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Best Credit Card Processing Companies of 2022

By
Mike Berner
,
Business News Daily Staff
| Updated
Jun 17, 2022

This list of 12 best credit card processors and buyer's guide will help you choose the right credit card processor for your small business.
Best for Easy Approval
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A+ Better Business Bureau rating
98% approval rate
No contract required
Best for New Businesses
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Flat-rate pricing
Wide selection of integrations
Month-to-month contracts
Best for High-Revenue Businesses
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Flat-rate pricing
Advanced reporting capabilities
Same-day funding available
Best for High Volume
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Transparent pricing and fees
Included PCI compliance
Volume-based discounts
Best for Growing Businesses
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No monthly or annual fees
Free POS and e-commerce app
Added features, like Afterpay
This list of 12 best credit card processors and buyer's guide will help you choose the right credit card processor for your small business.

What Is Credit Card Processing?

The credit card processor is the middleman between the credit card company and the business taking the payment. Funds transfer from the customer's credit account to a merchant's account to make a purchase. This process can happen in person, over the phone, by mail or online.

Best Credit Card Processors


  • For small businesses that process less than $5,000 per month, the most affordable card processing option is usually a processor that charges a flat rate for each transaction and doesn't impose monthly or annual fees.
  • Businesses that process more than $5,000 per month should look for a processor that offers interchange-plus pricing and charges few monthly or annual fees.
  • Look for processors that are transparent about their pricing by clearly posting rates and fees on their websites.
  • This best picks page is for entrepreneurs and small business owners looking for a credit card processing service.

Credit Card Processing Review Summary

Processors researched 12
Lowest processing rate 0.29%
Highest processing rate 3.5% + $0.35
Pricing models Flat, tiered and interchange-plus

Accepting card payments is a must for all businesses, whether brick-and-mortar or online. Choosing the best credit card processor can be a complex process for business owners, though, with complicated pricing and fees to navigate. We found the best credit card processors for every business type and size, including the best prices, features and overall ratings. Browse our top picks to find the best credit card processor for your business.

Best Credit Card Processing for Small Business

To select the best credit card processing provider for your small business, you must weigh your needs against the costs to accept payments. Prices and services vary from one credit card processor to the next. The best ones offer transparent and low pricing, few or no fees, flexible terms and the ability to expand as your business grows.

The credit card processors that stood out to us support a variety of payment methods, provide e-commerce and reporting tools, and transfer funds from credit card sales into your bank account as fast as possible. Some may not be the lowest-cost providers, but all of the extras make these services better options for small businesses. Here's a look at 12 credit card processors worthy of consideration:

Credit card processing company Best use case Pricing structure Contract structure Penalty for early termination Time to deposit Multiple payment methods supported Round-the-clock support
Merchant One Easy approval Flat rate Monthly No Within 2 business days Yes Yes
ProMerchant High-risk businesses Flat rate and interchange-plus Monthly No Within 2 business days Yes Yes
Clover New businesses Flat rate Monthly No Same day Yes Yes
Stax Fast-growing businesses Flat rate Monthly No Same day Yes Yes
Payment Depot Low fees Flat rate Monthly No Within 2 business days Yes Yes
Square Growing businesses Flat rate Pay as you use No Within 2 business days Yes No
Helcim High volume Interchange-plus Monthly No Within 2 business days Yes Yes
National Processing Budget Flat rate Monthly Yes Within 2 business days Yes Yes
Flagship Merchant Services Flexible contracts Flat rate and interchange-plus Monthly No Same day Yes Yes
Chase Merchant Services E-commerce Custom Flexible N/A Within 2 business days Yes No
Paysafe Online businesses Custom Month to month Yes Within 2 business days Yes No

Find the Right Credit Card Processor for Your Business

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Our Reviews

Merchant One: Best Credit Card Processor for Easy Approval

Merchant One offers extremely fast approval.
There are no PCI fees for new customers.
Termination fees may apply ($295 per remaining year in the contract).
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Every business, even if it has a low credit score, needs to be capable of processing credit cards. Merchant One seems to understand this, because it's one of the best credit card processors for easy approval. The average approval time is 24 hours, so business owners don't have to worry about the delays for new-applicant approval that can occur with other credit card processors.

Editor's score: 76/100

Merchant One provides credit card processing solutions with a variety of processing and POS features. Whether you're accepting payments online or in-store, Merchant One can support your business. Merchant One is one of the few credit card processors that look at more than your credit score when reviewing your application. Merchant One claims to have a 98% approval rate and says it's willing to work with all companies.

Another benefit of choosing Merchant One is 24/7 customer support for all customers. Other features include dashboard customization for various business types, the ability to use QR codes for payment, and bookkeeping features that make recordkeeping easy for businesses of all sizes. If you own a small business that has previously struggled with maintaining a high credit score, or if a speedy application process is a top priority, Merchant One is a great option to consider for credit card processing.

Read Merchant One Review

Clover Credit Card Processing: Best Credit Card Processor for New Businesses

Clover has flat-rate pricing.
It offers month-to-month contracts.
With Clover, First Data is your merchant acquirer.
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Clover is another great pick for small business owners whose top priority is flat-rate pricing, especially those in retail industries. Clover offers two pricing plans. Register Lite is best suited for businesses that have less than $50,000 in annual credit card sales. That plan costs $9.95 a month, a competitive price compared with those of other vendors we reviewed. You will also pay 2.7% plus 10 cents for in-person purchases, and 3.5% plus 10 cents for virtual or card-not-present purchases.

