Payment Processing: What Is a Third-Party Payment Processor?

Running a business comes with a whole set of tasks and potential difficulties even for the most successful companies. One of the many necessities that small and medium-sized businesses (SMBs) encounter is payment processing of cashless payments like a credit card. Thanks to checks, credit cards, and debit accounts, gone are the days when cash was king.

This is the era of digitization and seamless payment processing, both offline and online.

But the digital evolution of payment processing doesn’t have to be difficult for a brick-and-mortar retailer or small business owner. On the contrary, it can make life simpler for customers, merchants, and third-party participants to accept payments, including online payments.

Definition of Third-Party Payment Processing

Third-party payment processors (sometimes referred to as payment aggregators or credit card processing companies) are entities that allow merchants to accept credit card payments, online payments, and any other cashless payment method without the need to set up their own merchant accounts.

Third-party payment processing business entities aim to make it as simple as possible for merchants to run their business, have simple payment flows, and conduct transactions. That way, you won’t have to worry about setting up or maintaining a merchant account. You can simply create an account with a third-party payment processor, and have all your transactions go through them.

How Does Third-Party Payment Processing Work?

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Many businesses have their own merchant accounts with merchant services providers or a credit card processor. When their clients walk through the door and make a debit card purchase through a point-of-sale system, businesses with this type of account have the ability to accept payments directly through their own merchant account and be done.

However, for some businesses that are just starting out, this isn’t always the most economical method of taking payments. It takes time and effort to interface with merchant account providers, and if your business is still in its early start-up stage, your time can be better spent doing other things.

This is where a third-party payment processor comes into play. Instead of having your own merchant account, which often comes with setup costs, you’ll instead work with a third party who has their own relationship with a merchant services provider, essentially serving as an intermediary.

A well-known example of a third-party payment processing company is Square, which allows you to sign up and start accepting debit card payments on the very same business day.

By utilizing a third-party payment processor, you’ll be bypassing the step of having your own merchant account at a financial institution. These companies allow customers like you to use their merchant account to process all of your debit card and credit card payments. As a result, your customers’ payment information will be reviewed by the processor, along with running through a variety of anti-fraud measures, before they allow the completion of your client’s transaction from their bank account.

These payment processing companies can run debit cards, conduct credit card processing, and even serve as an online payment processor solution so you can expand your business to the digital realm. It helps to work with credit card processors and those who process payments online because it can increase the pool of buyers for any type of business.

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What Are Some Examples of a Third-Party Payment Processor?

Examples of well-known third-party payment processors include:

  • Stax
  • Cybersource 
  • Adyen
  • Square 
  • WePay
  • PayPal
  • Tipalti 
  • BitPay 
  • Stripe
  • Amazon Payments 
  • Ingenico 
  • Braintree

A third-party payment processor is a merchant services provider that lets you provide more payment methods to your customers and helps you receive payments without first setting up your own merchant account with a bank.

The simplicity of not having to get an account with a bank to accept credit cards and conduct card transactions with a debit or credit card company can genuinely increase your business experience.

There are thousands of payment processing services in the U.S. alone. The most suitable service will depend on your business needs.

Is Third-Party Payment Processing Necessary?

Many budding entrepreneurs, especially those who are just starting out, wonder whether a third-party payment processor is the right fit for them. After all, they hear that sign-up is easy and they won’t have to pay any fees. However, it’s important to dig a little deeper to understand who third-party payment processors truly work for and when they are necessary.

There are a variety of reasons a merchant might choose to go with a third-party relationship. Some companies might not be able to afford the monthly fees associated with dedicated accounts. Similarly, SMBs processing very low volume in customer credit card payments often can’t afford the setup costs of such an account. This makes a third-party access with a payment processor a good solution for your business when you are just starting out and do not anticipate processing a high volume of credit card transactions.

It is important to remember, however, that while you do not pay startup fees or monthly fees with a third-party payment processor, they still have to make money somewhere. They make up for their lack of fees in their per transaction percentage fee. This fee is significantly higher than it would be with a dedicated merchant account. This means that if you are processing payments at a high volume, this will be more expensive for you.

Do I Need a Third-Party Payment Processor?

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Just because third-party payment processors are available doesn’t mean they’re necessarily the right choice. For most small and medium-sized businesses, the negatives can outweigh the positives when it comes to a third-party payment processor.

If your company is at the point where the startup costs are negligible and your stream of clients is large enough to quickly outweigh those costs, a merchant service provider that offers a dedicated merchant account is your best bet. Additionally, working with a provider such as Stax means you will never see any startup costs, and the 0% markups will counteract the monthly membership.

The biggest downfall with payment processing through a third party is the lack of security. When you have your own dedicated merchant account, your business has gone through the process of underwriting and you are protected against fraudulent transactions and you know exactly when to expect the funds in your account.

What Are the Benefits of Using a Third-Party Payment Processor?

Unlike merchant accounts with banks that tend to be expensive and time-consuming to set up, many third-party payment processors don’t charge a huge deposit fee for setup. You’re only charged for the transactions you make.

At Stax, we don’t charge any outrageous monthly fees either. Here’s a list of some fees you’ll see from other banks and processors, but never from us:

  • No early termination fee
  • No customer support fee
  • No statement fee
  • No IRS fee
  • No batch fee
  • No annual fee
  • No contract fee
  • No cancellation fees

Top Considerations When Choosing a Third-Party Payment Processor

Some of the requirements to consider when choosing a third-party payment processor are:

Software integrations

See to it that the provider you choose works well with the software you’re already using in your business. If you have an online store, your processor should integrate with your eCommerce platform so you can easily partake in website payment processing. It also helps to use website payment processors that work with your accounting software (e.g., QuickBooks, Xero, etc.) to make payment reconciliations easier.

Hardware integrations

The same thing goes for your hardware. When shopping around for a credit card processing company, set your sights on providers that integrate with your card readers, terminals, POS systems, and more.

Cost

Look into the processor’s pricing model, markup, processing rates, as well as any other fees they charge. Then, run the numbers and figure out the most cost-effective option for your business.

Supported payment types

Pretty much all payment processors support credit card payments. However, alternative payment methods – such as mobile payments, ACH, and even SMS payments – are gaining steam, so make sure your vendor enables you to accept these payment types.

Policies

Processes and policies vary from one provider to the next. Some payment service providers, for instance, may require a monthly minimum when it comes to transaction volumes, while others don’t have any limits. Certain vendors may support same-day deposits while others don’t. Research these policies and ensure they work for your business.

Security and Fraud Prevention Measures 

Don’t neglect security and fraud prevention. See to it that your 3rd party payment processing provider follows industry-standard security protocols, such as encryption and tokenization, to protect sensitive customer data during transactions. 

Look for features like PCI DSS compliance, fraud detection tools, and chargeback management systems to minimize the risk of fraudulent activities and protect your business and customers.

Settlement Timeframes 

Find out how quickly you’ll receive funds from completed transactions. Some processors may offer daily, weekly, or monthly settlements, while others provide instant or next-day settlements. Consider your cash flow requirements and choose a processor that aligns with your business’s financial needs.

Customer Support

You need a payment processor that has your back and provides assistance whenever you need it. So don’t forget to ask about your vendor’s customer service offerings. Do they offer 24/7 support? What customer support channels do they use? Some providers may only offer email or live chat, while others also have their agents available over the phone.

Common Pricing Models of Credit Card Processing Companies

Credit card processing companies use a variety of pricing models. The most common are tiered pricing, interchange plus, and flat rate pricing. Some companies (like us here at Stax) use a monthly membership fee which keeps pricing extremely transparent. Merchants simply pay flat monthly fees and then interchange fees.

Interchange plus pricing is when the credit card processing companies charge you the interchange fees the credit card network charges them to run the payment plus a clear markup. 

Flat rate pricing is a percentage fee plus a certain number of cents per transaction. Often it will look like 2.75% + $0.12 per swiped transaction. This percentage will change depending on the risk the company associates to process transactions presented in particular manners – so in person transactions (not considered high risk) tend to be cheaper than a transaction through a virtual payment gateway.

Finally, tiered pricing is the least transparent structure to accept card payments. The credit card processing companies bundle interchange fees and markups into tiers so you can’t tell what the markup is or what they charge for the different types of transactions. Generally, these contracts are also filled with hidden fees that allow them to sell you on low-seeming costs to accept credit card payments and then hit you on the bill with much higher costs.

Generally, companies will also charge a variety of additional fees like chargeback fees, setup fees, and PCI compliance fees. It’s important to check with a vendor to find out what they charge ahead of time so you’re prepared.

What Are The Risks of Using a Third-Party Payment Processor?

Although many third-party payment processors have their benefits, their transaction fees might be higher than you’d expect. The cost of processing individual transactions can be higher than the transactional costs associated with merchant accounts. Depending on the size of your business and the number of transactions processed per month, the fees charged per swipe may not be an ideal solution for your business needs.

Final Words

As a small business owner, you need a reliable way to process payments. Third-party payment processors can make your first foray into accepting credit cards a simple process with minimal hassle. If you’re seeking out your first merchant processor or finally understand how to make a more informed decision, you’re on your way to reduced card processing fees and an all-around better payment experience.

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FAQs about Third-Party Payment Processor

Q: What is a third-party payment processor?

A third-party payment processor is an entity that enables merchants to accept credit card payments, online payments, and other cashless payment methods without setting up their own merchant accounts. Examples of popular third-party payment processors include Square, PayPal, Stripe, and Stax.

Q: How does third-party payment processing work?

Third-party payment processors serve as intermediaries between merchants and merchant services providers or credit card processors. Merchants create an account with the third-party processor, which processes transactions on their behalf using its merchant account.

Q: What are the benefits of using a third-party payment processor?

Using a third-party payment processor can reduce setup costs and time, as businesses do not need to create and maintain their own merchant accounts. Many third-party processors offer simple and cost-effective pricing structures and do not charge excessive fees.

Q: What are the risks of using a third-party payment processor?

The fees per transaction, especially in high volume sales, may be higher with third-party payment processors compared to dedicated merchant accounts. Additionally, the security and protections offered by dedicated merchant accounts may be lacking with third-party processors.

Q: Is third-party payment processing necessary for my business?

A third-party payment processor might be a good solution for small businesses that do not anticipate processing a high volume of credit card transactions. It is essential to weigh the costs, transaction volume, and features offered by third-party processors and dedicated merchant accounts to determine the best solution for your business.

Q: What should I consider when choosing a third-party payment processor?

When evaluating a third-party payment processor, consider software and hardware integrations, cost, supported payment types, company policies, and customer support quality.

Q: What are the common pricing models of credit card processing companies?

The most common pricing models include tiered pricing, interchange plus, and flat rate pricing. Some companies, like Stax, use a monthly membership fee model, which simplifies and makes pricing more transparent.


 

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Credit Card Processing Outages: Why They Happen and What You Can Do

For businesses of all sizes, credit card payments are essential. And when credit card processing outages occur, the revenue loss can be huge. Causes of payment processing breakdowns often stem from widespread power outages (often due to weather), internet service disruptions, and technology failures.

In August 2021 TSYS, a major credit card processing company serving over 80,000 retailers in the US, had an outage that caused quite a stir.

The Saturday night outage made the news when several businesses reported they were unable to process credit and debit card transactions. Though the outage only lasted for about 30 minutes, it took approximately three hours for affected businesses to announce they were fully operational again.

Payment processor outages are not only disruptive, but their cause also is not always easily understood or clearly communicated to the public. A Fiserv outage in February 2021 was reportedly caused by a power outage from a winter storm, but the TSYS blackout still leaves questions unanswered.

Using outdated payment terminals and systems can also lead to issues, which is why it’s essential to choose the best payment terminals and ensure that they are supported by your processor. Though rare, these outages could happen at any time, and reliance on outdated hardware and software puts businesses at risk of lost revenue.

In an increasingly cashless world, it is a huge problem for businesses when credit card processing outages occur. All businesses must be aware of the possibility of an outage and have a plan in place to maintain business continuity and transaction processing capabilities in such an event.

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What to Do During Credit Card Processing Outages

Disruptions in card processing are stressful for everyone involved. When an outage takes place, there are a few crucial steps the business should take to troubleshoot and communicate the issue.

