Several compelling reasons may prompt a business to invest in a credit card processor. In the highly competitive business world, the speed of cash flow is critical — making credit card processors key because they can streamline operations, increase transaction volume, strengthen security measures, and improve customer support.
In this article, you’ll learn about the benefits of using credit card processors, what to look out for, and the top eight solutions currently available on the market. Let’s dive in!
QuickLook: Top 8 Credit Card Processing Companies
- Intuit QuickBooks Payments
- Stax by Fattmerchant
- Merchant One
What is Credit Card Processing?
Credit card processing is a service that enables the electronic transfer of funds from a customer’s credit card to a merchant’s account. It involves verifying the cardholder’s details, obtaining authorization, and ensuring that the funds are properly deposited.
It’s essential for businesses because it enables them to accept cashless payments, which expands their customer base, increases sales, and improves the shopping experience — thus, promoting growth in an increasingly cashless society.
How Does Credit Card Processing Work?
Peeling back the layers of credit card processing, you can see a complex yet lean system. Let’s go through the sequence of events that take place, from the presentation of a card to the final approval of the transaction.
The cardholder plays the first decisive role in a credit card transaction by presenting their card as a promise to pay for goods or services. The security of their card details is of paramount importance as it protects against unauthorized transactions and possible fraud.
Merchants accept card payments as a fiduciary contract, providing goods or services immediately in anticipation of future payment. They use merchant accounts and special bank accounts that allow them to receive funds from credit card sales.
The card-issuing bank is the cardholder’s ally because it grants credit and issues the physical card used for the transaction. It plays a crucial role in the approval and financing process by checking the cardholder’s creditworthiness and approving the transaction for a successful sale.
Acquiring banks act as partners to the merchant in payment processing by facilitating the transfer of funds from the cardholder’s account to the merchant’s account. They manage the complex transaction flow and collect interchange fees, i.e., the costs that the banks jointly bear for processing the transaction.
Factors to Consider When Selecting a Credit Card Processor
Selecting a credit card processor is like choosing a financial co-pilot for your business journey — it demands careful consideration of several navigational tools. Below, we highlight key factors that should inform your decision to ensure a smooth and cost-effective payment processing experience.
Transaction Fees and Pricing Models
Transaction fees and pricing models provide the financial framework for card processing and affect your bottom line every time you swipe, dip, or tap. Processors offer different pricing models, such as flat fees, tiered fees, or interchange-plus fees, each with their own costs and benefits, so it’s important for merchants to analyze which model best fits their sales volume and transaction size.
Integration Options with Current Systems
Seamless integration between a credit card processor and a company’s existing systems is the cog that keeps the machinery of commerce running smoothly. The ability to integrate with POS systems, accounting software, and online platforms can determine operational efficiency, which is why businesses should opt for processors that offer flexible and compatible integration solutions.
Customer Support and Reliability
Customer service and reliability are the pillars of sustainable business operations, especially when it comes to processing financial transactions. A credit card processor must not only be reliable when it comes to processing transactions but also quickly available to solve problems.
Top Credit Card Processing Companies for Businesses
Ready to shop around for a credit card processor that’s the best fit for your business? The following lineup showcases the best in credit card processing, providing a mix of competitive rates, technological innovation, and exceptional service. Let’s delve into the specifics of what these industry-leading companies have to offer.
Square has revolutionized the payment processing scene with its sleek hardware and user-friendly software, catering to small businesses and entrepreneurs with its simple fee structure and no long-term contracts. The platform is characterized by an integrated POS system and robust features that support a wide range of industries.
Key features of Square include:
- Integrated Point of Sale: Square provides a comprehensive POS system that’s intuitive and customizable for a variety of business types.
- No Monthly Fees: With Square, there are no monthly fees; instead, businesses pay per transaction, making it cost-effective for small or seasonal businesses.
- Inventory Management: Users benefit from built-in tools for tracking inventory and sales trends.
- Omni-channel Selling: Square supports a unified online and offline selling experience with features that accommodate mobile payments, invoicing, and online stores.
- Swipe, Dip, or Tap: 2.6% + 10¢ per transaction
- Keyed-In Transactions: 3.5% + 15¢ per transaction
- Square for Retail: Custom pricing available upon request
Stripe is synonymous with online payment processing and offers a powerful suite of tools for internet businesses of all sizes. Stripe is valued for its flexibility, extensive API capabilities, and seamless checkout experience that can be adapted to any e-commerce environment.
Key features of Stripe include:
- Customizable Checkout: Stripe offers a fully customizable checkout experience that can be embedded into a website with ease.
- Global Payments: Acceptance of a wide variety of payment methods including credit cards, debit cards, and international currencies.
- Advanced Reporting: Real-time reporting and analytics tools are available for tracking transactions and understanding payment patterns.
- Robust Developer Tools: Stripe’s extensive APIs and developer tools allow for high levels of customization and integration.
- Integrated Pricing: 3.6% + 17¢ per successful card charge
- Customized Pricing: Available for businesses with large payment volumes or unique business models
Clover brings a versatile approach to credit card processing with its customizable POS systems that serve both retail and restaurant businesses. Its solutions range from hardware devices for storefronts to scalable payment processing apps, providing a comprehensive ecosystem for all types of transactions.
Key features of Clover include:
- Diverse Hardware Options: Clover provides a selection of devices from mobile card readers to full-service POS systems.
- App Marketplace: Access to a variety of apps for functions like loyalty programs, inventory, and employee management.
- Offline Mode: Ability to process transactions even when the internet is down.