Editor's score: 83/100

The higher-tier Register plan costs $39.95 a month and is geared toward merchants with more than $50,000 in annual credit card sales. You pay a transaction fee of 2.3% plus 10 cents for in-person purchases, and 3.5% plus 10 cents for online and keyed-in purchases.

Clover also offers a virtual terminal, which enables you to accept payments without POS hardware. It costs 3.5% plus 10 cents per transaction. The credit card processor allows business owners to take advantage of its Rapid Deposit service, which makes funds from credit card sales in minutes. This is another benefit that makes Clover a top pick for new business owners who prefer not to wait the standard one to two days for funds from sales.

You can purchase or lease Clover POS equipment directly from the company or buy the equipment on your own. Clover maintains a large network of resellers, so it's worth shopping around to find the best deal for your POS hardware.

Read Clover Credit Card Processing Review

Stax by Fattmerchant: Best Credit Card Processor for High-Revenue Businesses

Stax offers flat-rate pricing.
Same-day funding is available.
The pricing structure is not suitable for low-volume businesses.
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Stax by Fattmerchant is a great option for established small businesses with high annual revenues. Instead of requiring a contract, the company charges a monthly subscription fee. The exact fees vary based on the plan, but it's worth noting that all plans are geared toward higher-revenue businesses that process up to $500,000 per year. For customers with annual revenues exceeding $500,000, Stax offers the option to customize pricing. Stax also charges fees based on transaction volume, and these processing fees are added to the monthly subscription fees.

Editor's score: 87/100

Stax's pricing structure can add up to major savings for businesses that process large volumes of transactions. For businesses that make less than $500,000 per year, though, Stax would likely be a more expensive option. The credit card processor is well aware of this, so if you own a business with a low volume of transactions, your Stax representative may advise you to consider more suitable credit card processors.

Stax offers a number of features, including brand customization options for invoices and receipts, as well as add-on features for each plan. Large businesses are also assigned to a specific account manager, thus eliminating the need to explain issues to numerous representatives. Another bonus of working with Stax is that everything is done in-house, including customer service and technical support.

Read Stax by Fattmerchant Review

Helcim: Best Credit Card Processor for High Volume

Helcim posts its rates and fees on its website.
The monthly fee includes PCI compliance, virtual terminal access and an online store.
Some competitors offer lower online processing rates.
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Helcim is an option for businesses that process more than $5,000 per month and want better rates than what flat-rate plans offer. We selected Helcim because it provides interchange-plus pricing to all of its merchants and posts its complete rates and fees on its website, so you know exactly how much you'll pay. Helcim has low rates as well as volume-based discounts, and it's one of the few companies with a rate lock that guarantees its margin won't increase over the life of your account. The amount a business pays varies based on sales volume and transaction types. As sales increase, the cost margin decreases. 

Editor's score: 83/100

Helcim is truly an all-inclusive credit card processor. It has in-person, online and mobile processing, plus more advanced solutions, such as invoicing, recurring payments, a hosted online store and payment pages, and online food ordering. 

The company provides services on a month-to-month basis, charges no early-termination fee and has 24/7 phone support. Helcim also offers customer support via email, which makes the company a great pick for businesses that can benefit from a broad range of customer support options.

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Square: Best Credit Card Processors for Growing Businesses

There are no monthly or annual fees.
The basic POS app is free and can be augmented as your business grows.
The customer service isn't as robust as some competitors'.
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Small businesses don't always remain small; some need a credit card processor that can grow with them. Square stands out in that regard because of its low rates, a free e-commerce app, and point-of-sale (POS) software that expands to support expanding businesses' needs, making it our best pick for growing businesses.

Editor's score: 80/100

Square stands out for its low-flat-rate pricing model. The company charges 2.6% plus 10 cents for in-person payments, and 3.5% plus 15 cents for card-not-present transactions. The cost for purchases through your Square online store, Square online checkout, e-commerce API or an invoice is 2.9% plus 30 cents. There are no monthly, gateway, setup, PCI compliance, early termination or annual fees, nor is there a chargeback fee. (Most processors have steep chargeback fees.)

We were also impressed with Square's credit card processing app. Not only can you process payments from nearly anywhere, but the POS software features help you track and manage inventory, collect and analyze customer data, and run reports on sales and inventory. The app works on both Apple and Android devices. It also integrates with several business applications, enabling you to combine your sales data with other accounting and management functions.

Square's retail- and restaurant-specific features support businesses as they grow. The inventory- and order-management tools help you meet current demand and predict future orders, and the e-commerce store lets you sell products online for free. As a bonus, Square's online stores can synchronize with your inventory and social media accounts. 

Square users have access to the buy now, pay later service Afterpay. This service allows shoppers to split up the cost of their purchases into installment payments with no interest. The Afterpay service is managed directly through the Square dashboard.

Square's POS software comes with a wide variety of accounting features we like for growing businesses, including the ability to track invoices, accept payments and manage sales from one dashboard. These features will appeal to business owners who want a central location from which to assess their business.

Square Capital, the company's lending arm, provides small business owners with merchant cash advances, with funding available as soon as 24 hours after application. You need to establish a processing history with Square to be eligible for the short-term loans, which may be useful as your business expands.