Determine the cause

Since payment processing outages are infrequent, the first step for any business experiencing issues with processing payment should be determining the root cause. Checking to see if there is an issue with the internet service provider is a good first step to diagnose the disruption.

Wireless internet outages cause connectivity issues and can be easily remedied with a backup solution such as a DSL or hard-wired internet connection. Since most businesses use WiFi to operate their point-of-sale terminals, this is the best place to start when an issue occurs.

If the issue is simply the WiFi connection causing card processing errors, the problem can be easily solved and card payments can resume fairly quickly. In this case, it is important for management and staff on duty to understand how to remedy WiFi connectivity problems and to have information readily available to reconnect point-of-sale terminals to the internet. It’s worth providing your staff instructions on WiFI router troubleshooting so they can check that immediately when they cannot process credit card transactions at the card reader.

In some cases, the internet service providers experience disruption and the problem goes beyond the WiFi. Some mobile POS systems, including those offered by Stax, are able to connect to cellular data instead of WiFi. With a variety of technology available for businesses, it is important to know what type of connectivity devices have, because not all mobile devices are enabled with the ability to connect to cellular data.

If the internet is not the issue, the next thing businesses should do is check the physical terminals to ensure they are functional. Malfunctioning payment terminals are dealt with by working with the payment processor, and assuming there is a backup method or additional terminal in place to accept payments, there should be little disruption to the business.

Monitor down detector

Down Detector is a helpful resource with real-time notifications that report if an issue is widespread with an internet service provider, payment processing company, or even specific credit card companies such as Visa or Mastercard. Checking to see if the problem is isolated to ISPs, financial institutions, payment processors, or card issuers is an important part of the process when experiencing a credit card outage.

Accept alternative payment methods

Explore accepting alternative forms of payment, such as mobile payment apps (e.g., Apple Pay, Google Pay), PayPal. You can also consider peer-to-peer payments like Zelle and Venmo.

Just note that these options may require a functioning internet or mobile connection, so ensure you have a reliable network available.

Consider manual processing

They’re not ideal, but if you have access to manual credit card imprinters, consider using them to process transactions. Make sure you follow the necessary steps to imprint the card details and obtain a signature from the customer. 

If you do decide to implement manual processing, keep a log of all affected transactions during the outage, including the date, time, customer details, and transaction amounts. This record will help reconcile the transactions once the credit card processor is functioning again.

Communication is key

If the card processing issue is not caused by internet connectivity, power supply, or physical terminals, it is likely an issue with the card processing company. When this is the case, the first call should be to customer support to determine the cause and expected time for a fix.

It is also crucial for businesses to communicate with their customers when there is an outage. For this, social media announcements are a key way to reach customers.

Though businesses may be reluctant to turn to social media to announce something as unpleasant as their inability to process debit and credit card payments, proactive and transparent communication can resolve many of the customer service complaints.

Providing updates and communicating with customers during an outage goes a long way in ensuring the company is not to blame. Frustrated customers often share their experience on social media before news reports come out.

Providing transparent communication as soon as an issue is known will help alleviate some of the concern, and shows a commitment to resolving it.

Double-up on exceptional customer service

While great customer service should be present in all circumstances, it’s doubly important to provide exceptional customer support during the outage.

So, prioritize customer service and handle any inconveniences with empathy. Offer assistance, answer questions, and address concerns promptly. Keeping your customers informed and satisfied can help mitigate the impact of the outage on your business reputation.

Credit Card Alternatives–In-Store and Online

The most obvious alternative to a payment card is a cash transaction, but when that is not an option for the customer there are some options.

Provide multiple payment gateways online

Nowadays it is increasingly common to offer multiple payment gateways for eCommerce transactions. Many retailers offer multiple payment options such as PayPal, Amazon Pay, Google Pay, Apple Pay, and more.

Doing so gives options to the customer and allows them to select the method they feel is more convenient. The added benefit of offering multiple payment gateways is if one experiences an outage, there are alternative options for a customer to choose from.

The Benefits of Backup Processing for In-Person Transactions

Stax offers the ability to process transactions offline with the use of a mobile app, which can be accessed through tablets and mobile devices, even when power or internet goes down. When power and/or the internet isn’t functional, Stax has credit card machines that can connect to cellular data, allowing transactions to process normally, collecting credit card information with no interruption.

Mobile devices not only provide an option to support offline transactions, but they can also be a huge customer service enhancement during busy shopping seasons. Mobile POS systems are a great solution for large and small businesses and can easily be deployed across multiple locations.

Between the convenient checkout experience and backup processing abilities available with mobile POS, this solution is worth considering. Stax’s mobile payment solutions are easily integrated with online and stationary POS systems.

Further, integrations between POS systems and eCommerce sites allow customers to place an order online if there are issues at a physical location (and vice versa). In the event of an outage, having multiple options available may just save the day and provide a more seamless customer experience.

Choosing a payment provider that has backup processing, multiple payment options and integrations, reliable technology, and exceptional customer service allows your business to function smoothly, even when things go awry.

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FAQs about Credit Card Processing Outages

Q: What are the common causes of credit card processing outages?

Credit card processing outages can stem from widespread power outages, internet service disruptions, technology failures, and outdated payment terminals and systems.

Q: How can businesses identify the cause of a payment processing outage?

Businesses should check their internet service provider, ensure the functionality of physical terminals, and monitor Down Detector for widespread issues with ISPs, payment processors, or credit card companies.

Q: What can businesses do to maintain business continuity during credit card outages?

Businesses should have backup solutions like DSL or hard-wired internet connections, mobile POS systems with cellular data connectivity, and multiple payment gateways online.

Q: How should businesses communicate with customers during a credit card processing outage?

Businesses can use social media to provide transparent updates, reach out to customer support to determine cause and expected resolution times, and provide alternative payment solutions during the outage.

Q: What are some alternative payment methods for businesses to consider during processing outages?

Businesses can use multiple payment gateways such as PayPal, Amazon Pay, Google Pay, or Apple Pay, and deploy solutions like Stax’s mobile app for processing transactions offline using tablets and mobile devices with cellular data connectivity.


 

What’s the Best Payment Processor for Small Business?

As a business owner, the number of executive decisions that need to be made on a day-to-day basis can be scary at times. Hunting for a payment processor provider for your business shouldn’t be one of those things. When digging through the thousands of solutions that are meant to help you accept payments, finding the right tools is a priority but it’s not everything.

Knowing what to look for and what to avoid can help take the fear out of finding the right payment processor, making the decision a lot easier. We want to help prevent you from making a decision that will haunt you so we’ve put together a list of options to consider when looking for the right payment processor.

Make Sure The Payment Processor Technology isn’t Dead and Buried

A payment processor is only as good as their customer service and their payment technology. If the terminals and tools they are offering provide more problems than solutions, it’s time to find a better processing services provider. Standard payment solutions nowadays must include mobile and touch-free options.

RELATED: Non-profit Payment Processing: How Chrimata Drives Effortless Digital Donations Through Stax Connect

Create Monster Solutions With a Unified Payment Processor Experience

As the eCommerce market continues to expand and customers have multiple choices regarding how, where, and when to shop, providing additional payment becomes a must. 

That said,finding a simple way for your business to increasingly expand its payment offerings to support new customers is an ongoing challenge. Implementing a Unified Payments Platform is a future-proof solution that provides access to multiple payment methods through a single streamlined integration.

Stax’ integrated payment platform sets a new standard in payment technology. We offer the most streamlined payment platform experience, revolutionizing online payments to support small to medium-sized businesses all across the U.S. Our all-in-one API allows you to accept card present and card not present transactions, and you’ll have access to the best apps and tools in our app marketplace. Most importantly, because all of the payment methods run through a single platform, all of your data is accessible in a single place, making it easy to quickly understand the health of your business.

Hidden Payment Processor Fees are a Nightmare

When you’re trying to grow your business the last thing you need is an endless stream of extra payment processing fees killing your revenue generation. Don’t let hidden payment processing fees be the death of you.

One way to make sure you’re not being price gouged is by shopping around for the best rates and making sure you ask specifically about extra fees not included in the base rates. Too many processors bundle and hide fees within other charges including everything from PCI compliance to setting up your account. Average credit card processing fees range from 1.7% for swiped card payments up to 3.5% for keyed-in transactions.

Interchange Plus Pricing

A small fixed fee (between $0.10 and $0.50), plus a percentage of each purchase (between 1% and 3%) on top of the interchange fees charged by the card issuers.

Tiered Pricing

A tiered model puts credit card transactions into several categories—qualified, mid-qualified, and non-qualified. Qualified rates come from when a customer meets a processor’s criteria for the easiest, most secure transaction (swiping/inserting a card in-person). The other tiers come from having to key in the card’s details, or when a customer pays online. Tiers can also vary by card type, making this the most confusing and least transparent pricing structure.

Flat-Rate

Each card type has the same rate, typically 2.9% plus a transaction fee between 10 and 30 cents. While this seems like it may be the most straightforward at face value, it can be a very expensive pricing structure as you will pay the same rate to accept a debit card as a premium rewards credit card. The actual cost to accept a debit card is around 1%, whereas a premium rewards credit card can easily be 2.5%, but in a flat rate structure, you’ll pay the same (typically 2.9%) for both, resulting in a significant markup on many card types. So while it may be simple, it typically results in higher overall processing costs for most established businesses.

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Subscription

This model uses a flat monthly membership fee, which then gets the business access to the direct wholesale cost of credit processing from Visa and Mastercard. After the monthly membership, the business only pays the wholesale cost (interchange) set by the card issuers so that the business is never overpaying for processing. This is the pricing structure that we use at Stax and established businesses that process over $7,000 per month typically see significant savings compared to the other traditional pricing structures.

Payment Processor Fees to watch out for:

  • Credit Card Terminal Fees
  • Setup Fees
  • Early Termination Fees
  • Reprogramming Fees
  • PCI Compliance Fees
  • Address Verification Fees
  • Chargeback and Retrieval Fees
  • Payment Gateway Fees
  • Statement Fees
  • Batch Fees

They Offer Security So Good It’s SCARY

There can potentially be a lot of risks involved when accepting payments today. Providing the highest level of security with complete encryption and various layers of fraud prevention tools provides an additional layer of comfort to your customers. Card information is encrypted on all of our processing devices and never stored after the transaction is completed. Stax’ state-of-the-art cloud architecture is constantly tested for vulnerabilities to ensure the safety and security of that sensitive data.

Their Customer Service is ALIVE

Talking to a physical person when you have an issue or a question is slowly dying due to the implementation of automated systems in the early 1980s. When issues arise the last thing you want is to fumble through automated options hoping to get in touch with someone who can actually help you. Time is money, especially in this case.

Stax offers in-house customer service. When you call during business hours, you will speak with someone who knows our product and is always happy to help. From training to troubleshooting, we are the company to choose if you appreciate a human touch to your customer service needs.

You Might Also Like: What is ACH Payment Processing?

The Top 10 Payment Processors Small Businesses Need To Know

Now that you know what to look for, here are the best credit card processing companies that small business owners should consider as they look for the right solution for their business needs. (All processors on the list not only accept traditional payments from things like American Express, Mastercard, and Discover cards, but also mobile payments.)

1. Stax

We’ve already talked a lot about Stax, but to sum it all up: Stax offers a fairly unusual subscription pricing model, rather than the standard per transaction model. This pricing model makes us an ideal payment processing company for high-volume businesses. We sell our own payment processing terminals, but Stax also seamlessly integrates with other payment terminals and many point-of-sale solutions. And as we noted, we offer top-notch customer support and the highest level of PCI-compliance in the industry.

Don’t take it from us, though. Take it from all of our happy customers. We’ve got a 95% customer satisfaction score, a 73 NPS score, and a 9.2 rating on Trustpilot. Henry on Trustpilot put it best: “We have been doing business with this processing company for many years. We love to give them our business because they are very responsive.” Plus we’ve got a bunch of rave reviews for our customer support team on Trustpilot. 

