Updated July 26, 2020

Cheapest Credit Card Processing

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Looking for a cheap credit card processor for your small business? The right one can help you keep more profits. Here is a list of the top options.

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It's crucial for any business to accept credit card payments. Unfortunately, credit card processing fees is a necessary part.

Credit card fees can be very confusing. Each company has different fee structures. You can't just look purely at the lowest price. It may work for one kind of business, but be expensive for another. You have to think about what features you want and what's included in the fees.

Here are the top recommendations for cheap credit card processing companies for all types of businesses.

Here are the top cheap credit card processing providers for 2020:

Cheapest Credit Card Processing Rates

Here is a quick comparison of the rates charged by the top payment processing services.

CompanyPricing ModelProcessing Rates
SquareFlat rate2.6% + $0.10 (retail)
2.9% + $0.30 (online)
StripeFlat rate2.9% + $0.30 (online)
PayPalFlat rate2.7% (retail)
2.9% + $0.30 (online)
Payline DataInterchange-plusInterchange + 0.2% + $0.10 (retail)
Interchange + 0.3% + $0.20 (online)
DharmaInterchange-plusInterchange + 0.15% + $0.07 (retail)
Interchange + 0.2% + $0.10 (online)
FattmerchantSubscriptionInterchange + $0.08 (retail)
Interchange + $0.15 (online)
Starts at $99/month
Payment DepotSubscriptionInterchange + $0.15
Starts at $49/month
PayJunctionInterchange-plusInterchange + $0.75
CDG CommerceFlat rate (<$10k/mo)
Interchange-plus (>$10k/mo)
2.75%+ $0.30 (retail)
2.9% + $0.30 (online)

Read on to learn more in detail about each one, and to find the best credit card processor for your business.

Two Types of Providers

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When looking for a credit card processing service, first you need to think about what level of service you want. There are two types of credit card processing solutions.

1. Merchant Account Provider
Merchant account providers are a full-service credit card processor. The main thing is that you get a unique merchant ID number just for your business. This number identifies you properly whenever there's a credit card transaction and lowers the risk of fraud.

Merchant accounts require underwriting to approve you as a client. So it's best for larger, established businesses.

2. Payment System Provider (PSP)
Payment service providers only offers credit card processing. You don't receive your own unique merchant ID. Your transactions are processed in a batch with many other businesses' as well. It costs less because of the bulk processing.

There's no underwriting required so it's quicker to get started. But the tradeoff is lack of customer service, minimal PCI compliance assistance, and higher chance of frozen funds and fraud.

What's the difference between a merchant bank account and business bank account?
A merchant account is a type of bank account that allows you to accept credit card payments. You don't actually have access to this account.

When you take a card payment from customers, the funds are first deposited into the merchant account. From there, the money is then transferred to your business bank account (usually in 1-2 business days), where you can use.

Best Credit Card Payment Processing for You

The best credit card processing solution for you depends on your monthly sales volumes.

There's no definite answer, but here's the general rule of thumb to narrow down your search. If you:

  • Are a new or small business: It's best to use a payment services provider with flat pricing, like Square or PayPal. The application process is quick so you can get started processing credit card sales right away.

  • Have low to mid volume sales: If you process between $5,000 - $15,000 in sales each month, go for a merchant account provider with interchange-Plus pricing, like Payline Data. This will give you better value over flat rate pricing.

  • Are a large business: If you're a business processing over $15,000 in credit card transactions each month, then consider subscription pricing, like Payment Depot. The processor markups are very low, so your savings will more than justify the subscription fees.

Next, you'll learn more in detail about the top picks for each type.

Cheapest Credit Card Processing Companies

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The cheapest credit card processing company is the one that provides the features you need at the lowest price for your type of business.

Here is an overview of our top picks for each category below. We also break down the benefits and drawbacks of each.

SQUARE: Best for Mobile Businesses

Square is a flat fee payment processor. It is best for small mobile businesses with mostly in-person swipe/chip purchases. Ideal for small businesses like food trucks, seasonal sellers, market vendors, coffee shops, etc.

Cost:

  • Swipe or chip transactions: 2.6% + $0.10
  • Online transactions: 2.9% + $0.30
  • Key-in transactions: 3.5% + $0.15

All card payments are charged the same processing costs, whether it's credit cards or debit cards, Visa, Mastercard, Discover, or American Express. This makes card processing rates simple, but may not be the cheapest. There are no other monthly fees.