Growing small businesses may also like Square's Mastercard business debit card. Dubbed the Square Card, it makes it easy to access the cash from your transactions. There are no sign-up fees, annual fees, monthly fees, minimum balance fees or overdraft fees. Another perk: You get an instant discount of 2.75% when you use this card to shop at other Square sellers.

Your business can also accept ACH payments on your Square Invoices. This provides a secure alternative way for businesses to accept payments with lower processing fees. When your business sends a Square Invoice, customers can click the payment link, provide their bank details and complete the payment online.

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ProMerchant: Best Credit Card Processor for High-Risk Businesses

High-risk merchant plans are available.
ProMerchant offers flexible pricing.
The company is not transparent about its pricing.
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If you're considered a high-risk account – because of either your credit score or your industry – it can be hard to find credit card processors that are willing to work with you. But ProMerchant has a high approval rate, even for high-risk companies. That means you have a good chance of being approved, whatever your industry or business type.

Editor's score: 89/100

Once you contact ProMerchant for a free quote, the company will evaluate your business and recommend the best plan for you. The application process is fairly straightforward, and most businesses will know whether they are approved within 24 hours.

All of ProMerchant's hardware and software solutions are PCI compliant. This means the company meets the highest data security standards for the payment card industry. To maintain PCI compliance, business owners must fill out a yearly self-assessment and conduct quarterly scans of their processing solutions. This process ensures that your customers' information stays safe and reduces your liability.

All terminals provided by ProMerchant provide NFC technology and EMV compliance. The company offers fraud protection services and end-to-end encryption to secure payment information. These features mitigate the security issues that many businesses encounter. One of the best things about ProMerchant is its robust customer support. Immediately after you sign up, you receive access to a personalized support team that will be available to you 24/7/365 by phone and email as long as you remain a ProMerchant customer.

Read ProMerchant Review

Payment Depot: Best Credit Card Processor for Low Fees

The company is transparent about its pricing.
You're not bound by a lengthy contract.
Payment Depot is not available to merchants outside the U.S.
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For small businesses that process a high volume of card transactions, it can get expensive very quickly if you choose the wrong credit card processor. Payment Depot's membership-based pricing and wholesale rates help keep your processing costs in check, which is why we chose Payment Depot as our best pick for low fees. 

Editor's score: 70/100

With Payment Depot, customers pay a flat rate each month and a low transaction fee. There are no setup fees, cancellation fees, monthly fees or long-term contracts. Businesses that process a high volume of payments stand to save the most when working with this credit card processor.

Payment Depot offers four plans based on monthly processing volume. The Basic plan, which is for businesses that process $25,000 or less each month, costs $49 plus 15 cents per transaction. The Most Popular plan is for businesses that process up to $75,000 a month; it costs $79 a month, plus 10 cents per transaction. The Premier plan is for companies that process up to $150,000 a month; it costs $99 per month and 7 cents per transaction. The Unlimited plan has no monthly processing limit and costs $199 per month and 5 cents per transaction. 

We like that Payment Depot offers several pricing plans and that the company's website lists pricing.

When you sign up with Payment Depot, you receive a merchant account, which allows you to accept payments in-store, online and via mobile devices. Payments are typically deposited into your account in one or two business days. Payment Depot also provides integrations with QuickBooks, Shopify and WooCommerce.

Businesses that process a lot of credit card sales need a processor that is easily accessible. Payment Depot assigns you a dedicated account rep who serves as your main point of contact. Support is available Monday through Friday from 11 a.m. to 8 p.m. ET.

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Chase Payment Solutions: Best Credit Card Processor for E-commerce Businesses

Chase offers both flat-rate and interchange-plus pricing.
Chase Payment Solutions has POS and e-commerce capabilities.
The flat-rate pricing can be expensive if your business has a high sales volume.
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If you own an e-commerce business or already process payments through PayPal, Chase should be on your radar as you consider credit card processors. As one of the largest banks in the U.S., Chase offers the convenience of a bank and a processor rolled into one. By choosing a direct processor such as Chase, you can negotiate rates and contract terms without a middleman. Chase also offers flat-rate pricing.

Editor's score: 87/100

With Chase Payment Solutions, small business owners in the e-commerce space enjoy a seamless integration with PayPal. The company also offers the highly rated Orbital Virtual Terminal, which allows business owners to use a computer as a credit card terminal. An optional USB-connected card reader is also available for added convenience. Although the virtual terminal is free, business owners are required to pay for the card reader.

The Chase Mobile Checkout app is available to iOS and Android users who process payments through a tablet or smartphone. The app works with Bluetooth and is EMV-compliant, which makes it a convenient option for small business owners. Although the app is free to download, a long-term contract with Chase Payment Solutions may be required to use it, so it's important to read your contract's fine print.

Read Chase Payment Solutions Review

National Processing: Best Credit Card Processor for Businesses on a Budget

National Processing has some of the lowest interchange-plus rates.
All customers are assigned a dedicated account representative.
National Processing charges a termination fee.

National Processing is our budget pick because it charges lower interchange-plus rates than competitors. It also has a rate-lock guarantee that ensures you don't unexpectedly pay more to process card payments. 

Editor's score: 80/100

One downside of National Processing is that it charges a termination fee. To avoid the fee, customers must provide proof of a lower rate from a different credit card processor, which National Processing may then match. The fee is also waived if your business closes. The company will pay you $500 if it can't beat your current rate. On the plus side, you won't pay National Processing an annual fee or a monthly minimum.