2. Square

Square is best known for their iconic white square credit card readers that plugged into the headphone jacks of mobile devices. Around 2014, the Square Reader took off amongst small merchants trying to take credit card payments because the mobile card reader is free and it required no contract to use the processor or virtual terminal. Square made it possible to start taking in-person transactions same day. Its pricing structure is also a very straightforward flat-rate, with no PCI-compliance fees. And while it still serves primarily the small business or low-volume market, its functionality as a merchant services provider has grown to support mid-size businesses.

3. Shopify

Shopify is a behemoth in the eCommerce space.  In fact, it’s the most popular eCommerce platform. And now, Shopify Payments can power both online transactions and in-person sales. For online stores already running Shopify online, using Payments in-store is an easy way to get started taking credit card payments in-person. The Shopify universe includes not just eCommerce software, but a POS system as well. While it will integrate seamlessly with a Shopify store, the in-person payment processing system is still fairly new and not as robust as other solutions on this list. 

4. Payment Depot

Like Stax, Payment Depot runs on a monthly subscription pricing model. They offer 24/7 customer support, no long-term contracts, no PCI-compliance fees, and an online dashboard to manage payments. It integrates with Clover’s POS solution for in-person sales and Authorize.net for online sales. (If you’ve already got hardware other than Clover, Payment Depot’s team will work to create the integration you need.) Payment Depot is not only well-priced, it has excellent customer support.

5. Stripe

Stripe is one of the more well-known payment processors because it’s very easy to get started taking payments on it. However, Stripe truly shines in the fact that it’s extremely developer-friendly. For businesses looking to create totally unique integrations with their payments systems, Stripe is an ideal solution. Of the payment processors, it was also one of the earliest to take mobile wallet payments like Apple Pay and Google Pay. All this tech-savviness can be a real downside, though. For small businesses looking for a straight-forward payment processing solution, the sheer volume of stuff Stripe can do can be very overwhelming and confusing once you’re in the dashboard system.

6. PayPal

Originally a peer-to-peer payment platform, PayPal has grown into an absolute powerhouse in the payments world – offering merchant accounts as well as customer accounts. They offer a flat-rate pricing structure. Because the system is extremely well known at the consumer level, the name also inspires trust with customers. They now also offer POS hardware through its subsidiary, Zettle. The first card reader you purchase comes at a steep $50 discount. PayPal IS known for its hidden fees and poor customer service – so that should be something that you are prepared for.

7. QuickBooks Payments

For merchants who love QuickBooks, Intuit now offers a payment processing service. It’s a combo of subscription and flat-rate pricing structures. That is, you have to have a QuickBooks Online subscription to use Payments and then the actual pricing of Payments is a flat-rate per transaction model. It should be noted that QuickBooks Payments doesn’t offer phone support. It does, however, offer instant transfers for no additional fee when you have a QuickBooks Cash account. Overall, for those who want to live in the QuickBooks universe, Payments is an easy and obvious add-on. 

8. Clover

Much like Square, Clover is a credit card processor that offers native hardware options with integrated flat-rate payment processing. This makes them an ideal solution for very small businesses who need an easy all-in-one POS software and payment processing system. (You may also have noticed them earlier on the list. Unlike Square, you can utilize their POS hardware integrated with a variety of other payment processors if you prefer.) However, unlike a number of other solutions on this list, Clover’s payment processing will take at least a few days to get up and running. You have to get the solution through a sales rep. As a result, it also lacks pricing transparency on it’s site.

9. Dharma Merchant Services

Dharma Merchant Services is best known for providing great discounts to nonprofit organizations. (And for donating a large portion of their profits to charity.) However, they are also well-enough priced that other small businesses may enjoy them. They have interchange-plus pricing, with no long-term contracts. Dharma also can be used on Clover hardware. It should be noted that in addition to a $25 chargeback fee, Dharma also charges a $5 retrieval fee when a customer disputes a transaction. Additionally, they do not charge an early termination fee, but they DO charge a $49 account closure or cancellation fee.

10. Helcim

Helcim provides full-service merchant accounts without a monthly fee. They instead operate on interchange plus pricing. This makes it an ideal transition for growing small businesses from simple payment processing to merchant accounts. Helcim also offers robust inventory management integrations, making it an ideal solution for those merchants who put their inventory system at the heart of their operations.

It should be noted that Helcim has a larger than usual list of prohibited customer-types, which generally include only high-risk merchants. Businesses like psychics and consumer bankruptcy law firms, for instance, appear on the list.

 

How Stax Takes The Fear Out of Payment Processing

With top-rated customer support, optimized payment technology, and the highest level of PCI compliance, Stax takes the fright out of finding the right payment processing solution. We offer you subscription-based credit card processing at a direct cost. This means zero markups, zero hidden fees, and no contract.

To learn more about Stax payment processing services reach out to a payment consultant for a consultation today. We will be glad to answer any questions you may have and help you make use of our state-of-the-art integrated payment solutions right away.

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Top Online Payment Services in 2024

The pandemic accelerated the shift toward online payments and most consumers adopted online banking services.

Shoppers have embraced the convenience of paying for goods and services at the touch of a button instead of hauling cash around anytime they need to get something.

If you’re reading this, you likely recognize the need to adopt online payment services, particularly if you want to keep your existing customers happy and reach all your potential buyers.

In this article, we will show you how online payment services work, what providers charge for those services, and the top online payment solutions on the market.

TL;DR

  • A payment processor helps to facilitate fund transfers between a merchant and a customer, by routing the transaction via the relevant card network to the issuing bank that approves the payment.
  • Your payment processor or digital payments company will provide you with the POS systems and digital software tools you need to accept card and digital payments from customers.
  • Major online payment services companies include Stax, Clover, Helcim, Braintree, PayPal, Amazon Pay, and many others.

What Are Online Payment Services?

Online payment services are solutions companies offer to help businesses seamlessly accept and make payments over the internet.

This can happen via an electronic (credit or debit card) or digital (smartphone, tablet, or computer) medium. 

Essentially, the service provider will give you all the tools you need to accept whatever payment method is chosen by your customer.

On the surface, the entire online payment process is seemingly completed within seconds, but a lot goes on in the backend to facilitate these transactions. 

Five entities are usually involved in the process and we will explain the role of each party below:

  • The cardholder: is the customer paying for your goods or services physically with a card at the point of sale, or digitally via shopping cart software on your eCommerce website.
  • The merchant: is the business owner accepting the electronic or digital payment from the customer. The funds will be deposited to the businesses’ merchant account if the card is valid and the transfer is approved.
  • The card network: is a company that connects the merchant with the card issuer (bank) to facilitate a fund transfer from a paying customer. The four major networks in the US include Visa, Mastercard, Discover, and American Express.
  • The issuing bank: is the financial institution or card issuer that provided the credit or debit card to the paying customer. The bank is the custodian of the customer’s funds and is responsible for confirming the buyer’s ability to pay. 
  • The payment processor or acquiring bank: is the financial institution that processes the payment on behalf of the merchant by sending information about the transaction to the issuing bank via the relevant card network. 

eCommerce business owners will also need a payment gateway to be able to accept digital payments. 

A payment gateway is basically the internet-based version of your physical POS system. Its role is to approve or decline the transaction after reviewing the validity of the financial details provided by your customer.

Basically, your payment gateway validates your customer’s means of payment, while your payment processor encrypts that financial information and then sends it to the issuing bank via the card network.

The good news is that the very best online payment services companies like Stax will provide both the payment gateway platform and payment processing services. 

Online Payment Services Person Paying Online

Payment Processing Costs

Of course, access to online payment services will cost you money. 

The cost is usually a combination of charges per transaction and a monthly subscription for use of the provider’s software to process payments and manage other aspects of your business.

The exact amount of the transaction charges varies from one payment services company to another, and they include the following fees:

  • Interchange fee: it is the largest expense per transaction and is paid to the issuing bank for taking on the risk to back the customer’s credit card. The fee is usually calculated as a percentage of the transaction amount and all providers charge this fee.
  • Assessment fee: this is a flat-rate percentage of your monthly sales that is paid monthly to credit card associations (Visa, Amex, Discover, and others). It is the second largest cost of card processing. 
  • Processor fee: it is paid to your payment processor for facilitating each transaction and can be a flat rate or a percentage of the transaction amount. The fee is usually higher for credit cards than debit cards.

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Together, these are the network fees you must pay to process online payments. The pricing structure of these fees differs from one provider to another, but they all fall under three models.

1. Flat-rate pricing

Under this model, the provider charges a flat-rate for each transaction regardless of the type of card the customer is using or the interchange rate. 

For example, PayPal uses this model and charges 2.9% of the transaction amount plus a 49¢ flat fee for card payments.

This model is ideal for small businesses that don’t have the transaction volumes to negotiate for a favorable rate since you at least always know how much is being charged for each transaction.

On the other hand, it can be more expensive for businesses that process significant transaction volumes, since it denies them the cost-savings they would have obtained from cheaper transactions like debit card payments.

2. Interchange-plus pricing

With this model, the payment services company charges you the relevant interchange rate plus a processing fee that can be a flat rate or a percentage of the transaction.

The processing fee will usually depend on the type of transaction. For example, card-present transactions are usually cheaper than card-not-present transactions.

Many of these providers may also add a markup to the official interchange rate to cover other associated costs.

The disadvantage of this model is that per transaction cost is difficult to track since it varies from one transaction to the next. 

However, this disadvantage is overwhelmed by the flexibility it provides. You can negotiate for favorable rates if you process high volumes. 

And even if your business isn’t big enough to negotiate directly with the provider, you will get lots of cost savings due to the varying charges for the different types of transactions.

3. Tiered pricing

Here interchange fees are grouped into different tiers, depending on the applicable interchange rate for transactions that fall within each bucket. The provider will then attach a processing fee to each tier.

For example, whenever a customer pays for your product by swiping their card physically through your POS system, the transaction will be classified as Tier 1, and you will pay a 0.7% interchange rate plus a 25¢ flat fee.

The beauty of this model is that it combines the advantages of both flat-rate pricing and interchange-plus pricing. You can trace what each transaction costs, and save more if most payments fall within lower-priced tiers.

The disadvantage is the ambiguity involved. The provider is the only one that determines which type of transaction falls within what tier and why. 

This can get very costly quickly, especially if many of your customers are using payment methods that fall within more expensive tiers. 

Besides, it is almost impossible to predict or control the types of payment methods your customers will be using to pay for your goods and services.

What Are the Different Types of Online Payment Services?

Knowing the different kinds of online payments will help you choose the right provider that supports payment methods popular with your customers.

  • Debit/Credit Cards: the most common payment method. It can be used for in-store payments via your POS system or online where the customer inputs the card details into your checkout page.
  • eWallets: it eliminates the need for the customer to carry credit cards or enter card details for online payments. A digital wallet lets customers link their bank accounts to their wallet, and payment is with a simple wave or taps on their phone for in-store purchases and one or two clicks for online transactions.
  • Bank transfers: provided the user is registered for net banking, the customer can easily authorize the transfer of funds from their online banking account through the use of a customer id and secret pin. 
  • Electronic checks: it lets you simply type in the customer’s routing and account number, then the money will be electronically transferred from the buyer’s checking account to your account. Electronic checks use the ACH network and are more convenient than traditional paper checks, but they are still subject to fraudulent practices because the fund transfer is not effected immediately. 
  • Mobile pay: the option is more common in developing countries, and its usage is fueled by the exponential growth in the adoption of smartphones globally. It lets users with internet access pay in-store for goods and services with a banking app, and it is similar to a digital wallet.
  • Cryptocurrency: customers with cryptocurrencies use encrypted virtual wallets based on secure, blockchain technology to send payments for goods and services. Digital currency doesn’t currently offer any discernible advantages to small businesses, but you should consider it if it’s a payment method used by your customers.

Why You Need Online Payment Services

For one, it would be impossible to run an eCommerce store without a payment gateway and processor to facilitate fund transfers from customers.

Other numerous advantages are also applicable to both brick-and-mortar and omnichannel businesses including: 

  • Convenience: your customers want simplicity and the flexibility to make payments from anywhere. Online payment service providers make that possible.
  • Wider reach: you will be able to reach more customers in your local client base since more people are choosing to shop online. You will also be able to sell internationally to the global market.
  • Greater transparency: the whole process takes a few seconds, so you will know instantly whether the customer has the funds to pay for your goods or not.
  • Security: most providers pursue PCI compliance where all their platforms and tools are built to ensure effective anti-fraud and cyber security protection.

