If all or most of your business is conducted online, look for a credit card processor geared toward e-commerce, such as Shopify or PayPal. These types of processors have simple integration that makes it easy to set up your e-commerce store. Learn more in our Shopify review.

Top credit card processors

When looking for a credit card processor, consider these top companies. 

Merchant One

  • Merchant One does not charge a separate PCI compliance fee.
  • It accepts businesses with low credit scores.
  • It costs $6.95 per month plus a flat rate of 0.29% to 1.55% for in-person transactions.

Read our Merchant One credit card processing review to learn more.


  • Square does not charge monthly fees.
  • It offers a free POS app.
  • It has flat-rate pricing of 2.6% plus 10 cents for in-person transactions.

Our Square review has more details on how this processor stacks up to the competition.


  • ProMerchant accepts high-risk businesses.
  • It’s easy to get approved.
  • You have a choice of flat or interchange-plus pricing.

Consider our review of ProMerchant if you’re looking for more information on this processor.


  • Chase has POS and e-commerce capabilities.
  • The platform is easily scalable.
  • You have a choice of flat or interchange-plus pricing.

Stax by Fattmerchant

  • Fattmerchant’s monthly fees start at $99 for high-volume businesses. 
  • It has interchange-plus pricing with no percentage markup, just a per-transaction fee.
  • It does not charge a monthly fee for businesses processing less than $80,000 per year.
  • It has flat-rate pricing of 2.9% plus 8 cents per transaction for in-person transactions.

Jennifer Dublino and Sara Angeles contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

Marci Martin
Contributing Writer at
With an associate's degree in business management and nearly 20 years in senior management positions, Marci brings a real-life perspective to her articles about business and leadership. She began freelancing in 2012 and became a contributing writer for Business News Daily and in 2015.
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