This credit card processor offers three pricing models: one each for retailers, restaurants and e-commerce companies. All three plans cost $9.95 per month and include the rate lock guarantee. Restaurants pay 0.14% plus 7 cents per transaction, retailers pay 0.18% plus 10 cents per transaction, and e-commerce businesses pay 0.3% plus 15 cents per transaction.

Unlike other card processors, National Processing also charges a PCI compliance fee. And although you aren't forced to sign a long-term contract, which is another plus, National Processing does charge a termination fee. The company will waive this fee if your business is sold or closed, or if National Processing can't match or beat a rival's credit card processing rate. 

National Processing, similar to other credit card processors we evaluated, provides customers with a merchant account, which lets you process payments in person, online or via mobile devices. You can also send one-time and recurring invoices and accept payments via the company's billing software, which also gives you access to tools that lower the likelihood of fraud and chargebacks. Additionally, with this credit card processor, you get ACH processing, QuickBooks accounting integration, and a virtual terminal that lets you accept credit card payments when customers enter their information on your e-store or when they pay by digital invoice on your website.

National Processing's customer service was another reason we selected it as one of our best picks. We like that you get a dedicated account representative who is available Monday through Friday from 10:30 a.m. to 7:30 p.m. ET. Tech support is available 24/7.

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Flagship Merchant Services: Best Credit Card Processor for Flexible Terms

There are no long-term contracts or cancellation fees.
You can choose between interchange-plus and tiered processing rates.
Flagship charges a PCI compliance fee.

Small business owners don't want to be locked into long-term contracts with exorbitant termination fees; they want flexibility and freedom, which they get with Flagship Merchant Services, our pick for the best credit card processor for flexible contracts.

Editor's score: 90/100

Flagship Merchant Services is a full-service payment processing company that charges on a month-to-month basis and has no cancellation fees. The credit card processor offers two pricing models: the interchange-plus rate and a tiered pricing model.

The tiered pricing model can get confusing, as there are multiple options. Flagship doesn't list its prices online for either pricing model; you will need to contact the company to get a custom quote.

Flagship Merchant Services also sells a variety of credit card processing hardware, so you can easily accept payments in-store, on the go and online. For example, Flagship sells a simple credit card terminal with a built-in PIN pad, which is a good option for new businesses, as well as a comprehensive POS system, which may be a better option for more established businesses. 

Flagship sells terminals and POS equipment from Verifone and Clover, among other vendors. It is possible to get free equipment from Flagship (a free Clover Mini credit card processing terminal), but you must sign a three-year contract. We recommend that you purchase your card processing reader or terminal so you can keep your month-to-month service terms. Your Flagship account also comes with an online reporting tool that you can use to analyze your sales data.

Flagship offers good customer service. You get a dedicated account representative who is available during regular business hours. (Flagship is based in Birmingham, Alabama.) If you need help with your account after hours, 24/7 technical support is also available; just visit Flagship's site, provide your contact info, and submit your request.

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Paysafe: Best Credit Card Processor for Digital Tools

Paysafe supports e-cash payments.
You can make recurring payments and send invoices.
You must contact the company to compare interchange-plus and tiered pricing plans.

Paysafe is our pick for the best credit card processor for digital tools. Whether your business accepts e-invoice or online payments, you need a credit card processor that understands e-commerce, can process a variety of payments, works with a range of POS devices, and can transform your smartphone into a mobile checkout device. 

Editor's score: 84/100

We like that Paysafe enables you to accept cash for online purchases, which is somewhat rare among credit card processors. Using Paysafe's eCash service, customers can pay cash for their purchases by entering a 16-digit code. That capability opens up new opportunities for you to do business with customers who have been wary of buying online or who previously couldn't. With Flagship's eCash service, you can reach international customers and consumers who don't have a credit card or bank account.

If you need a POS system, you can get it through Paysafe. The company offers Clover POS hardware, as well as the PAX A920 mobile tablet terminal. Paysafe includes free PCI compliance; many other processors charge a separate fee for PCI compliance. Plus, you can send invoices and set up recurring payments. 

Paysafe's focus on PCI compliance stood out to us. Following proper security protocols can help protect small business owners from liability. We like that Paysafe's out-of-the-box and customizable checkout platforms emphasize security breach protection.

Paysafe is the parent company of Skrill and Neteller, two e-money transfer services. Through the two digital wallets, customers can make real-time payments at more than 25,000 online merchants in more than 40 currencies. Paysafe has been expanding the cryptocurrency capabilities of both Skrill and Neteller, enabling customers to withdraw money from digital wallets and send it to a crypto address. 

Paysafe doesn't disclose pricing on its website. You must fill out an online form or contact the company to get a quote.

E-commerce is booming, and small businesses will increasingly need to accept different forms of payment. Paysafe stands out in that regard, making it our best pick for digital tools. 

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Stripe: Best Credit Card Processor for Online Businesses

Stripe doesn’t charge account fees or require long-term contracts.
It integrates with hundreds of business software applications, including e-commerce platforms.
Stripe has transparent, flat-rate, pay-as-you-go pricing for its basic processing services.

Stripe is the best credit card processor for online businesses because it easily connects to existing e-commerce stores and websites with ready-to-go integrations and prebuilt checkout forms that you can customize to match your brand. It has transparent pricing with flat rates, no account fees for its basic services and no contract. In addition, Stripe's services are scalable, allowing you to add advanced features and customizations as your business grows.