The Top 7 Best Online Payment Services

For each company listed below, we have reviewed them and we are sure that they each offer robust online payment services, so we focused on highlighting the unique strengths of each provider.

1. Stax Payments 

Stax offers a membership-style, interchange-plus pricing model without any markup on the interchange rate.

The monthly membership subscription fee gives you access to the Stax platform with its many features, including inventory management, CRM, invoicing, analytics tools, and support for a large number of third-party apps. 

You also get all the hardware you need to accept both in-store and on-the-go payments. 

Interchange-plus pricing includes the applicable interchange rate plus 8¢ to 15¢ in transaction fees depending on the payment method. 

Since there are no markups or hidden fees, all the associated costs and platform services are covered by your fixed monthly subscription fee. 

And this is why Stax is such a great solution for most businesses, especially those that process at least $5000 in transactions each month. The more you process funds, the more cost savings you will get.

2. Helcim 

It is a full-service merchant provider that supports both in-person and digital payments. The company provides a mobile card reader and thermal printer for in-store payments, while its online payment gateway is notable for its low cost.

What truly sets Helcim apart are the volume discounts it offers to users that handle large volumes of transactions each month. The company operates a tiered pricing model.

3. Authorize.net 

The company lets users choose between an all-in-one plan (merchant account and payment gateway) or a gateway-only plan.

Customers subscribing to the gateway-only plan will have to obtain a merchant account from another provider. 

Fees are predictable and the all-in-one plan costs 2.9% + $0.30 per transaction processing fee and a $25 per month gateway fee, while the other plan costs $0.10 per transaction (excluding the fee charged by your merchant account provider), a $0.10 daily batch fee, and the $25 per month gateway fee.

4. Square 

What’s notable about Square is how easy it is for new users to set up and start processing payments.

The POS software is free, it doesn’t charge any subscription fees, and there is suitable POS hardware for each budget type. 

It also uses a flat-rate pricing model, which further buttresses the argument that it is ideal for new businesses with low transaction volumes that want to start receiving online payments without spending too much. 

5. Due

This company built its name as a provider of productivity apps like time tracking and invoicing tools to freelancers and professional service companies. 

It got on this list because it now includes payment processing among its services. 

Users get access to productivity tools as well as a digital wallet for sending and receiving payments to anyone in the world. Its flat 2.7% processing fee is just perfect for its freelancer user base.  

6. PayPal

PayPal is probably the most popular payment gateway-only provider on this list among both consumers and small businesses. 

There is no monthly subscription fee, and it charges a flat rate depending on your transaction type.

The company ensures users can make and receive payments with ease, and it’s more likely than not that visitors to your eCommerce site already own a PayPal account. 

7. Stripe

Just like PayPal, Stripe is a payment gateway-only provider and it also uses a flat-rate pricing model.

 What sets it apart is the range of API customization options available to users. 

The provider’s payment platform is flexible enough to be customized to meet the needs of any eCommerce business. It also integrates well with a wide range of popular business software apps.

Conclusion

You are now equipped with the knowledge you need to select the right online services provider for your small business. 

Your choice will play a great role in the success of your business, and that’s why you are better off signing up with a market leader like Stax

The company will handle all your payment processing needs and provide you with a robust software platform for a subscription fee that is tailored to the size of your business without roping you into any binding long-term contract.

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Explained Simply: What is a Merchant Services Provider?

Your Merchant Services Provider is a vital partner that can help you operate and grow your business. They facilitate credit card processing and provide other important services for your business. Essential services offered by a merchant services provider include:

Accepting payments from your customers via credit, debit, and electronic payments allowing for seamless transactions.

Securely managing PCI compliance when processing and storing payment information for your business, making your customer data safe.

Providing your business with technology to track payments, understand business data, and collect outstanding invoices.

Let’s get back to basics to understand the definition of a merchant.

In This Article

TL;DR

  • Merchant services companies provide businesses and individuals with the tools and requirements to accept credit cards, debit cards, and other forms of electronic payment for transactions to take place. 
  • The products that merchant service providers offer to businesses in order for them to actually be able to accept and process payments in a way that works for them and their customers.
  • A Merchant Services Provider grants you the technology and information your business needs to optimize operations. You can learn a lot about your business from the payment data provided to you by your Merchant Services Provider. 

What Is a Merchant?

“Merchant” is a term used by payment processors to refer to their customers. Customers, or merchants, are businesses that accept credit card payments from their clients in-person, online, or over the phone. A Merchant Services Provider offers products and systems to help those businesses run smoothly.

These products and services often integrate with the business tools you already have. For instance, your payment provider may connect to a POS system for your retail store or to your QuickBooks Online for reconciliation. Merchant Service Providers can also provide customer management, inventory systems, and payment reporting.

Who Is Considered a Merchant?

A merchant represents a person or company that sells goods or services. Merchants can sell items in-person or online (sometimes called an eCommerce merchant). Most merchants today operate both in-store and online.

Different Types of Merchants:

  • eCommerce Merchant: A merchant who sells items online.
  • Retail Merchant: A merchant who sells items that they purchase from manufacturers.
  • Wholesale Merchant: Merchants/manufacturers who sell items to retail merchants. 
  • Affiliate Merchant: Merchants who use affiliate networks to sell goods.
  • Direct-to-consumer (DTC) Merchant: Merchants who sell items to consumers that they themselves create.

DTC merchants have become quite common in recent years, as selling goods on the internet has a very low barrier to entry. Most DTC companies are still wholesale merchants, selling their items to retailers who then sell the item to the consumer. 

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What Is a Merchant Account?

A merchant account is a bank account specifically established for business purposes where companies can make and accept payments. Note that a merchant account isn’t the typical bank account. This is a basic assumption that poses a lack of clarity for most business owners. Merchant services accounts allow businesses to accept credit and debit card transactions or other forms of electronic payment from customers, with the aid of a payment gateway.

Merchant account services often come with added fees, but also an array of services. Most often the merchant has to cover the transaction fees from payment processors, the credit card association, and the issuing bank for the merchant account. To that effect, it’s perhaps savvier for the merchant to look out for an option that’ll help cut down the cost per transaction.

On the other hand, a low processing fee doesn’t guarantee reliable service and support in the long run.

Merchant Account Provider vs. Merchant Services Provider

While the two entities overlap quite a bit, there are some distinctions between merchant services and merchant account providers.

The former is a much broader term that’s used to describe an organization that has various offerings for merchants—including payments, technology integrations, businesses services, etc.

Merchant account providers typically stick to helping businesses set up their merchant account—i.e., the type of bank account that enables you to accept credit and debit card payments.

In many cases, these terms are used interchangeably.

How Does Merchant Services Work?

Merchant services companies provide businesses and individuals with the tools and requirements to accept credit cards, debit cards, and other forms of electronic payment for transactions to take place.

There are thousands of merchant service providers in the U.S alone. From ISOs and third-party merchant services providers like Square, Stripe, Paypal, and Stax to big bank-operated merchant services (Bank of America, Wells Fargo, Chase Bank) each company offers its own tools, services, and fees. Depending on the size of your business, one model will be more expensive than another.

How Easy Is It To Open a Merchant Services Account?

A merchant services account establishes a business relationship between a merchant services provider and a business. Doing so provides the business with the ability to accept debit and credit cards, contactless payments such as Apple Pay, eCommerce transactions, and more. Some payment processing companies like Square don’t require a merchant services account in order to do business with them.

Not having a merchant services account can be a risky choice. Payment processing providers such as Square often accept higher-risk business clients that wouldn’t normally qualify for a merchant account. That increases the risk for the payment processor. If your business falls into that category, you’re more likely to experience an account hold for certain transactions. If the payment processor decides to no longer assume that higher risk, they can simply cancel your account leaving you unable to accept payments from customers.

Merchant Services Products

The next essential part of what makes up “merchant services,” is the different tools available for payment processing. The products that merchant service providers offer to businesses in order for them to actually be able to accept and process payments in a way that works for them and their customers.

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What are the Contactless Payments

Contactless payments include credit and debit cards, Apple Pay, Android Pay, Google Pay, Fitbit Pay, and other devices that use near field communication (NFC) or radio-frequency identification (RFID).

Pay on-the-go with Mobile Payments

Mobile payments are payments made for a product or service through a portable electronic device such as a tablet or cell phone. Mobile payment technology can also be used to send money to friends or family members with applications such as PayPal and Venmo.

Swipe, Dip, and Tap: Credit Card Terminals

A Credit Card Terminal also called an Electronic Data Capture Terminal or EDC Terminal is an electronic device that enables merchants to accept credit cards allowing customers to swipe, dip, or tap their credit or debit card to make a payment.

Online Shopping Made Easy: eCommerce Solutions

eCommerce is the activity of electronically buying or selling products on online services or over the Internet. From accepting credit cards and debit cards online to set up your customized web store, eCommerce solutions can bridge the gap when in-person payments are not an option.

Boost Sales with Virtual Terminals

A virtual terminal is a software application for merchants that allows them to accept payment with a payment card, specifically a credit card, without requiring the physical presence of the card.

Upgrade Your Business with POS Systems

A point of sale system, or POS, is the place where your customer makes a payment for products or services at your store. Simply put, every time a customer makes a purchase at your store, they’re completing a point of sale transaction.

Secure Payment Gateway

A payment gateway is a piece of software that works with your website or eCommerce store and allows you to take and process secure credit card payments online. The payment gateway serves in the place of a credit card terminal.

Secure Payment Processing with Merchant Services Provider

A Merchant Services Provider functions as the intermediary between banks, your business, and your customers. This allows you to confidently accept your customers’ preferred form of payment. With a Merchant Services Provider, you can depend on this payment arriving securely in your bank account.

When a customer swipes a card, the Merchant Services Provider moves the customer’s funds to your bank account. The funds will typically appear in your bank account within 48 hours. Many businesses do qualify for next-day funding and can get paid even faster.

Your Merchant Services Provider is where you will purchase or rent credit card terminals and mobile swipers. If you have an online business, they will seamlessly integrate with your eCommerce store. Virtual terminals let you accept payments online or key in payments over the phone. Your Merchant Services Provider will help you find the right payment processing services for your business.

Secure Payment Merchant Services Provider | Nfc Security

Secure Payments: Prioritize Payment Security

Payment Security is vital for businesses processing credit card transactions, online payments, and maintaining card number storage. There can potentially be a lot of risks involved when accepting payments today. According to one Nilson report, 2021 card fraud losses in the U.S. totaled $11.91 billion, an 18% increase over $10.09 billion in 2020. Through Payment Security, a Merchant Service Provider can help you and your clients conduct business transactions safely and securely.

Your Merchant Services Provider can help you ensure PCI compliance. This means that cardholder data stored by your business, including names and card numbers, is secure. Businesses can be proactive in protecting data by using strong passwords and updating their antivirus software regularly.

Meanwhile, your Merchant Services Provider will maintain PCI compliance on the payment end of your business. This includes tokenizing payment information and protecting your business by putting fraud prevention measures in place. Learn more about how Stax protects your payments.

Technology Provider

A Merchant Services Provider grants you the technology and information your business needs to optimize operations. You can learn a lot about your business from the payment data provided to you by your Merchant Services Provider.

  • Which customers are spending the most time and money with you?
  • What times of day, month, or year are you collecting the most payments?
  • Are there products or services on which you could increase your revenue?

Important Questions to Ask Your Merchant Services Provider:

  • How are your equipment costs structured?
  • What are your processing costs?
  • Are there any other costs or fees?
  • What kind of contract is required?
  • What kind of reporting and statements are offered?
  • Is all of your equipment PCI DSS compliant?

Which Merchant Service Is Best?

Every cent counts towards improving your business operations. This is why finding the best merchant service provider is so important. If you need to grow your business and serve your target market, then you need to have proper merchant services in place. There are over 1000 payment processing companies in the U.S. Here are a few things to consider while choosing payment processing platforms for your business.

With all the changes occurring in the economy, it’s imperative to provide a myriad of payment options to your customers. Payment processing solutions such as mobile payments, virtual terminals, and touch-free or contactless payment solutions expand revenue generation opportunities and give your customers a more seamless experience.