Pros:
With a free swipe reader and low per-swipe fees, Square is an easy and affordable way for new businesses to start. It can also be used offline on your mobile device, so you can literally accept credit cards anywhere even without an internet connection.

There are no hidden fees beyond the per-transaction flat fees. In fact, Square does not even charge a chargeback fee for disputes.

The Square Point of Sale app is one of the most powerful POS software, making it a great choice for mobile payment processing. You can set discounts, issue refunds, send invoices, get detailed reporting, manage customer database, and handle employee and inventory management all on the app.

All accounts get a free virtual terminal, payment gateway, and online store. Everyone can also get a free wireless swipe reader that plugs into your headphone jack or lightning port. Chip reader can be purchased.

Square also offers plans with special rates for retail, restaurant, and appointment-based businesses.

Square offers some add-on services for extra costs, such as loyalty program, payroll, and marketing.

Cons:
Even though this flat-fee structure is most predictable, the transaction cost could be quiet high. Larger businesses may be better suited with interchange-plus pricing.

Square's customer service does leave much to be desired too. Their support hours are rather restricted and they prefer clients find their answers in their knowledge database.

Contract:
Month-to-month; no cancellation fee.

STRIPE: Best for Online Businesses

Stripe is one of the most flexible payment processors for internet-only businesses. It's ideal for larger ecommerce businesses, in-app purchases, and online stores that accept global payments.

Cost:

  • 2.9% + $0.30 per transaction
  • Additional 1% for international payments in any currency

Pros:
Stripe is known for a lot of advanced API developer tools that allows for complete customization of your checkout experience. It can be customized with a variety of programming languages, however, you'd have to have a developer.

Stripe's main focus is on helping eCommerce merchants have robust storefront and billing features. Some even consider their payment processing as secondary.

Stripe integrates with dozens of online shopping carts, including Shopify, WooCommerce, and X-Cart. It also has integrations specially for B2B businesses.

It also offers hundreds of apps and extensions for all features from invoicing, accounting, marketing, to operations.

Cons:
Since Stripe is meant to be completely customized, it may be overwhelming if you don't have developer resources (or expensive if you have to hire one). So it may not be ideal for small online businesses that don't advanced customization.

Contract:
Month-to-month; no cancellation fee.

PayPal: Best for Low-Volume Retailers

PayPal also offers a flat processing fee for all payment types. It's best for a new or small business with less than $5,000 in monthly sales, or businesses with low average transaction amounts.

Cost:

  • Swipe or chip transactions: 2.7%
  • Online transactions: 2.9% + $0.30
  • Key-in transactions: 3.50% + $0.15
  • Virtual terminal: 3.1% + $0.30

PayPal also offers some special transaction rates for these types of businesses:
  • Nonprofits (online websites): 2.2% + $0.30
  • Micropayments plan: 5% + $0.05

Pros:
PayPal has the lowest fixed swipe and EMV processing fees. So it's good for small retailers that take in-person payments. It offers a PayPal Here POS app as the mobile payment solution to accept cards on your smartphone or tablet.

PayPal offers the best range of payment options to customers. With PayPal being such a recognized brand in the payments industry, it's a big advantage to let people pay with PayPal on your website and even in store. You can also send an invoice.

PayPal is incredibly easy to set up. You can use it with most major e-commerce platforms. Within minutes, you can install a free online checkout button and begin accepting all form of payments, including credit cards, PayPal, Venmo, and even e-check payments.

Cons:
The card readers are not free, but the prices are reasonable.

If you want to accept payments over the phone, the virtual terminal is only available under the PayPal Pro plan and costs $30/month. This is a lot considering that Square offers this for free. In addition, recurring billing for subscriptions is an extra $10/month.

Contract:
Month-to-month; no early termination fees.

PAYLINE DATA: Best for $5,000+ Per Month

Payline Data is a full service merchant account. It offers a low cost interchange-plus pricing structure that works for almost all business types and sizes.

It accepts smaller sized businesses, so it's a good choice if you're somewhere in between a small mobile store and a large established business.