Editor's score: 80/100

We like that Stripe integrates with a huge variety of e-commerce platforms, online shopping carts and other business software, such as QuickBooks. The prebuilt checkout forms can be easily embedded on any website. For business owners with more advanced website development capabilities, Stripe also allows extensive customization. 

Here's a small sampling of the e-commerce solutions that integrate with Stripe:

  • Big Cartel
  • BigCommerce
  • Cratejoy
  • Ecwid
  • GoDaddy
  • Magento 2
  • Shopify
  • Squarespace
  • Volusion
  • WooCommerce
  • Wix
  • X-Cart

Stripe's client libraries and mobile API meet industry standards, such as Payment Card Industry Data Security Standard requirements, so you're always compliant. Stripe is certified as PCI Service Provider Level 1, although you will still need to do your part to be PCI compliant by following the data security standards and completing the annual self-assessment.

Stripe has simple, transparent pricing for its credit card processing services, with no hidden fees. Online credit card transactions cost 2.9% plus 30 cents, while in-person credit card transactions cost 2.7% plus 5 cents. Stripe also assesses a chargeback fee of $15. Additional products and services, such as instant payouts, also cost extra. 

The one downside is that Stripe may not be the best solution for business owners who aren't highly tech-savvy. Some merchants may need to hire a web developer to help them unlock the full value of the service. 

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COSTS, FEES AND EQUIPMENT FOR CREDIT CARD PROCESSING

Cost is one of the most important factors to examine when you're deciding which credit card processing service to use. You don't want to overpay thousands of dollars for the convenience of accepting credit and debit cards from customers.

What Costs Should You Expect for Credit Card Processing?

There are usually three sets of costs involved when you are choosing a credit card processor: rates, fees and equipment costs.

  • Rates: These are the processing fees you pay for each transaction. Rates are typically a percentage of the total sale amount. In addition to this percentage, card processors charge a few cents per transaction.
  • Fees: Most processors charge monthly account service fees, which are reflected on your statement, but some processors may levy these fees quarterly or annually.
  • Equipment costs: The cost of equipment is usually a one-time expense for the hardware needed to accept credit cards. We recommend buying processing equipment upfront whenever possible. Many processors offer leasing (or free equipment), but it's typically associated with exorbitant costs.

Credit Card Processing Rates

The rate you pay a credit card processor consists of three parts: the interchange rate, the card brand's assessment fee and the processor's markup. The interchange rate and the assessment fee are set by the card networks, and everyone pays the same amount. This portion of the rate is non-negotiable. However, each processor sets its own margin, so that part is negotiable.

From these three parts, processors create their rate structure or pricing model. There are three main rate structures to know.

  • Flat-rate pricing: For businesses that process less than $5,000 per month or have very small sales tickets, flat-rate pricing is usually the most affordable option, because all you pay is a fee for each transaction; there may be no monthly or annual account fees. (However, some fees, such as a PCI compliance fee, may still apply.) 

TipTip: Shop around before committing to a flat-rate processor. Flat rates can be expensive for small businesses.

  • Interchange-plus pricing: Most industry experts recommend interchange-plus pricing for businesses that generate a lot in credit card sales. That's because the price you're quoted is the processor's markup (the only aspect of pricing that is negotiable), which you can easily compare as you evaluate the pricing of multiple processors.
  • Tiered (or bundled) pricing: With a tiered pricing model, the processor bundles the interchange rates, assessment fees and the processor's markup, and separates them into three tiers: qualified, mid-qualified and nonqualified. Companies that use the tiered pricing model usually advertise only the qualified rate (which applies to regular debit cards accepted in person using a card reader) and disclose the other tiers only if you specifically ask for them. It's impossible to determine the processor's markup with a tiered pricing model, and the number of tiers (and the types of transactions that go into each tier) vary by processor, so it's difficult to know if the rates you're offered are competitive.

What Is the Average Fee for Credit Card Processing?

The average credit card processing fee ranges from 2% to 4% of each sale. Here are some of the factors that determine the per-transaction cost:

  • The type of card your customer uses (debit, credit, rewards, premium rewards, corporate)
  • How you accept the card (in-person using a card reader, manually keyed in, online)
  • The pricing structure your processor uses (flat rate, interchange plus, tiered)

What Fees Come With Credit Card Processing?

There may be several fees in addition to the processing rate per transaction. It can get confusing, because each processor may charge different fees; it's hard to know which fees are standard and which ones are superfluous. [Check out some tricks to help you lower your credit card processing fees.]

Processors with flat rates usually don't charge account service fees, but you still need to be aware of some incidental fees.

  • Monthly fee: This fee, sometimes called a statement fee, covers customer service and statement preparation. It ranges from $5 to $15 per month, though it may be higher if it covers additional services, like PCI compliance and gateway fees.
  • Payment gateway fee: This monthly fee covers the usage of the payment gateway, which allows you to accept payments online. The cost varies depending on the payment gateway, but it is often comparable to the monthly fee ($5 to $15).
  • Monthly minimum fee: Some processors require you to generate a certain dollar amount in processing fees each month. For some processors, the monthly minimum is $25, but others set it higher. If you do not meet this number, you're charged the difference.
  • PCI compliance fee: All full-service processors require merchants to complete a PCI compliance questionnaire each year. Not all processors charge this fee, but for those that do, the average cost is $100 per year. If you don't complete your PCI questionnaire, you're charged a high PCI noncompliance fee until you do.
  • Network fees: These fees are charged by the card networks and are passed on to you as either monthly or annual fees. Examples of these fees are Mastercard's Merchant Location Fee and Visa's Fixed Acquirer Network Fee.