In some cases, it also makes sense to partner with a company that offers payment services beyond credit cards. Payments types like ACH and Text2Pay are quickly gaining steam, so it makes sense to use a provider that supports these modes of payment.

What Should You Look for in a Merchant Services Provider?

While looking for a merchant services provider, make sure to take note of their costs. Depending upon the kind of solutions you need, you will most likely have to keep the following charges in mind.

  • Setup Fee
  • Equipment Fee
  • Monthly Fee/Service Fee
  • Transaction Fee
  • Credit Card Processor Fee

Payment Processing Pricing

Flat Rate: Suitable for small retail businesses and startups with a low sales volume, the flat rate is a fixed percentage that’s based on a charge when processing payments. This pricing model is quick and easy to set up and has the best ease of use

Interchange-Plus Pricing: Each credit card issuer such as Mastercard and Visa has specific interchange rates for each card type whether it be CNP or Card present transactions. With the interchange-plus pricing structure, the processor adds a markup to the interchange and takes a cut out of each sale.

Direct Interchange: A direct interchange fee is one where the merchant charges a one-off monthly fee without any percentage rate. It’s not the best for small businesses that generate low volumes of sales.

Tiered Rates: Tiered rates are grouped in different structures that separate each card type(Visa, Mastercard, Discover). It’s not the most convenient for small to medium-sized businesses. Since the fees fluctuate this is not an ideal option for B2C transactions.

Additional Fees to Watch Out For:

  • Account fees
  • Minimum processing fee
  • Statement fee
  • Account setup fee
  • Cancellation fee
  • Chargeback fees
  • NSF fee
  • Early Termination fee

Don’t Forget About Customer Support

Be sure to vet the customer support offerings of a merchant services provider. Payment processing has several moving parts, and tech issues may arise. In these instances, you want a knowledgeable partner who has your back and can ensure that everything runs smoothly.

When selecting a provider, look into their customer service capabilities. Is support available 24/7? What platforms or channels can you use to access the info you need? What are other merchants saying?

The answers to these questions will help you gauge a provider’s reliability when it comes to customer support.

Final Words

Ranked one of the best merchant services companies of 2023, Stax has disrupted the payments industry with our subscription-based pricing model. Stax is a subscription-based merchant service provider with total transparency built into its model. All merchants have access to direct cost payment processing with 0% markups, no contracts, and no hidden fees.

We believe that all of this useful data should be placed in the hands of business owners like you. You can increase your knowledge and make strategic decisions that will positively impact your business. That’s why we built Stax, our all-in-one payment platform. With Stax, you can track payments, create payment links, and collect invoices in one place. Plus, you can also view detailed reports about the state of your business at any time.

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Quick FAQs about Merchant Services Provider

Q: What are the essential services provided by a Merchant Services Provider?

  • Accepting credit, debit, and electronic payments
  • Securely managing PCI compliance
  • Providing technology for payment tracking, business data interpretation, and invoice collection

Q: What is a Merchant Account?

A merchant account is a specialized bank account created for business purposes, allowing companies to make and accept electronic payments, including credit and debit card transactions, with the assistance of a payment gateway.

Q: What’s the difference between a Merchant Account Provider and a Merchant Services Provider?

Merchant Account Provider solely helps businesses set up their merchant account, while a Merchant Services Provider offers a broader range of services, including payments, technology integrations, and business services.

Q: How do Merchant Services work?

Merchant Services Providers supply businesses and individuals with the tools and requirements necessary to accept credit cards, debit cards, and other electronic payment forms for transactions to occur.

Q: What types of payment processing products do Merchant Services Providers offer?

  • Contactless Payments (NFC/RFID)
  • Mobile Payments
  • Credit Card Terminals
  • eCommerce Solutions
  • Virtual Terminals
  • POS Systems
  • Payment Gateway

Q: How do Merchant Services Providers ensure payment security?

Merchant Services Providers use measures such as PCI compliance, tokenizing payment information, and fraud prevention to create a secure payment environment.

Q: How can a Merchant Services Provider help optimize business operations?

By providing valuable payment data insights, Merchant Services Providers can help businesses understand customer spending habits, peak payment periods, and potential areas of revenue growth.

Q: What should a business consider when choosing a Merchant Services Provider?

  • Costs (setup fee, equipment fee, monthly fee, transaction fee, processor fee)
  • Support for various payment types (credit cards, ACH, Text2Pay)
  • Customer support availability and quality
  • Payment processing pricing models (Flat Rate, Interchange-Plus, Direct Interchange, Tiered Rates)
  • Additional fees (account fees, minimum processing fees, statement fees, contract cancellation fees, etc.)

Top 7 Payment Trends to Watch in 2024 and Beyond

Payment processing has never been more complex than it is today. This is, in part due to the abundance of options, and the continual advancement of technology.

The payments industry is constantly adapting to meet the needs of businesses and consumers alike, and staying informed about the latest trends is crucial for success in this evolving landscape.

The payment processing ecosystem continues to evolve with new capabilities, and businesses must stay up to date on trends to provide the best customer experience possible.

Financial institutions play a vital role in facilitating digital payments. They serve as intermediaries between merchants, consumers, and payment processors, ensuring seamless and secure transactions. As the payments industry continues to evolve, financial institutions are adapting their services to meet the changing needs of businesses and consumers.

They are investing in advanced fraud detection and prevention technologies, enhancing transaction security, and exploring partnerships with fintech companies to provide innovative payment solutions. This collaboration between traditional financial institutions and fintech startups is driving the industry forward and fostering a culture of innovation.

As we look to the future, the payments industry will continue to witness the rise of mobile payments. With the widespread adoption of smartphones and the increasing availability of internet access, consumers are relying on their mobile devices for various activities, including payments. Mobile payment apps, such as Stax Pay, PayPal, Venmo, and Alipay, are gaining popularity worldwide, offering a convenient and secure way to make transactions on the go. Businesses that embrace mobile payments can tap into a growing customer base and provide a seamless shopping experience across multiple channels.

With multiple payment channels available to merchants, deciding which to accept can be a daunting task. Digital payments are leading the way in the payment industry with continuous innovation and security measures that modernize the shopping experience, both in-person and online.

To help you make sense of the payments landscape, this post sheds light on 7 payment trends for businesses to watch.

In an era marked by technological advancements and changing consumer preferences, digital payments have emerged as a cornerstone of the modern economy. The convenience, speed, and security offered by digital payment methods have revolutionized the way we transact and interact with money. We will explore the transformative potential of digital payments within the ever-evolving landscape of payment trends.

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Background on the Payments Industry

The payments industry stands at the forefront of financial innovation, reshaping the way we transact and exchange value. As financial services organizations seek to meet evolving consumer demands, technological advancements and changing market dynamics are propelling the industry forward.

The rise of e-commerce and digital marketplaces has given birth to a surge in online payments. Consumers now expect seamless, secure, and frictionless experiences when making digital purchases. As a result, financial services organizations are adopting innovative payment solutions to meet these demands. From mobile wallets and digital payment gateways to instant payment systems, the industry is witnessing a remarkable shift towards online payments.

The global cashless payment volumes have been on a steady rise, driven by convenience, security, and speed. Consumers are embracing digital payment methods such as credit cards, mobile payment apps, and contactless technologies. This cashless revolution has prompted traditional payments providers to reevaluate their strategies and adapt to the changing landscape. To remain competitive, they are enhancing their digital capabilities, fostering collaborations, and embracing new technologies.

The payments industry continues to undergo a remarkable transformation, driven by technological innovation, evolving consumer behaviors, and the need for enhanced digital experiences. Financial services organizations must navigate these changes, embracing online payments, collaborating with fintech firms, and prioritizing security to stay competitive. As the industry adapts and evolves, it holds the potential to revolutionize financial transactions, promote financial inclusion, and shape the future of commerce.

Financial Services

The financial services industry has long been a pillar of the global economy, providing individuals and businesses with essential services such as banking, investment, insurance, and more. In recent years, this industry has experienced significant transformations driven by technological advancements, changing customer expectations, and evolving regulatory landscapes. We will explore the latest developments and trends reshaping the financial services industry, and the opportunities they bring for both financial institutions and consumers.

Digital Transformation and Customer-Centricity

The advent of digital technologies has propelled the financial services industry into a new era of convenience and accessibility. Financial institutions are leveraging digital platforms to streamline processes, enhance customer experiences, and expand their reach beyond traditional brick-and-mortar establishments. Online and mobile banking services enable customers to access their accounts, make transactions, and manage their finances conveniently from anywhere, anytime. The focus has shifted towards customer-centricity, with personalized offerings, tailored recommendations, and intuitive user interfaces becoming standard practices.

Fintech Disruption and Collaboration

The rise of fintech startups has disrupted traditional financial services, challenging established players to adapt or risk falling behind. Fintech companies leverage innovative technologies to offer specialized financial solutions such as peer-to-peer lending, robo-advisory services, digital wallets, and blockchain-based payments. To stay competitive, traditional financial institutions are embracing collaboration with fintech firms through partnerships, investments, and incubator programs. This collaboration brings together the expertise and infrastructure of traditional institutions with the agility and innovation of fintech, fostering a dynamic ecosystem of financial services.

Rise of Mobile Wallets and Contactless Payments

One of the prominent payment trends in recent years is the widespread adoption of mobile wallets and contactless payments. Mobile wallet applications, such as Apple Pay, Google Pay, and Samsung Pay, allow users to securely store their payment information and make transactions with a simple tap or touch of their smartphones. The convenience and contactless nature of these payments have gained significant traction, particularly in the wake of the COVID-19 pandemic, where hygiene and contactless interactions have become paramount.

Peer-to-Peer (P2P) Payment Solutions

P2P payment solutions have transformed the way we exchange money among friends, family, and colleagues. Platforms like Stax, Venmo, PayPal, and Cash App have made it incredibly easy to split bills, repay debts, and send money instantly. P2P payments have become an integral part of our daily lives, simplifying transactions between individuals and enabling seamless digital transfers.

Integration of Digital Payments in E-commerce

The e-commerce sector has experienced tremendous growth, fueled in part by the increasing popularity of digital payments. Online shopping platforms, from global marketplaces to small-scale businesses, have embraced digital payment methods as a means to enhance customer experience and drive sales. The integration of secure checkout options, such as credit cards, digital wallets, and even cryptocurrencies, has expanded consumer choices and facilitated frictionless transactions in the digital marketplace.

Biometric Authentication and Enhanced Security Measures

As the digital payments landscape evolves, so do the security measures to protect user information and transactions. Biometric authentication methods, including fingerprint recognition and facial identification, have become more prevalent in ensuring secure digital transactions. These advancements in security technology add an extra layer of protection, making digital payments not only convenient but also highly secure.

Financial institutions are investing heavily in robust security measures to safeguard customer data and protect against cyber threats. Additionally, evolving regulatory frameworks, such as PSD2 in Europe and open banking initiatives, promote greater transparency, competition, and data sharing among financial institutions. Compliance with these regulations is crucial to ensure trust, maintain integrity, and protect consumer interests in the financial ecosystem.

Internet of Things (IoT) and Connected Devices

The proliferation of connected devices and the Internet of Things (IoT) has opened up new possibilities for digital payments. With IoT-enabled devices, such as smartwatches, fitness trackers, and voice-activated assistants, users can make payments seamlessly without the need for physical interaction. For example, a smart fridge could reorder groceries and make payments automatically when supplies run low. The integration of digital payments with IoT technology simplifies transactions, making them a natural part of our connected lives.

1. Going Cashless Leads the Way for Digital Payment Trends

Common cashless transaction types include credit and debit, mobile wallets, ACH transfers, and any eCommerce transaction. Cashless transactions are expected to increase tremendously in the coming years, and businesses need to be prepared.

Going cashless is part of a larger revolution in the payments industry where processing companies and businesses seek to evolve their practices. Customer demand for digital transactions and the expectations for payment options to suit their needs is a driving force for the evolution of payment processing.

2. Mobile Wallets Become Table Stakes

Mobile wallets were already commonly used in recent years thanks to their convenient, contactless, and secure nature. The use of digital wallets is popular for in-person transactions through the near-field communication (NFC) technology, and eCommerce transactions.