- Customizable UI: User interfaces on POS systems can be customized to fit the needs of the business.
- Start as low as 2.3% + 10¢ per transaction
- Hardware cost varies based on the device selected
- Processing fees are quoted based on business type and sales volume
A household name, PayPal offers a wide reach with its large user base. This makes it a top choice for companies looking for a payment processor with a recognized and trusted payment platform. It is particularly beneficial for businesses looking for easy online transaction options and mobile payment solutions.
Key features of PayPal include:
- Wide Acceptance: PayPal is widely recognized and trusted by consumers around the globe.
- Flexible Payment Options: PayPal allows for payments through PayPal balance, linked bank accounts, credit cards, or PayPal Credit.
- Invoice and Estimate Features: Easy-to-use invoicing and estimate tools are integrated into the platform.
- Seller Protection: PayPal offers protection on eligible sales against fraud and chargebacks.
- PayPal checkout: 3.49% + fixed rate
- Send/Receive Money for Goods and Services: 2.99%
- See the website for the full listing
5. Intuit QuickBooks Payments
Intuit QuickBooks Payments is deeply integrated with accounting software, making it the ideal choice for businesses that value optimized financial management. It offers QuickBooks users a straightforward way to process credit card payments directly in the accounting ecosystem.
Key features of Intuit QuickBooks Payments include:
- Direct Integration: Seamless synchronization with QuickBooks for real-time bookkeeping.
- Multiple Payment Methods: Accepts credit cards, debit cards, and ACH transfers.
- Mobile Payments: Offers a mobile app and card reader for accepting payments on the go.
- Instant Deposit: QuickBooks Payments users can get access to funds quickly with instant deposit capabilities.
- Monthly Plan: Lower rates available with a monthly fee for high-volume sellers
- ACH Transfer Fees: 1% per transaction
6. Stax by Fattmerchant
Stax by Fattmerchant challenges the traditional credit card processing fee model by offering subscription-based pricing, which can lead to savings for businesses with higher transaction volumes. This processor stands out with its predictable pricing and an open API for easy integration.
Key features of Stax by Fattmerchant include:
- Subscription-Based Pricing: A monthly membership model that offers zero markups on interchange fees.
- Omni Integrated Solutions: A single platform for all payment types, including in-store, mobile, online, and invoicing.
- Analytics and Reporting: Advanced reporting tools for insights into sales trends and customer data.
- Customizable Dashboard: Personalized dashboards that give a clear overview of business performance.
- Subscription Fee: Monthly membership starting at $99
7. Merchant One
Merchant One offers a range of credit card processing solutions with a high approval rate, even for businesses that might find it challenging to get approved elsewhere. With personalized customer service and a quick setup process, it provides a tailored approach to payment processing.
Key features of Merchant One include:
- High Approval Rates: Works with a wide range of businesses, including those considered high-risk.
- Variety of Payment Solutions: Offers POS systems, mobile payments, and online payment gateways.
- Fast Setup: Quick and straightforward application and setup process.
- Personalized Service: Dedicated account representatives for personalized customer service.
- Qualified Swiped Rate ranging between 0.29% and 1.55%
- Monthly Fee: Merchant One charges a monthly fee of $13.95
ProMerchant promises a hassle-free experience with its transparent pricing and contract terms, aimed at businesses of all sizes looking for simplicity and reliability. Its commitment to no hidden fees and personalized service plans make it a competitive option for merchants focused on cost and value.
Key features of ProMerchant include:
- Transparent Pricing: Offers clear, straightforward pricing with no hidden fees.
- Flexible Contract Terms: Promises no long-term contracts and no cancellation fees.
- 24/7 Customer Support: Around-the-clock customer service for any issues that arise.
- Inclusive Processing: Accepts all major credit and debit cards for maximum customer convenience.
- Pro Merchant offers two transparent pricing plans tailored for maximum savings. The “Interchange” plan combines Visa and MasterCard’s base rates with a minimal fixed markup, ensuring costs stay low. Alternatively, the “Zero Cost Processing” program for retail and restaurants passes transaction fees to customers, offering significant savings for business owners by leveraging a merchant-centric approach.
Sealing the Deal: Choosing Your Ideal Credit Card Processor
In our overview, we’ve explored the critical role of credit card processors in today’s market, detailing how they operate and the advantages they bring to your business. As you consider the options for a credit card processor, it’s just as essential to integrate with accounting software that complements your choice and streamlines your financial operations.
For an in-depth look at the best accounting software tailored for modern startups, visit our blog on Startup Nation.
How do credit card processing companies make money?
Credit card processing companies primarily make money by charging merchants a variety of fees for their services. These can include transaction fees, monthly or annual account fees, and sometimes additional charges for things like chargebacks or non-compliance.
How does a credit card processing company work?
A credit card processing company acts as a mediator between the merchant, the customer, and the financial institutions involved in a transaction. When a customer makes a payment, the processing company verifies the transaction and ensures funds are available.
What are the benefits of using a credit card processing company?
Utilizing a credit card processing company offers businesses the ability to accept credit and debit card payments, which can increase sales opportunities and customer convenience.
How can I choose the right credit card processing company for my business?
Choosing the right credit card processing company requires a review of your business’s specific needs, including transaction volume, sales patterns, and budget. Look for companies with transparent pricing, reliable customer support, and seamless integration with your current business systems.
How long does it take to set up a credit card processing service?
The setup time for a credit card processing service can vary depending on the provider and the complexity of your business’s systems. Typically, it can take anywhere from a few days to a couple of weeks.