In addition, some fees are triggered by a certain action. Here are some examples.

  • Chargeback fee: When a customer disputes a transaction, you're charged this fee. It usually costs $15 or $20 per incident, but it may be as high as $45. Some processors refund this fee if you win the dispute.
  • Address Verification Service (AVS) fee: AVS is an anti-fraud tool that verifies the address and ZIP code of the cardholder. It usually costs a few cents per transaction.
  • Voice authorization: This is another anti-fraud feature that requires you to call the credit card company to provide them with additional information about the transaction. It's rarely required, but you're charged for each occurrence.
  • Batch fee: This is a small daily fee you pay when you close out the day's sales. It usually costs the same amount as your per-transaction fee, which is typically between 10 and 30 cents. Not all processors charge this fee.
  • Non-sufficient funds (NSF) fee: This is a fee you are charged if you don't have enough money in your business bank account to pay the fees you owe the processor.

What Equipment Does a Business Owner Need to Process Payments?

At a minimum, you'll need a phone or tablet credit card reader or a credit card terminal. Additional hardware, also called peripherals – like cash drawers, receipt printers and barcode readers – can be added to your system.

When you're shopping for a card reader or terminal, look for one that lets you accept magstripe cards, chip cards, and contactless cards and mobile wallets. The best credit card readers have these capabilities and typically cost less than $100 (usually between $20 and $50). If you prefer a credit card terminal, a basic one with these capabilities usually costs $200 to $300.

TipTip: The best credit card reader for small business owners may be a mobile credit card reader used with a smartphone or tablet and the processor's app. It's an affordable choice, and you save further because you can email or text receipts to your customers so you don't have to buy a receipt printer (or paper).

WHY DO BUSINESSES NEED CREDIT CARD PROCESSING?

Credit card processing allows you to accept payments from customers who pay using a credit card, debit card or mobile wallet, like Apple Pay or Google Pay. You need to be able to accept these payment methods because that's how most customers prefer to pay. Cash use continues to decline, particularly in light of the pandemic as customers and merchants opt for contactless and online payments. With contactless payments, consumers tap their mobile device, contactless credit or debit card, or wearable on the payment terminal to check out. This payment method is quicker and safer than handing cash to a cashier or swiping a credit card. Most of the top POS providers and credit card processors support tap-to-pay.

What Are the Benefits of Credit Card Processing for Businesses?

Accepting your customers' preferred payment method has a couple of additional benefits. First, customers can spend more when they shop with a credit card than when they pay cash. Second, you won't lose potential sales from customers who don't carry cash.

What Are the Basics Business Owners Should Know About Credit Card Processing?

You have a lot of options for credit card processing, but some processors are accessible for nearly every business, even solopreneurs and freelancers.

If you are an entrepreneur or a freelancer who's just starting out, consider a mobile credit card processing company such as Square, which has flat rates, no contracts, a free mobile credit card processing app, and affordable card readers that connect to a phone or tablet. Then, as your business grows and your processing volume increases, you can add more equipment and features, or you can switch to a more advanced payment processing service.

Here's why we like mobile credit card processors for new businesses:

  • Low startup costs. You already have a smartphone or maybe even a tablet; the only thing you need to buy to start accepting credit cards is a card reader. Some processors give you a free swiper when you sign up, but you want a model that accepts chip cards and contactless payments. These readers cost less than $100 (usually $20 to $50).
  • Pay-as-you-go fees. Most flat-rate processors charge you only when you run a card, and you pay a flat rate for each transaction. This rate looks higher than what some processors advertise, but that's because you don't pay monthly account service fees. If you opt for a full-service processor, look for one that has interchange-plus pricing, which is more transparent and economical than tiered (or bundled) pricing structures.
  • No monthly minimum. Some processors have a monthly minimum, which means you're required to process enough sales each month to generate a certain dollar amount in processing fees. If you rarely accept credit cards, you don't yet know how much you'll process each month or you have a seasonal business, you shouldn't work with a processor that charges this fee.
  • No contract. Standard credit card processing contracts have three-year terms and automatically renew for additional one-year terms with just a 30-day window at the end of the term to cancel. If you want to cancel your account but you miss that window and then cancel, you're charged an expensive early-termination fee. If you choose a full-service processor, look for one that has month-to-month terms. The best credit card processors don't make you sign a lengthy contract to keep your business.

Why Is Support for Offline Transactions Beneficial to Merchants? 

The internet is usually reliable, but outages do occur. If you are a merchant that relies on the internet to process payments, you're out of luck if your provider doesn't support offline transactions. Thankfully, most do. 

With this type of transaction, the customer checks out normally, with the card data encrypted and stored on the terminal until an internet connection is established. Once the merchant is back online, the information is sent to the merchant's bank account and card network. That means your business won't lose sales during an internet outage. If you want to accept card payments outside your establishment, this feature also proves handy. 

Frequently Asked Questions

Is credit card processing secure?