Users can store their debit and credit cards with an end-to-end encrypted digital wallet and make secure transactions easily. Gone are the days where retailers can simply accept cash, and digital wallets provide a safe, secure, and seamless customer experience at the point of sale.

Though mobile wallets may not be universally used like traditional payment options, more and more people are leaving their residence without their analog wallets.

Providing multiple payment options is now table stakes for any business accepting secure payment from customers, and digital wallets will continue to grow as a payment trend.

Digital Wallets | Payment Trends

3. Tap-to-Pay with Contactless Credit Cards

Another trend that’s showing rapid growth and popularity? Contactless credit card usage.

More retailers are offering this as a safer payment solution and providing information about how contactless payments work is important to educate wary customers. Contactless card transactions typically process faster than inserting the chip, and also incur less wear and tear on the card. Additionally, contactless cards are more secure than swiping a card’s magnetic strip and are processed with end-to-end encryption.

Though not all banks issue cards with contactless capabilities, there are currently over 190 million contactless Visa credit cards, with 300 million total expected to be in circulation by the end of 2021. Additionally, most major card issuers are now sending these out by default and replacement cards are frequently getting this upgrade.

American Express states that most of its products have contactless technology, and many other financial institutions such as Bank of America, Capital One, and Chase have several options available.

Combined with mobile wallet tap-to-pay adoption, businesses should consider accepting contactless payments, as this payment trend continues to be widely adopted by consumers.

4. Paving the Way for More P2P Payments

Peer-to-peer payments (P2P) are more commonly known by their app names. Venmo, Cash App, PayPal, Google Pay, Apple Pay, and Zelle are popular apps that allow users to transfer money from linked bank accounts or credit and debit cards to another user.

While this is often used by consumers to transfer money between individuals, some businesses can easily implement this payment method to provide a more seamless experience for their customers.

Although P2P payments are not suitable for many businesses, some do offer pay-to-merchant (P2M) options, with PayPal leading in this space and accepted by many retailers. However, there are some drawbacks for businesses seeking to offer P2M.

These payments may take longer to process, incur larger transaction fees, and may be less secure than other payment methods. This method may not be suitable for all businesses, but for some, the streamlined payment experience for the customer could be a deciding factor.

P2P Payments

5. Buy-Now-Pay Later is Gaining Popularity

Buy-now-pay-later (BNPL) is a payment option that allows customers to spread out their purchase payments in a way that resembles a personal loan. The terms of these loans vary, with some including interest, and others dividing the purchase into multiple interest-free automatic withdrawals.

Other differentiators of BNPL payment services include whether there is a hard or soft pull on the customer’s credit, late fees, and payment cadence, and loan duration. One example of a BNPL merchant partnership is Amazon’s partnership with Affirm, which allows customers to use this service on purchases of $50 or more without a credit check or interest on the purchase.

These transactions are different from typical credit card transactions and can sway customers who are on the fence to make a purchase. According to McKinsey, BNPL was used as a payment option for 30% of respondents, and 29% of people report that they would have made smaller purchases or not purchased at all without BNPL.

Depending on the average price point and shopping habits of your customers, adding a buy-now-pay-later option could lead to significant increases in business, especially around prime shopping seasons. While it may not be suitable for every business, this payment method is certainly making waves and has several providers available for merchants to consider.

6. Cryptocurrency and Cross-Border Digital Payments

The use of cryptocurrency for payments has increased in recent years, with about 21% of survey respondents citing this as their primary reason for entering the cryptocurrency market. Cryptocurrencies are known to be volatile in their value, but the investment potential is the leading reason for ownership, with 43% of survey respondents citing this as their motivation for holding cryptocurrency. Major companies such as Microsoft, Tesla, Expedia, and WeWork now accept cryptocurrency payments. This digital payment trend is one to keep an eye on, as the usage has evolved to be more mainstream.

The digital payments landscape is evolving rapidly, driven by technological advancements and changing consumer expectations. Businesses must stay informed about the latest payment trends to navigate this complex ecosystem successfully. Embracing digital payments, leveraging emerging technologies, and collaborating with financial institutions are key strategies for businesses to thrive in the ever-changing payments industry. By staying ahead of the curve, businesses can deliver exceptional customer experiences and drive growth in the digital economy.

There is also a rising trend in cross-border payments using cryptocurrency. These transactions often process faster and automatically convert to local currency, creating a seamless customer experience. PayPal has one of the most notable offerings for cross-border transactions, allowing customers to buy, hold, transfer, and use multiple cryptocurrencies in transactions around the world.

Another emerging trend is the use of blockchain technology in the payments industry. Blockchain, a decentralized and immutable ledger, offers enhanced transparency, security, and efficiency in transactions. It enables peer-to-peer payments without the need for intermediaries, reducing costs and settlement times. Financial institutions are exploring the integration of blockchain into their payment infrastructure to streamline cross-border transactions, improve remittance services, and simplify compliance procedures.

Digital payments have emerged as a driving force in the payments industry, transforming the way we conduct transactions. With the rise of digital wallets, consumers can securely store their payment information and make purchases with just a few clicks. Digital wallets, such as Apple Pay, Google Pay, and Samsung Pay, provide a convenient and streamlined checkout experience, both in-store and online. As more consumers embrace this technology, businesses must ensure they are equipped to accept digital payments to meet customer expectations and stay competitive in the market.

In recent years, the concept of Central Bank Digital Currencies (CBDCs) has gained significant attention and sparked intriguing discussions in the world of finance and technology. CBDCs represent a new form of digital money issued and regulated by central banks, aiming to combine the benefits of traditional fiat currencies with the efficiency and security of modern digital payment systems. In this blog post, we will delve into the world of CBDCs, exploring their potential impact, benefits, and considerations as central banks around the world explore their adoption.

Understanding Central Bank Digital Currencies (CBDCs)

Central Bank Digital Currencies (CBDCs) are digital representations of a country’s official currency issued and backed by a central bank. Unlike decentralized cryptocurrencies like Bitcoin, CBDCs maintain a centralized control structure, with the central bank overseeing their issuance, regulation, and redemption.

CBDCs leverage advanced digital technologies, such as blockchain or distributed ledger technology (DLT), to provide a secure and efficient means of transferring value. This technology ensures transparency, traceability, and integrity of transactions while maintaining central bank authority and regulatory oversight.

Benefits of Central Bank Digital Currencies (CBDCs)

Enhanced Financial Inclusion: CBDCs have the potential to extend financial services to unbanked or underbanked populations. With CBDCs, individuals without traditional bank accounts can access digital wallets directly provided by central banks, enabling them to participate in the digital economy and gain access to essential financial services.

Efficient Cross-Border Transactions:

CBDCs can streamline cross-border transactions by reducing intermediaries and associated costs. With the instantaneous nature of digital transactions, CBDCs have the potential to enhance the speed, transparency, and efficiency of international money transfers, benefiting businesses and individuals alike.

Improved Monetary Policy Implementation:

CBDCs provide central banks with greater control and visibility over the monetary system. The digital nature of CBDCs enables real-time data analysis, facilitating more effective policy implementation and economic decision-making. Central banks can respond swiftly to changing economic conditions, making monetary policy more agile and targeted.

Strengthened Security and Financial Integrity:

CBDCs offer enhanced security features that help combat illicit activities such as money laundering and fraud. The use of advanced cryptographic techniques and immutable transaction records on a distributed ledger ensures the integrity of CBDC transactions, reducing the risk of counterfeiting and unauthorized access.

Considerations and Challenges

While CBDCs hold great promise, their implementation presents certain considerations and challenges that require careful evaluation:

Technological Infrastructure:

Deploying CBDCs requires robust technological infrastructure to handle large-scale transactions securely and efficiently. Central banks must ensure that the underlying technology is scalable, resilient, and capable of accommodating the needs of a digital payment ecosystem.

Privacy and Data Protection

Balancing privacy and security is a crucial aspect of CBDC implementation. Central banks must establish robust data protection frameworks to safeguard individuals’ financial information while complying with regulatory requirements and preventing illicit activities.

Interoperability

Achieving interoperability between different CBDC systems and existing payment infrastructures is crucial for seamless cross-border transactions. Collaboration among central banks and international regulatory bodies is essential to establish interoperability standards and protocols.

User Adoption and Education

The successful introduction of CBDCs relies on user adoption and acceptance. Educating the public about the benefits, functionality, and security features of CBDCs will be essential to build trust and encourage widespread adoption.

7. Security Through AI and Machine Learning

Given the amount and variety of fraud retailers face, businesses must rely on AI and machine learning to enhance their security measures. AI and machine learning monitor for real-time fraud indicators and decline transactions as appropriate, and provide insights into trends in fraudulent transactions.

Payment processing companies are advancing to include real-time analysis of transactions to look for fraud and provide valuable insights to retailers. For businesses of any size, using machine learning to evaluate the massive quantities of data from transactions helps to optimize operations and work proactively against fraud.

One of the key payment trends to watch in 2023 and beyond is the integration of digital payments with emerging technologies. For example, the adoption of artificial intelligence (AI) and machine learning in payment processing is revolutionizing fraud detection and prevention.

AI algorithms can analyze vast amounts of data in real-time, identifying patterns and anomalies that may indicate fraudulent activities. By leveraging AI-powered solutions, businesses can enhance security measures and protect both themselves and their customers from potential threats.

Final Words

In the era of speed and convenience, innovations in payment processing are foundational to the customer experience. The adoption of an integrated payment platform, such as Stax, provides a secure and scalable way to serve customers. Helpful analytics and 24/7 support mean your business can rest assured that you and your customers receive best-in-class service.

Just as there are many options available to customers for their shopping needs, there are options in choosing your payment processor. Stax operates without hidden fees, contracts, or markups. Our integrated payment system has solutions for every business and works with existing software applications seamlessly – saving your business time and money.

From small businesses to large enterprises, choosing the right provider for your payment processing needs is critical, as is the need to prioritize the customer experience.

With Stax, your business and your customers experience innovative and scalable payment solutions with award-winning service. Get in touch with us to learn more.

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FAQs About Payment Trends

Q: What are payment trends, and why are they important?

Payment trends refer to the evolving methods, technologies, and consumer behaviors that shape how transactions are conducted and processed. Staying informed about payment trends is crucial for businesses to adapt, enhance customer experiences, and remain competitive in the ever-changing landscape of the payments industry.

Q: What are the top payment trends to watch?

The top payment trends to watch include:

  1. Rise of digital wallets and mobile payments
  2. Expansion of contactless and biometric payments
  3. Growth of peer-to-peer (P2P) and instant payments
  4. Integration of blockchain and cryptocurrencies in mainstream transactions
  5. Adoption of Central Bank Digital Currencies (CBDCs)
  6. Advancements in voice-activated and Internet of Things (IoT) payments
  7. Increased focus on security and fraud prevention measures

Q: How will digital wallets and mobile payments shape the future of transactions?

Digital wallets and mobile payments offer convenient, secure, and contactless options for consumers to make purchases and transfers. These methods eliminate the need for physical cards or cash and provide seamless integration with smartphones, making transactions quick and easy. They are expected to become increasingly popular, driving the shift towards a cashless society.

Q: What are contactless and biometric payments, and why are they gaining traction?

Contactless payments involve using cards, smartphones, or wearables near a contactless-enabled terminal to make a payment. Biometric payments use unique physical attributes, such as fingerprints or facial recognition, to authorize transactions. These methods enhance convenience, speed, and security, reducing the need for physical contact and improving the overall payment experience.

Q: How do peer-to-peer (P2P) and instant payments revolutionize money transfers?

P2P and instant payments enable individuals to send money directly to others quickly and effortlessly, often in real-time. These payment methods are reshaping the remittance industry, simplifying bill splitting, and facilitating transactions between friends, family, and businesses. They eliminate the need for traditional intermediaries and offer immediate access to funds, enhancing financial inclusion and transaction efficiency.

Q: What role do cryptocurrencies and blockchain play in future payments?

Cryptocurrencies and blockchain technology provide secure, decentralized, and transparent transactions. With growing acceptance, cryptocurrencies like Bitcoin and Ethereum are being integrated into mainstream payment systems, enabling faster cross-border transactions and reducing costs. Blockchain, the underlying technology, ensures trust, immutability, and accountability in financial transactions.

