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Updated May 08, 2024

6 Confusing Things About Accepting Credit Cards

Credit card processing rates and service contracts don't have to leave your head spinning. Our guide will help you make sense of it all.

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Marci Martin, Business Operations Insider and Senior Writer
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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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. While you don’t need to be a contract lawyer to understand the terms and conditions of your credit card processor, you do need to read the contract thoroughly 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 agreements and complicated compliance issues might leave your head spinning. To help you make sense of everything involved with accepting credit cards, we’re going over six of the most confusing aspects and ways to make the process simpler.

Confusing things about accepting credit cards

1. Credit card processing quotes and fees

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

“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 representatives 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.

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.

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 enterprises. 

For example, a flat percentage with no per-transaction fee is best for companies that make many small sales, such as cafes. A lower percentage with a per-transaction fee is best for businesses 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 point-of-sale system. To prevent needing to switch providers down the line, choose a processing vendor that can serve your needs as your business grows. You may be able to start out with one pricing structure and move to another as your volume increases.

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

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.

With 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 lower your credit card processing fees.]

Did You Know?Did you know
Interchange fees 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 one of the most important — and confusing — aspects of signing up with a credit card processor. Failure to understand your service agreement completely could lead to some unpleasant surprises later on.

“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 and communicating directly with the vendor, you risk the shock and hindrance of hidden fees and service limitations. In particular, you should ask how long the agreement lasts and whether you are leasing the credit card processing equipment, Ebrahimi said. Watch out for processing fees, including early termination, annual, setup, monthly, monthly minimum and Payment Card Industry (PCI) compliance fees, he added.

Be wary of credit card processing vendors 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 company to remove it — or move on to another 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 lead to 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 assume the credit card processing provider will handle PCI compliance or they don’t know enough about security to verify whether their credit card processor is compliant. Some may not even think their business is at risk, but large companies aren’t the only ones that get hacked. Over 45 percent of data breaches affect small businesses, according to a Verizon 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,” he said.

As with pricing and fees, the best way to prevent confusion is to ask questions. Ebrahimi recommends point-blank asking vendors if their credit card 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’ credit 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 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 of Vorex, a professional services automation provider. “Many small businesses do not have a mechanism or the technological capacity to stop a service automatically until the customer updates [their] 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.”

Did You Know?Did you know
You should 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 account 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, co-founder and chief technology officer of PropertyScout. “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 integrations that make 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 our choices for the best credit card processing companies. We analyzed and reviewed a variety of vendors and services, comparing transaction fees, plan options and more.

Merchant One

  • Since 2015, Merchant One hasn’t charged a separate PCI compliance fee for new customers.
  • It accepts businesses with low credit scores.
  • The base plan 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 on its entry-level plan.
  • The free plan includes a POS app at no charge.
  • The free plan has flat-rate pricing of 2.6% plus 10 cents for in-person transactions.

Our Square credit card processing review details how this processor stacks up to the competition.

Chase Payment Solutions 

  • Chase’s platform has POS and e-commerce capabilities.
  • The system is easily scalable.
  • The bank processor feature means payments go through significantly faster than normal.

Learn everything this processing service has to offer in our Chase Payment Solutions review


  • Stax’s monthly fees start at $99 for high-volume businesses. 
  • There is interchange-plus pricing with no percentage markup, only a per-transaction fee.
  • Another option is flat-rate pricing of 8 cents per transaction for in-person transactions.

Check out all the features available in our Stax credit card processing review.

Know the fine print and avoid credit card processing surprises

It’s easy to get caught off guard when you don’t understand all the details of credit card processing. Stay one step ahead by putting in the effort to understand everything you’re committing to when you sign up with a credit card processor. When you do your homework ahead of time, you don’t have to worry about hidden fees or security issues later on. The more you prepare now, the more time you can spend on the most important part — accepting sales with ease and keeping your loyal customers happy.

Natalie Hamingson and Jennifer Dublino contributed to this article. Source interviews were conducted for a previous version of this article.

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Marci Martin, Business Operations Insider and Senior Writer
Over the years, Marci Martin has mastered the art of proposals and business plans and risen to become president and CEO of a small company. She is a business management pro and skilled project manager who has spent more than 10 years overseeing business operations for a range of companies. She's had hands-on experience in such notable business areas as finance, human resources, logistics and safety. Martin, who has a degree in business management, is also passionate about leadership and public speaking. She enjoys conceiving business messaging and presentations, which she infuses with her real-life experiences and perspective.
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