As a small business owner, you must remain vigilant against credit card fraud. Though most headlines focus on data breaches at major retail chains, small businesses are vulnerable, too. Small businesses can shore up their credit card processing security measures by doing two things.

The first step is to ensure that you comply with the Payment Card Industry Data Security Standard (PCI DSS). Created by Visa, Mastercard, American Express, Discover and JCB in 2006, this standard requires that businesses meet certain criteria to ensure their transactions are as secure as they can be.

The second action is to upgrade your card reader to accept EMV (Europay, Mastercard and Visa) chip cards. Most credit cards have a chip embedded in one end of the card, and having the technology to read it makes the transaction significantly more secure because the chip is harder to counterfeit than the standard magnetic strip.

How can you avoid credit card processing fees?

Credit card processing companies rely on fees to make their money, so there's no way to completely eliminate credit card processing fees. If you feel you're paying too much in fees, you can negotiate with credit card processors to reduce them. If you can accept cards in person instead of over the phone or online, you'll also save money on fees.

Another option is to set a minimum transaction amount that customers must meet before they can pay with a credit card. By doing this, you can ensure you come out on top of the transaction, since it makes more financial sense to pay the fee on a $10 purchase than on a $2 one. The major credit card networks have rules about minimum transaction amounts, so verify that your policy complies with their rules.

Similarly, you can move the fee to your customers entirely by using cash discounts or surcharging. Many gas stations use this method, in which a gallon of gas is discounted if you pay with cash. Though this may cause potential customers to take their business elsewhere, it could encourage people who prefer paying with cash to frequent your store more often. If you go this route, check the credit card networks' rules for surcharging to ensure you follow best practices.

How much are credit card processing fees for consumers?

Consumers usually don't pay credit card processing fees. Some processors advertise surcharging programs that pass processing fees to your customers. However, these programs aren't popular with consumers and thus could be risky.

Before implementing such a program, you need to know your customers and determine if they would accept it or if it would lead them to shop elsewhere. As mentioned above, the credit card networks have surcharge rules.

How long can a merchant hold an authorization?

Authorization holds vary depending on the status of the transaction and the card issuer's self-imposed time limits. For most transactions, a merchant has up to 30 days to clear an authorization hold, though some credit card companies, like Visa and Discover, have significantly shorter time limits before such authorizations "fall off" the account. By failing to complete a transaction hold, you run the risk of the credit card processing company charging you a misuse fee.

What are the typical credit card processing fees?

Credit card processors charge a variety of fees. Some are etched in stone; others are negotiable. One non-negotiable charge is the interchange fee, which card-issuing banks charge on every transaction made with their credit cards. That fee is passed on to the merchant. The amount charged is based on the type of credit card the customer uses, whether the transaction is in person or online, and the amount of the purchase. The riskier the payment method is, the more you pay in interchange fees.

The assessment fee or service fee is another non-negotiable cost. Payment processors must pay this fee to the card networks, and they pass that fee on to the merchant.

The payment processor's markup is the fee the payment processor charges to use its services. You may be able to negotiate this fee with some credit card processing companies.

What should I look for in a credit card processor?

When you're looking for a credit card processor that is right for you and your business, consider the fees the processor charges, the terms of the contract, and the service it provides. You don't want to be stuck with a payment processor that doesn't have live customer support or is impossible to reach when you have a problem. You also want one that will work with you to ensure you remain PCI compliant, that offers EMV-supported card readers and that accepts multiple payment methods.

What pricing structures are available for credit card processing?

There are three main credit card processing pricing models: tiered, interchange-plus and flat rate. With tiered pricing, the credit card processor charges you the interchange rate, an assessment fee and its markup in different tiers. There are usually three tiers, but some vendors have up to six. The rates might vary by transaction type and credit card. It's difficult to compare the costs of vendors with tiered pricing.

Interchange-plus pricing is a structure in which credit card processors charge you the interchange rate, the assessment fees and their markup. You know exactly how much you are paying for the transaction, since the markup stays the same regardless of the type of card or transaction.

With a flat-rate pricing model, the vendor charges you a fixed percentage of each sale regardless of whether the customer is using a Visa, Mastercard or any other credit card. There could also be a per-transaction fee that depends on whether the transaction was an in-person or card-not-present payment.

How long does it take to settle credit card sales?

It typically takes 24 hours to three days to settle a credit card sale. It depends on the merchant account provider and the type of merchant account you have. Thanks to advances in payment technology, the turnaround to clear credit card sales is faster than it used to be. If you choose a direct processor, like Chase – which is a combined processor and acquiring bank – you can expect shorter time frames.

Does online credit card processing work the same as in-store processing?

In-store and online credit card processing work the same way. The only difference is that, with online credit card processing, the consumer doesn't swipe or insert a credit card. Instead, the customer inputs their credit card information while checking out online. This information typically includes the card number, the expiration date, the CVV number and the shopper's billing address. Most credit card processors support both in-person and online payments. The latter is becoming more important as e-commerce and mobile commerce become more popular.  

Should I avoid tiered credit card processor pricing?

Most small businesses should avoid tiered credit card processor pricing, which bundles the interchange rate, assessment fees and markup into one pricing plan. Because the costs are bundled, it's difficult to tell how much you are paying for each item. It also makes it hard to comparison shop. Unless the vendor is willing to break out its fees, it's best to avoid a tiered pricing structure.  