Cost:

  • Card present: Interchange + 0.2% + $0.10
  • Online transactions: Interchange + 0.3% + $0.20
  • $20 monthly fee for e-commerce merchants
  • $10 monthly fee for retail stores
  • $10 monthly fee for virtual terminal

Pros:
Overall, Payline Data offers reliable credit card processing services at low rates. The interchange-plus pricing model is best for transparency. It generally comes out cheaper than flat-fee structures like Square, especially if you have higher sales volume.

It also offers a plan tailored to healthcare and medical providers with special card processing rates.

Payline Data offers a one month free trial, so you can try it out first and see if you like it. Learn more by checking out our Payline reviews.

Cons:
Payline does have several add-on fees. The subscription billing feature costs an additional $29.95/month, which is expensive compared to other payment processing companies. There are also fees for accepting ACH payments and chargeback prevention.

Contract:
Month-to-month; no early termination fees.

Payline Data also offers payment solutions for high-risk businesses. This could include:

  • Industries with a high risk of chargebacks or fraud
  • Businesses with high rate of failure
  • Industries that require lots of legal regulation
  • If you have a history of bad credit
  • Businesses with large transaction amounts

Many credit card processors don't approve these kinds of businesses (which includes travel agencies, financial services, and online gaming). Payline Data is willing to take on the risk and work with you to find your best options for your unique needs. Note that fees may be higher for high-risk businesses, but the prices are fair.

DHARMA MERCHANT SERVICES: Best for $10,000+ Per Month

Dharma Merchant Services charges some of the lowest credit card processing rates on the market. But they only work with higher transaction volume merchants.

Cost:

  • Storefront: Interchange + 0.15% + $0.07; $20/month
  • Virtual: Interchange + 0.2% + $0.10; $20/month
  • Restaurants: Interchange + 0.15% + $0.07; $20/month
  • Discounts for businesses processing over $100k/month

Pros:
Dharma Merchant Services has very transparent low rates. Plans are separated into whether you have a retail store, ecommerce store, or restaurant.

All accounts get the MX Merchant payment gateway, which also includes a virtual terminal, customer database, invoicing and recurring billing feature. It offers integration with most major shopping carts.

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

Cons:
The funding time is 2 business days, which is longer than other companies offering next day funding. Usually, Dharma only works with larger business owners processing over $10,000 a month.

Contract:
Month-to-month billing. However, there is a $25 account closure fee.

FATTMERCHANT: Best for $15,000+ Per Month

If your business takes over $15,000 in credit card sales per month, then consider looking into a subscription based merchant services provider like Fattmerchant.

Cost:

  • Up to $500k annually: $99/mo
    Interchange + $0.08 for swipe payments
    Interchange + $0.15 for online payments
  • Over $500k annually: $199/mo
    Interchange + $0.06 for swipe payments
    Interchange + $0.12 for online payments
  • Custom rate for over $5M annually

Pros:
Even though it charges monthly subscriptions, Fattmerchant has one of the lowest per-transaction fee markups (especially for card present payments). This can make it the cheapest option for larger businesses.

Fattmerchant offers a good combination of technology and price. It offers an excellent Omni integrated payments platform with a lot of robust tools. You can handle mobile and online payments, invoicing/recurring billing, customer database, inventory and employee management.

In addition, it has advanced analytic tools to identify and compare sales trends.

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

Cons:
The monthly subscription fee is charged per payment method. So if you have both a physical and online store, you'll need to pay $99 each month for each processing method.

Contract:
Month-to-month; no early cancellation fees.

PAYMENT DEPOT: Best for $30,000+ Per Month

For very large businesses, Payment Depot offers the cheapest credit card processing fees. It also has a membership based pricing model.

Cost:

  • $49/mo; Interchange + $0.15 (for up to $25k monthly)
  • $79/mo; Interchange + $0.10 (for up to $75k monthly)
  • $99/mo; Interchange + $0.07 (for up to $150k monthly)
  • $199/mo; Interchange + $0.05 (no processing limit)

Pros:
Payment Depot offers four pricing plans with different processing volume limit, so you can choose the best fit for your company. For this reason, very high volume merchants will usually find a better deal with Payment Depot than with Fattmerchant.

It only charges a small fixed fee for all payment methods, regardless of whether you're taking credit cards in person, online, or by phone order. So it's also better if you sell on multiple channels.