Q: How will Central Bank Digital Currencies (CBDCs) impact the future of payments?

CBDCs are digital representations of traditional fiat currencies issued and regulated by central banks. These digital currencies have the potential to streamline payments, enhance financial inclusion, and improve monetary policy implementation. CBDCs aim to combine the benefits of digital payments with the stability and oversight provided by central banks, revolutionizing the way we transact and exchange value.


 

How to Get a Credit Card Machine for Small Business

Are you looking to accept credit or debit card payments for your business? While the process may appear difficult, small business credit card processing is easier than it sounds.

Credit card usage has been on the rise, and this trend isn’t showing signs of slowing down. As of 2020, 79% of American consumers had at least one credit card or charge card, and experts are expecting that number to continue to grow.

Needless to say, small business owners that don’t accept credit cards are leaving a lot of money on the table. If you want to keep up with modern consumers, you need to ensure that you have the systems in place to accommodate their payment needs.

Doing that starts with evaluating different credit card processing services and selecting the right solution for your business.

Credit Card Payments and Your Business

One of the first steps to getting started with credit card processing for businesses is determining your specific needs. Ironing out your requirements will make it easy to evaluate credit card processing companies and figure out the best option for your business.

To that end, below are some helpful questions that can surface your business needs.

What Types of Credit Card Brands Do You Want to Accept?

Understanding what debit card and credit card brands to accept is very important for your business and customers. Credit cards contain their own unique set of rates and interchange fees which can be costly. As a business owner, you pay for the convenience of accepting a chosen payment method in order to accommodate the interests of your customers. Visa and Mastercard are standard, but then you also have American Express and Discover.

It’s important to note that each of these card networks have varying processing fees and policies, so be sure to consider them when deciding on the credit card types to accept.

How Will You Accept Payments?

List the methods you’ll use to accept card payments. Are you accepting in-person payments or online? Will you be accepting mobile payments or contactless payments like Apple Pay? Do you plan to take credit card payment info over the phone? What about online payments?

The answers to these questions will enable you to figure out what hardware and software you need to effectively set up and take credit card payments. For example, if you’re a large retail business that focuses on in-store transactions, then having a robust pos system that integrates with your credit card processor and credit card machines is a must.

If you’re selling online, see to it that your payment processor integrates with your e-commerce shopping cart.

There are many credit card processing solutions you can choose from. Depending on the industry, some payment types will serve as a default with additional options to expand payment collection methods from customers. Customers can make payments on your website or through a POS terminal next to the cash register.

You can process payments on your smartphone with a mobile card reader or you can type payments into a virtual terminal. Payment preferences are continuously changing so it’s important to know how customers want to pay as well as how your business wants to charge.

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How Much Sales Volume Do You Expect to Be Credit Card Transactions?

The number and amount you process are major factors that credit card processing companies consider when setting your rates. As such, you should understand your transaction volume before hunting for a merchant account service.

Step 1: Choose the Right Payment Gateway

The first step to small business credit card processing is setting up a payment gateway account— which is different from a merchant account provider. All your transactions, no matter what type, are channeled through a payment gateway. The payment gateway’s role is simply to decline or approve a transaction. Here’s a look at how payment gateways work:

  • The customer goes through the checkout process and pays for a good or service with their credit card.
  • Next, the authorization needs to be checked. The payment gateway service sends the transaction data to the merchant bank’s processor, who then routes the transaction data to the cardholder’s bank account.
  • The transaction now needs to be verified. The cardholder’s bank will either approve or decline the transaction. Then it will pass that information back to the credit card processors. The processor then passes the information to the cardholder and the merchant.
  • For a card that was accepted, goods or services are delivered. The transaction is completed.
  • The customer’s bank sends the required funds to the credit card processor. The processor forwards the funds to the merchant’s bank. Once you research the different payment gateway options available to you, contact the one that’s right for your business to get started. Be sure to look for the following features when choosing a gateway account for your business.
  • PCI DSS compliant
  • SSL (Secure Socket Layer)
  • eCommerce integration
  • Report generation
  • Customer support

Step 2: Set Up Your Merchant Account

The second step to processing and card machines for small business is choosing a merchant account provider (your payment processor). This involves thorough research into the best credit card processor for your business. Be sure to review not only the credit card processing fees from the payment processor, but also the overall pricing structure.

Some gateway service providers also include merchant services, but you should shop around before settling on that option. You should also note that some payment processors actually have gateway services of their own or have partnerships. It is important to find the right credit card processor for your transaction needs.

You want to find a payment processor that has all the credit card processing solutions you need to make transactions, and you want the best rates for their services.

How To Get A Credit Card Machine For Small Business | Person Using Pos System

Keep These Key Features in Mind When Choosing a Payment Processing Company

Not all payment processors are created equal. To figure out the right payment processing solution for your small business, be sure to take the following factors and features into consideration when researching a credit card processing company.

  • Digital application and rapid setup time. You operate in a fast-paced environment, so it’s important to partner with a payment processor that makes account and equipment setup quick and easy.
  • Favorable pricing structure and low transaction fees. Ask about the pricing model of your payment processor. How much is their markup? What processing fees do they charge? Ideally, your processor should offer transparent pricing and clear details about their rates. Or better yet, choose a payment processing provider that doesn’t take a cut out of your sales. At Stax, you are charged a flat monthly fee for unlimited access to the direct cost of interchange rates.
  • No ancillary or hidden fees (see below). Stay away from providers that tack on additional processing fees beyond credit card processing.
  • Fraud protection. You want a provider that looks out for you and helps prevent fraudulent transactions from taking place.
  • Supports the payment processing solutions you need.  Depending on your business, this may include integration with your POS system, EMV-compliant equipment, support for your shopping cart, POS terminal, virtual terminal, mobile card reader, etc.

Processing Fees You Should Avoid

  • Termination fees
  • Customer service fees
  • Statement processing fees
  • IRS fees
  • Batch processing fees
  • Annual processing fees
  • Contract fees
  • PCI compliance fees

Step 3: Accept Credit Card Payments

Once your merchant account is set up, you’re ready to accept credit card payments. This can be as simple as logging into a software product or entering your customer’s payment information.

In some cases, you’ll need to set up your equipment (i.e., POS system, credit card readers, etc.) Whatever credit card payments solution you choose for your business, it should be simple and easy to use.

If you don’t like the payment processor or the services you’re receiving after a few months, it should be easy to switch payment processors— unless you signed into a contract. Many contracts will have a hefty termination fee you have to pay in order to cancel. Try to get the fee waived or simply choose a credit card processor that doesn’t have contracts.

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FAQs About Getting A Credit Card Machine

Q: What is a credit card machine, and why do I need one for my small business?

A credit card machine, also known as a point-of-sale (POS) terminal, is a device that allows your small business to accept credit and debit card payments from customers. It is essential for modern businesses as it enables easy and secure transactions, expanding your customer base and increasing sales.

Q: How can I get a credit card machine for my small business through Stax Payments?

Getting a credit card machine through Stax Payments is simple. You can visit our website and request a call from our team once you provide some basic information about your business. Once registered, you can browse through our range of credit card machines and choose the one that best suits your business needs. Our team will guide you through the application process and provide assistance every step of the way.

Q: What types of credit card machines are available for small businesses at Stax Payments?

Stax Payments offers a variety of credit card machines to cater to diverse business needs. Our selection includes traditional countertop terminals, wireless terminals for mobility, virtual terminals for online transactions, and mobile card readers for on-the-go businesses.

Q: How secure are the credit card machines offered by Stax Payments?

Security is a top priority for Stax Payments. Our credit card machines are equipped with the latest encryption and compliance measures to protect your customers’ sensitive data. Rest assured that your transactions are safe and compliant with industry standards.


Ready to Set Up Credit Card Processing for Your Small Business?

If you’re looking for the perfect payment processing solutions for your small business, you’ve come to the right place. Stax Pay offers subscription-based integrated payment processing services at a direct cost— without any markups, ancillary fees, or contracts.

Checkout Optimization: 10 eCommerce Checkout Best Practices to Try On Your Website

Checkout Optimization: 10 eCommerce Checkout Best Practices2 to Try On Your Website

eCommerce brands spend considerable time and resource attracting visitors to their website and engaging them with great products. But there’s a lot more you need to focus on if you’re going to nurture customers into completing the checkout process.

A customer may love your brand. They might have found the ideal product that fits their needs. But unless the shopping journey and checkout are smooth and seamless, the odds of them abandoning cart is high.

According to Baymard Institute, the average cart abandonment rate in eCommerce is almost 70%, with almost 20% of consumers citing a “too long/complicated checkout process” as the main reason for cart abandonment.

This is why optimizing your eCommerce checkout holds the key to turning lookers into buyers.

What is Checkout Optimization?

Checkout optimization is a series of strategies used by brands to streamline the eCommerce checkout process. When the checkout is seamless and easy to navigate, it’s far easier to convert customers and foster repeat purchasing behavior.

But checkout optimization is about far more than just the checkout. Cart abandonment isn’t just caused by the checkout process itself, but moments of friction throughout the shopping journey.

In sum, the best checkout optimization strategy doesn’t start at the checkout page; it starts right from the moment a shopper enters your website.

Why is Checkout Optimization Important?

Investing the time to optimize the checkout process can pay off both in the short and long-term. Consider the following.

Reducing Cart Abandonment

It’s a known fact that cart abandonment hurts a brand’s bottom line. But the reasons behind cart abandonment are often misunderstood.

Shoppers who place items in their cart and then abandon it aren’t disinterested in your brand. They’re actually showing a strong intent to buy. The problem is that something got in the way of them completing their purchase.

By making an effort to optimize your checkout, your brand stands to recover hundreds, if not thousands, of dollars in lost revenue.

Increasing Customer Retention

Cart abandonment is just one element of online store visits going underutilized in eCommerce. It’s not enough to secure that first purchase from a customer; you also need them to shop with you again if you’re going to build a healthy business.

It’s important to remember that it’s your customer’s final impression of the shopping experience that determines whether they’ll return to your brand. They might have completed a purchase, but if they had to fight tooth and nail through a complex checkout experience, they’re unlikely to buy from you again.

In sum, checkout page optimization is directly linked to your customer retention efforts; if you want to foster repeat purchasing behavior, you need to give them a positive checkout experience.

How to Implement Checkout Optimization

Now that we’ve discussed the benefits of checkout optimization, lets take a look at the steps and tactics you can try to reduce cart abandonment and improve conversions.

1. Make Sure Your eCommerce Website is Optimized for Mobile Devices

Mobile devices are no longer just a place to browse for products, they’re increasingly a tool to make purchases. If you want to gain a share of this lucrative market, you need to make sure that your entire website offers a great user experience on mobile.

Optimizing your online store for mobile shopping has other benefits, too. Since 2019 Google has used mobile-first indexing, meaning that it’s the mobile version of your site that determines search rankings. By ensuring a seamless mobile shopping experience, your SEO will see a boost.

How? By choosing a mobile-friendly design that adjusts to different screen sizes. This removes the need for customers to zoom into different parts of the screen, which quickly leads to cart abandonment.

It’s also important to think about the placement of your CTAs. Users shouldn’t have to scroll to find the button they’re looking for, so you need to position them above the fold. Icebreaker puts two large CTAs front and center on their home page so that customers can kickstart their shopping experience:

Checkout Optimization_Website Optimization Mobile Screenshot_Body Image

2. Make Personalized Product Recommendations

Personalization is an increasingly important element of the eCommerce experience. Every shopping journey on your website is unique and customers want you to treat it that way.

According to Salesforce, 66% of consumers say they expect brands to understand their individual needs, while 70% say that how well a company understands their needs impacts their brand loyalty.

Giving shoppers recommendations for products that are complementary to their cart contents is a powerful strategy to maximize AOV via upselling and cross-selling.

Moreover, if shoppers have to hunt all over your website to find a companion item, shopping cart abandonment is more likely. By conveniently spotlighting related products, customers can make sure they have everything they need to make the most of their purchase.

