February 13, 2019

Cheapest Credit Card Processing

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Finding the cheapest credit card processing company doesn't mean just finding the lowest prices. You need the company that provides the features you need at a price you can afford.

© CreditDonkey

Looking at credit card processing fees, it's easy to get overwhelmed. Each company charges different fees and even structures them differently. What seems "cheap" for one company might be crazy expensive for another. Taking the fees at face value isn't enough. You have to determine what those fees provide.

Of course, in short you want the processing that will save you the most money. But you also need to focus on the features and/or customer service you receive for that price.

Keep reading to learn the best Cheapest processing companies you may want to consider.

Choosing the Right Type of Credit Card Processor

Before we dive into which credit card processors give you the best bang for your buck, let's look at the types of credit card processors. It's easy to get confused. You'll see merchant account providers and payment service providers. Mistakenly choosing the wrong one could be one of the costliest mistakes you make.

Merchant Account Providers

Merchant account providers are your "full-service" credit card processing companies. They are also your traditional processors. With a merchant account provider, you have a merchant ID number. This number pertains only to your business. It's what every party tied to the transaction uses and is what makes fraud and account hacking less likely. It's also what makes the prices higher, possibly even unaffordable, for new, small businesses.

Aside from the identity you receive, merchant accounts give you a variety of other features, including:

  • PCI compliance assistance

  • Payment gateways for the eCommcerce side of your business

  • ACH payment capabilities

  • Tax reporting assistance

Payment Service Providers

Payment service providers are just what the name suggests. With a PSP, you don't receive your own merchant ID. Your transactions are processed in a batch and not just with your own company's transactions, but those of many other businesses as well. The bulk processing is what allows for the cheaper processing costs.

The tradeoff, however, is lack of customer service, minimal PCI compliance assistance, and a high risk of frozen or held funds and fraud.

Micro businesses and those with very few credit card transactions usually fare the best with these companies, as they don't need the full service of a merchant provider.

What to Look for in a Cheap Credit Card Processing Company

After you decide the type of credit card processing company you need, it's time to narrow down the necessary features. Below are the features we feel are most important.

  • Pricing: Focus on how the processing company charges merchants. Is it a flat monthly fee or a per-transaction model? Flat monthly fees are easy to compare, but watch out for additional fees, such as PCI fees, terminal fees, payment gateway fees, and statement fees. Per-transaction fees are never the same from one company to another. Interchange fees will be the same, but the markup is what you'll focus on. Is it a percentage plus a base fee, just a percentage, or just a base fee?
  • Terms of the contract: It's not a bad thing to have a contract, but it's the fine print you have to watch. Long-term contracts often have early termination fees. Luckily, many of the credit card processing companies today offer month-to-month contracts.
  • Cost of equipment: If you'll process card-present transactions, you'll need the hardware to do so. Some companies request clients to lease the equipment. However, many have the option to buy it outright and some even supply it free of cost.
  • Type of support: Customer support isn't a given with any credit card processing company. Some charge for the service while others don't provide phone service as an option. If you worry about setup, use, or just general support, pay close attention to this area. Look not only at the cost, but also the type and times the company offers the support.

Cheapest Credit Card Processing Companies

The Cheapest credit card processing company is the one that provides the features you need. We provide our picks for each category below.

SQUARE: Cheapest for Mobile Businesses

Cost: 2.75% per transaction (swipe or chip); 2.9% + $0.30 per eCommerce transaction; 3.15% plus $0.15 per keyed-in transaction

Mobile businesses just starting out enjoy the free card reader and app from Square. All businesses pay is the per transaction fee. As a flat fee, it can be affordable for businesses with a small number of transactions. Square doesn't charge any of the other fees mentioned above or have hidden fees. All of their costs are wrapped into the flat fee they charge merchants per transaction.

If you need more features or have a high monthly total volume, it may not be the most cost effective option for you. Choosing a company with interchange-plus pricing and separated account fees may suit you better.

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

STRIPE: Cheapest for Online Businesses

Cost: 2.9% plus $0.30 per transaction

eCommerce businesses with an onsite developer benefit from the advanced features Stripe offers online businesses. They also operate on the flat-fee, pay-as-you-go system, but the fees are slightly higher than Square's fees. Stripe does offer international payments in any currency for an additional 2% fee.

You don't have the option to purchase a card reader, POS system, or any other hardware with Stripe. However, because there is no contract, you can use Stripe as much as you want and then move onto another merchant account provider as your company grows.

Stripe's main focus is on helping eCommerce businesses have robust storefront and billing features. Some consider their payment processing as a secondary, affordable service for online businesses.

PAYLINE DATA: Cheapest for Small Businesses

Cost: Interchange price + 0.5% for eCommerce; Interchange price + 0.3% for brick-and-mortar stores

Monthly fee: $7.50 for mobile transactions; $9.95 for shop transactions

If you want a full-service merchant account provider with fees like a payment service provider, Payline Data is a great option. They offer interchange-plus pricing but with a pay-as-you go structure. You don't have to sign a contract or worry about account cancellation fees.

You will have to purchase any hardware you want at your store, but you can buy it outright rather than dealing with a lease. Their system also integrates seamlessly with existing eCommerce software and they offer the ability to accept mobile payments for either card-present or no-card-present transactions.

PAYJUNCTION: Cheapest with No Monthly Fee

Cost: Interchange price + 0.75%; checks 0.75%

If you want to avoid paying the monthly fee, PayJunction offers a variety of benefits at no monthly cost. PayJunction does not require a card reader either, which means no hardware fees. Everything is browser-based for card-present and no-card-present transactions. The system also offers a few basic POS features, giving you access to customer management features and recurring billing options.

Perhaps the largest benefit PayJunction offers is the digitization of everything. You don't have to worry about filing papers and feeling unorganized at tax time. Everything is stored online and available for reporting as you need it.

If you process less than $10,000 in business transactions per month, PayJunction does charge a $35 monthly fee.

CDG: Cheapest for Retail and eCommerce

Cost: 0.30% plus $0.15 per online transaction; 0.25% plus $0.10 per swiped and mobile transaction
$10 monthly fee

CDG is very transparent. They don't charge any fees that they don't disclose upfront. The $10 monthly fee gives you access to both an online payment gateway and a merchant account.
CDG claims to provide the equipment free of charge, which, in essence, they do. However, they do charge annual insurance for the equipment. As far as leased equipment goes, it's pretty affordable at just $6.58 per month. CDG includes free updates and maintenance of the hardware.

Optional security package available for $15 per month.

Other Credit Card Processing Companies to Consider:

  • 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. They do, however, have a whole host of additional fees they charge. Negotiating these fees based on your needs will yield the best results.
  • Dharma: If monthly minimum requirements are an issue for you, Dharma is a good option. They don't require minimum monthly transaction amounts and don't charge setup fees. They do charge $10 per month plus $7.95 for PCI compliance, but their transaction fees are competitive for businesses conducting more than $10,000 per month.
  • 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 volume, 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.

The Bottom Line

Finding the Cheapest credit card processing company requires plenty of research and patience. Thoroughly review the features offered and read the fine print. Ask the providers as many questions as possible before signing up in order to maximize your profits while pleasing your customers with your ability to accept credit card payments.

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