It also offers next day funding if you process your batch by 5 PM Central time.

Payment Depot offers a variety of hardware options for purchase (including the popular Clover POS systems). Or it can reprogram your existing processing equipment for free. Some plans qualify for a free mobile card reader and/or free terminal.

Cons:
If you cancel, Payment Depot does charge a 20% restocking fee for returned equipment.

Payment Depot doesn't work with high risk merchants. It may also deny you if you have bad personal credit or if your company has an unfavorable reputation.

Contract:
Choose month-to-month billing or an annual subscription. Both choices allow you to cancel at any time with no termination fee. Annual memberships offers a discount and 90-day money back guarantee.

PAYJUNCTION: Best for Established Retailers

PayJunction is another solid option for established businesses with a steady $10,000 or more in monthly sales volume. It offers good features for retail stores.

Cost:

  • Credit cards: Interchange + 0.75%
  • Checks: 0.75%

Pros:
PayJunction's main selling point is paperless transactions. Paper receipts are messy, wasteful, and toxic. PayJunction's Smart Terminal digitally stores your customers' transaction histories, card and ACH info, and signatures. You can easily pull them out if you need to (like for a refund).

This paperless processing also makes for very easy setup and minimal hardware. You can get the Smart countertop terminal for free if you can provide 2 months of billing statements.

It charges one single percentage mark up plus the normal interchange rates. This can be a little bit high, but could be cheaper for businesses with small average transaction size. And there is no monthly fee.

Cons:
PayJunction is not ideal for very small businesses. If you process less than $10,000 in business transactions per month, there is a $35 monthly fee, so it's best to look elsewhere.

Contract:
Month-to-month; no early cancellation fees.

CDG Commerce: Best Full Service Merchant Account

CDG Commerce is a full-service merchant account ideal for small to mid-volume businesses. It offers different pricing structures based on how much you process per month.

Cost:

  • Online transactions: 2.90% + $0.30
  • Swiped or mobile transactions: 2.75% + $0.30
  • For $10,000+: Interchange + 0.25% + $0.10
  • $10 monthly fee

Pros:
CDG offers tiered pricing based on the processing volume of your business. It offers a simplified flat rate plan for smaller businesses processing $1,000 to $10,000 a month. For established businesses, it offers interchange-plus pricing, which is often more affordable.

CDG offers its equipment with no upfront costs, so that makes it easy for newer businesses to set up. You can get a credit card terminal and POS for free, but must purchase insurance. CDG includes free updates and maintenance of the hardware.

CDG also gets bonus points for offering 24/7 customer support by phone and live chat.

Cons:
While CDG claims to provide the equipment for free, they do charge insurance. But it's still pretty affordable. The credit card terminal costs $79/year, which comes out to just $6.58 per month. And the POS system will cost $39/month for complete protection.

Contract:
Month-to-month; no early cancellation fees.

Optional security package available for $15 per month.

Other Credit Card Processing Companies to Consider

If the ones above don't fit your needs, here is a list of other processors to consider.

Intuit Quickbooks Payments:
Quickbooks offers a flat fee pricing of 2.4% + $0.25 for swiped payments. Compared to processors like Square and PayPal, this pricing structure could be cheaper for small businesses with larger average order value (around $100).

Plus, Quickbooks offers other business solutions like accounting software, payroll, and inventory tracking.

National Processing:
National Processing offers a low interchange-plus pricing for small businesses. Larger businesses can switch to subscription pricing (membership fees starting at $59/mo) with a lower markup rate. Restaurants have a discounted rate. Users can be eligible for a free Clover Go mobile reader.

Helcim:
If you want to know exactly what your per transaction pricing will be, visit Helcim's website. After inputting information about your industry, monthly processing numbers, and per transaction average, you'll receive a customized quote on the spot.

They do charge monthly rates based on your industry, but they are very transparent about every fee on their website.

Chase Merchant Services:
If you already have a business checking account with Chase, you can check out Chase Merchant Services to have everything under one roof. It offers payment processing for in-person, online, and by phone. It's month to month billing.

In addition, Chase offers other business services, including business credit card and small business loans.

National Bankcard:
This popular merchant processing provider works with some of the biggest brands, like Shell, Dominos, and KFC. Processing rates start from 0.25%, though the only way to get your final quotes is to speak with a rep. It offers a free card reader and payment terminal.