Did the COVID-19 pandemic have any impact on how small businesses accept payments?

The COVID-19 pandemic had a big impact on how consumers pay for products and services. Contactless and digital payments, which were once considered a nice-to-have, quickly became a must-have. Mobile payments and e-commerce also grew significantly. Small businesses were forced to adapt by acquiring contactless payment terminals, accepting different digital and mobile payment methods, and embracing e-commerce as the main way to conduct business. Although the growth rate in new payment technologies has receded, these payment methods have become the norm for many consumers. 

Do people pay with cryptocurrency? 

Approximately 18% of the U.S. adult population has invested in, traded or used cryptocurrencies, according to eMarketer. Credit card companies such as Visa and Mastercard are getting involved, making it easier for small business merchants to accept bitcoin and other cryptocurrencies via credit card. Future growth in cryptocurrency remains highly speculative, and there is no guarantee that it will retain its value. That said, accepting cryptocurrency as payment could serve as a way for small businesses to distinguish themselves from competitors and gain public attention. 

What are the steps involved in credit card processing?

The steps in credit card processing are the same for most product categories and business types. The process starts with the customer selecting an item to purchase. The credit card is then swiped, scanned or entered into a payment terminal. Next, the data is transmitted to be approved. Once it goes through the authorization, which happens in seconds, the transaction will either go through or be declined. If there are enough funds, the transaction is authorized and completed. The merchant closes out all of the credit card transactions at the end of the day, and the credit card processor's acquiring bank collects the money from the credit card issuers. The sales are then deposited into the merchant's bank account, typically in two days or less.

Why do credit card processors offer high-risk merchant accounts? 

Not all credit card processors work with every business. Industries that are prone to fraud and chargebacks may have a tougher time finding a company to process their sales. Some credit card processors work with high-risk businesses, but they charge more for their services, to mitigate some of the risk. They call their accounts high-risk merchant accounts and charge you more in processing and chargeback fees. 

Which businesses do credit card processors consider high-risk? 

Tobacco and gambling are often perceived as high-risk businesses by credit card processors. Other industries a credit card processor may not work with include pawn shops, subscription services, alcohol sales and firearm dealers.

What to Expect in 2022

Consumers have high expectations for credit card payments, which means you should work with a credit card processor that helps you meet these standards. One requirement is a "fast, frictionless experience" that is also secure, according to 92% of the 7,000 North American and European consumers surveyed for an Ekata report.

Since the COVID-19 pandemic, the popularity of mobile and contactless payment options has surged. According to Square, just 5.4% of Square sellers were cashless in February 2020, but that percentage jumped to 23.2% in April 2020. As states relaxed their restrictions and more retail locations reopened, the percentage dropped back down and settled at 13.4% in August.

Economist Felipe Chacon said he believed the findings showed "a significant and stabilizing increase in cashless adoption rates compared to pre-pandemic, with business owners increasingly reliant upon contactless and online payments and consumers utilizing those alternatives." He suggested that COVID-19 will affect how people conduct business for years to come.

Credit card processing fees are something else to watch this year. The pandemic has increased the rate at which shoppers are using digital payments. While cash was already declining in usage, the rate at which this has happened really accelerated over the past two years. This has left small businesses accepting more credit card payments, which, in turn, has meant they've paid more in credit card processing fees. 

Those fees are becoming a significant burden for many businesses. Research from the Canadian Federation of Independent Business revealed that 78% of businesses believe their credit card processing fees have been unaffordable. We expect that small business owners who are shopping for credit card processing services will zero in on pricing and choose providers that can give them a reasonable rate both now and as their transaction volume increases.

Services that allow consumers to pay for purchases in installments have also grown in popularity. So-called buy now, pay later (BNPL) has become a preferred payment method for a growing number of younger consumers. Notably, shoppers tend to spend more when going this route.

Credit card processors are starting to integrate BNPL support into their POS systems. In August 2021, Square acquired Afterpay, which lets consumers make installment purchases for items at the point of sale. The integration was officially launched in January 2022.

When announcing the deal, Square said it would integrate Afterpay into its Seller and Cash apps, allowing small merchants to offer BNPL at checkout. Stripe, a competing payment processor, already supports Afterpay. Even Walmart is getting into the game, scrapping its layaway program for a BNPL offering. 

In addition to a "fast, frictionless experience," consumers expect their data to be secure. Although Visa found that EMV adoption has been extremely effective in reducing incidents of card-present fraud, it is still rampant. According to Juniper Research, retailers will lose $130 billion to card-not-present fraud between 2018 and 2023.

Payment processing companies are projected to spend close to $10 billion by 2023 to detect and prevent fraud. In a TSYS blog, Scott Talbott, senior vice president of government affairs at the Electronic Transactions Association, wrote that "these tools are powered by technological advancements like machine learning, biometrics, geolocation tools and artificial intelligence. They are critically important in the fight against increasingly sophisticated criminals."

Donna Fuscaldo and Lori Fairbanks contributed to the writing and research in this guide.

Mike Berner
Mike Berner
Business News Daily Staff
Mike Berner is a staff writer at business.com and Business News Daily specializing in finance. Mike has a deep background in the financial world, having written hundreds of articles and blog posts on financial markets, business and investing. He holds a B.A. in economics and a B.B.A. in finance, both from the University of Massachusetts, Amherst. Prior to his writing career, he performed quantitative analysis and research as an economic analyst.
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