Flagship Merchant Services:
Flagship is one of the oldest merchant account providers around. Today, they operate as a reseller for iPayment. They offer month-to-month contracts with no setup, cancellation, or gateway setup fees.

However, the company does have a myriad of additional fees. It's best to negotiating these fees based on your needs.

What to Look for in a Cheap Credit Card Processing Company

Make sure to think about these following factors when comparing companies.

Pricing structure:
This can be very complicated. There are several pricing models. A new or micro business owner will do best with the simplicity of flat rate pricing. A large business owner should consider interchange-plus or monthly subscription.

To fully understand how fees work, read our guide about credit card processing fees.

Add ons:
Watch out for additional fees, such as setup fee, PCI compliance fees, batch fees, and statement fee. Some providers also charge for virtual terminals and payment gateways. And some have extra expense for things like fraud protection and subscriptions billing.

Monthly minimums:
Some companies charge a fee if you don't meet a minimum monthly processing dollar amount. Of course for new businesses, choose a company without minimum requirements.

Contract terms:
Beware of long term commitment and termination penalty. Luckily, many of the credit card processing companies today offer month-to-month contracts, so you have the flexibility to cancel without having to commit for life.

Cost of equipment:
Card present credit card transactions will require the proper hardware. Some companies give you the option to buy it outright or lease. Some may even supply devices free of cost.

Type of customer support:
Not all companies provide quality customer support. When you have a problem or question, you want to be able to reach someone. If you worry about setup or tech support, this is something important to pay attention to.

Test out a company's customer service to get an idea of how responsive they are and the hold times. It's also smart to read user reviews.

Credit Card Transaction Fees Explained

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There are three components to the total transaction fees:

1. Interchange fees:
These are fees charged by credit card networks (Visa, Mastercard, etc.) and goes to the issuing bank. They are non-negotiable. It's the same no matter what processor you're using.

The interchange rate depends on things like type of card and brand. Debit cards have lower rates. Rewards cards have higher rates than normal credit cards.

2. Assessment fees:
Assessments are charged by the card networks and take up a very small percentage.

3. Processor markup fees:
This is the fee charged by your card processor. The cost will vary depending on the processor and can be negotiated. This is the fee you should be comparing when comparing credit card processors.

You may see the markup expressed in "basis points" (bps). One basis point = 0.0001 or 0.01%. If a processor displays their markup as 50 bps, in this case, that means 0.50%.

Some providers separate out the interchange and markup fees. While others blend them all together into a flat-rate fee. And some include it into a monthly membership fee. Learn more here.

Can You Negotiate Cheaper Processing Costs?

If you are a larger business, in most cases, you can negotiate the processing company's mark up fee. Many companies offer discounted rates or even custom pricing if you process over a certain amount.

For example, Square offers custom rates if your annual sales exceed $250,000. Stripe can help you design a custom package if you process more than $100,000 monthly.

There are a couple of ways you can negotiate fees:

  • The percentage markup: Negotiate the percentage if your average order value is larger. For example, getting it down from 0.3% to 0.2% can make a huge difference. Every penny you can save adds up.
  • Per-transaction fee: Negotiate this fee if you have smaller transaction sizes. If the markup was 20 cents per transaction, reducing it to 10 cents will save a ton over thousands of sales.

In general, the more you process per month, the more ability you have to negotiate rates. Don't be shy to ask; there's nothing wrong with wanting to save.

Keep in mind that the credit card processing companies have no control over the interchange fee (which is the largest component of processing fees). Those fees are set by the card associations and go to the credit card companies and issuing banks.

Bottom Line

In today's world, it's important to be able to accept credit cards whether you run a retail business or ecommerce store. But processing fees will cut into your profit. Finding the cheapest credit card processing option for you requires some research.

Here's a quick summary:

  • Startups and small business owners will find flat rate pricing to be the best place to start. This offers the most affordability, predictability.
  • On the other hand, larger businesses will find much cheaper rates with interchange-plus or subscription pricing. These models offer more transparency.

Just like with any product, thoroughly compare processors and their features to see what makes most sense for your business needs. Ask the providers as many questions as possible before making a decision, especially if there's anything you don't understand.

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

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