Victoria’s Secret triggers a pop-up cart page whenever shoppers add a new item that spotlights possible companion products:

Checkout Optimization_Victoria’s Secret Personalized Product Recommendation_Body Image

3. Offer a Free Shipping Option

Thanks to the likes of Amazon’s two-day shipping policy, shipping costs have become one of the biggest deal-breakers when it comes to shopping online. According to Baymard Institute, “unexpected extra costs” like shipping are the biggest reason for abandoned carts, as cited by 48% of consumers.

This is why all eCommerce businesses should offer some form of free shipping, such as a minimum order threshold or membership program. Nordstrom offers free standard shipping on all orders, but customers have to pay extra for expedited shipping if they want their items faster:

Checkout Optimization Nordstrom Rack Free Shipping Option Body Image

 

Whatever you decide, it’s important to be upfront about your shipping policy, lest customers get a nasty surprise at the checkout. Be sure to detail your shipping costs on a page linked to the header and footer of your website for maximum transparency.

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4. Use Exit Popups

The average eCommerce conversion rate for online shoppers who put items in their cart is just 11.4%.

That’s right—only around 10% of customers who have strong purchasing intent will end up buying from you.

Why? Because while consumers have recognized a need, they haven’t felt that final push to commit. With the help of exit popups, you can give potential customers that urgency to purchase.

Exit popups are a form of marketing automation that tracks the mouse movements of eCommerce site visitors to identify when someone is about the close their browser. Shoppers are then shown a compelling offer via a popup and a CTA to persuade them to complete the purchase.

Exits popups can include any relevant offer or promo code that increases the odds of a purchase. J Crew’s popup offers shoppers 15% off their next purchase if they sign up to their mailing list:

Checkout Optimization_Jcrew_Website Exit Pop Up_Body Image

5. Include Customer Reviews on Your Product Pages

Shopping online can be a risky business for consumers, especially when it involves unfamiliar brands or products. If we can’t go into a store location to view an item, we’re forced to rely on other forms of information to finalize our purchasing decisions.

When there’s a litany of happy customers talking about how great a product is, consumers are much more likely to buy it. In fact, 79% of consumers trust online reviews as much as personal recommendations.

By allowing customers to leave reviews on your eCommerce store, retailers can build social proof that their brand is reliable and convenient to purchase from.

Sephora has leveraged the power of its passionate beauty community to build a comprehensive ratings and reviews tab on every product page. Customers can provide images, skin tone or hair type information, and whether they would recommend a product to others:

 

Checkout Optimization_ Sephora Product Page Customer Reviews_Body Image

6. Offer a Guest Checkout Option

Forcing customers to provide you with information before they can progress to the checkout adds friction to the shopping experience. Baymnard’s research shows that “the site wanted me to create an account” was the second-biggest reason for cart abandonment.

While getting customers to provide this information is useful for retargeting purposes, this needs to be weighed against a possible increase in your cart abandonment rate.

Allowing customers to bypass this process via a guest checkout functionality is especially important for first-time customers, who are less likely to tolerate interruptions to the checkout flow.

If you want more customers to sign up for an official account, consider offering some kind of incentive, like a discount or free shipping with their next order.

Crate & Barrel provides a great template for how to segment first-time and returning customers at the onset of the checkout process:

Checkout Optimization_ Crate&Amp;Barrel Website Guest Checkout Option_Body Image

7. Try to Keep the Checkout Process to a Single Page

Ideally, you want to keep your checkout to just one page. If customers don’t know what’s around the next corner (or the next page) this increases the odds of them abandoning cart because they may not have the right information on hand.

When customers can see the checkout process all in one place, such as form fields for shipping and billing addresses, payment information, and phone numbers, they’re far more likely to complete the process.

A multi-page checkout is worsened when customers have no idea how far through the process they are. If you can’t use a single page checkout, consider adding a progress bar so customers can monitor their checkout progress.

Flo & Frankie uses a simple checkout layout that keeps customer details all on one page, as well as providing the order summary and a field to enter any discount codes:

 

Checkout Optimization_ Floo &Amp; Frankie Single Page Checkout_Body Image

8. Use Autofill and Data Validation

Enabling an autofill function allows returning customers can add their details almost instantly, speeding up the checkout process considerably.

For first-time customers, you can add optimization features like auto-filling the customer’s city and state when they enter their zip code, or suggesting likely shipping addresses when they begin typing in the address field (shown below):

 

Checkout Optimization_Address Auto Fill And Data Validation_Body Image

You also want to avoid any errors taking place during the checkout process that could cause delays to delivery. Using data validation to approve shipping addresses is an important strategy to optimize your eCommerce checkout and ensure that fulfillment goes smoothly.

9. Offer a Variety of Payment Options

Today, customers are used to having a wide variety of payment methods to choose from, such as digital wallets and Buy Now, Pay Later plans. If your customers cannot find their preferred payment option, they might choose to shop elsewhere.

Diversity of payment options means offering your customers more choice and flexibility. Some shoppers distrust using credit cards online and instead prefer methods like ACH. Others simply want the most convenient option possible to avoid having to enter their card details manually. Taking advantage of plugins on WordPress or Shopify allow you to place express checkout buttons that speed up the process, helping you to capture more impulse purchases.

Ulta Beauty offers customers a choice between paying via credit card, PayPal, or setting up a deferred payment schedule via Afterpay:

 

Checkout Optimization_Multiple Payment And Billing Options_Body Image

10. Add an SSL Certificate

Brands need to start building trust with shoppers from the moment they enter their website. But if customers don’t feel as though your checkout is safe and secure, they aren’t going to purchase from you.

With consumers more reliant on eCommerce than ever during the pandemic, security concerns around shopping online have increased. According to a ClearSale survey, 92% of consumers say that security is important to them, while 83% said they would be more likely to shop on websites that discussed or showed their fraud prevention efforts.

This is why it’s important to optimize your checkout with an SSL certificate and security badges from key companies to bolster consumer confidence. VeriSign, Norton, or LifeLock are some of the most recognized safe checkout badges.

Cotton On uses Norton’s SSL certificate to reassure customers of a safe checkout process:

Checkout Optimization_ Norton Ssl Ecommerce Shopping Certificate_Body Image

Final Words

Checkout optimization is the result of a range of strategies designed to improve the shopping experience and make life easier for your customers. It’s important to understand that optimizing your checkout won’t happen overnight. It takes experimentation and thorough A/B testing to find the perfect formula that reduces cart abandonment. But with a bit of work, you will see your conversion rate rise over the long term and create healthy growth opportunities for your business.

You should also recognize the importance of having convenient payment methods at the checkout stage. Giving people an easy and affordable way to pay reduces friction and gets them across the finish line faster.

Stax enables you to offer a variety of payment options at checkout. From credit and debit cards to mobile payments, digital wallets, and ACH—we’ve got all your payment needs covered.

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FAQs about Checkout Optimization

Q: What is Checkout Optimization in eCommerce?

Checkout optimization is a set of strategies used by brands to make the eCommerce checkout process smoother and easier for customers. The main goal of checkout optimization is to enhance customer conversion rates and encourage repeat purchase behavior.

Q: Why is Checkout Optimization Important for eCommerce Businesses?

Checkout optimization is important for reducing cart abandonment rates, which directly impacts a business’s bottom line. It is also key to increasing customer retention by providing shoppers with a positive checkout experience that encourages repeat purchases.

Q: How is Cart Abandonment related to Checkout Optimization?

Cart abandonment typically happens due to a complicated or lengthy checkout process. By optimizing the checkout journey, businesses can reduce cart abandonment and recover potential lost revenue.

Q: What are some strategies to implement eCommerce checkout optimization?

Strategies include optimizing your website for mobile devices, making personalized product recommendations, offering free shipping options, using exit popups for compelling offers, including customer reviews on product pages, offering guest checkout options, simplifying the checkout process to a single page, utilizing autofill and data validation features, offering wide variety of payment options, and adding an SSL certificate for secure checkout.

Q: How can Mobile Optimization help with Checkout Optimization?

Mobile eCommerce sales are increasing and businesses need to provide a smooth, mobile-friendly shopping experience to tap into this market. A mobile-optimized site not only boosts SEO but also reduces the possibility of cart abandonment due to difficult navigation on small screens.

Q: How can Personalized Product Recommendations enhance Checkout Optimization?

Impersonal and vague product suggestions can lead to cart abandonment. By making personalized recommendations, brands can maximize their Average Order Value (AOV) through upselling and cross-selling and thus streamline the checkout process.

Q: What role does Free Shipping play in Checkout Optimization?

Unexpected extra costs like shipping fees are a main reason for cart abandonment. Offering free shipping can entice customers to complete their purchases.

Q: Why should an eCommerce Website Include Customer Reviews in Checkout Optimization?

Visible customer reviews add to the credibility of a product and can compel visitors to make a purchase. They offer social proof that the brand is reliable and convenient to shop from.

Q: How can offering a variety of payment methods contribute to checkout optimization?

Providing multiple payment options enhances the convenience for consumers who prefer using different payment methods. Chances of potential customers dropping off at the payment stage can be significantly reduced when their preferred payment methods are offered.

Q: How does an SSL Certificate play a role in Checkout Optimization?

An SSL Certificate ensures the security of a customer’s confidential information during the checkout process, enhancing customer trust and reducing the chance of cart abandonment due to security concerns.


 

Gateway Credit Card Processing: Reviewing the Top Payment Gateways in the Market

With just over 131.2 billion card transactions made in the U.S. in 2018 according to the 2019 Federal Reserve Payments Study, it’s clear that card payments have been accelerating steadily in the past several years. There’s an increase in consumer expectations to be able to choose from multiple payment methods, including credit or debit card, NFC mobile payments such as Apple Pay, or other online payments.

For small- and medium-sized eCommerce merchants, navigating the world of credit card processing and payment solutions can be challenging, which means it could be difficult to make the best decisions as you try to grow your business.

In this article, we’re going to look at the current landscape of gateway credit card processing. We’ll look at just what exactly payment gateways are, and then review the top payment gateway providers active in 2022 to help you make informed decisions.

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What is a Payment Gateway?

Payment gateways, which are also called credit card processing gateways, are necessary for all types of merchants, whether you’re a small business or a larger corporation. Payment gateways are used for processing and accepting payments as part of the payment authorization process at checkout.

This means whether your customers are making a payment via a “card not present” (CNP) transaction—like via your eCommerce site, using a virtual shopping cart, or over the phone or mail using a virtual terminal—you’ll need a payment gateway.

Payment gateways encrypt and route all entered data, such as your customers’ credit card information. This creates a secure connection that connects payment and credit card processors, card networks, and financial institutions such as the acquiring bank and your customers’ issuing banks.

As a note, you will need to get a Secure Sockets Layer (SSL) certificate to accept customer’s credit card information on your online store. An SSL certificate provides an important layer of security and encryption for your customer’s data at checkout. The certificate will update your URL from “HTTP” to “HTTPS”. The “S” tells customers they can trust you with their credit card information.

The gateway will then finalize the sale and either approve or deny the transaction—for example, if there isn’t enough money available.

Simply put, a payment gateway functions as a sort of online point-of-sale (POS) terminal for eCommerce merchants, transmitting the necessary information to process payments.

Payment Gateways vs. Payment Processors

We’ve already spoken at length at the difference between payment gateways and processors, but here’s a quick summary on the difference between the two.

While both encrypt payment information such as card data, you need both a payment processor and payment gateway for CNP transactions. If you’re processing card-present transactions in person—like when a customer makes an in-store credit card transaction using your POS system—then you’d only need a payment processor. Essentially, the payment gateway acts as the POS or card reader in a CNP transaction, connecting to the payment processor to then do its usual job.

What are the Most Important Features of a Payment Gateway?

If you need to sell in-person and online, having a payment gateway is a must. However, not all eCommerce gateways are created equal. There are a few factors you should be on the lookout for when shopping for a merchant services provider, including:

  • That it can be easily integrated with the software and tools you already use.
  • That they offer upfront pricing, such as no setup fees or long-term contracts.
  • That your provider offers the latest payment solutions to streamline and future-proof your workflow.

The Top Payment Gateways

Online businesses can choose from a variety of payment gateways providers to start accepting debit and credit card payments. This is one of the oldest software industries, so there are many providers with well-developed functionality.

Here’s a quick breakdown of some popular payment gateways on the market:

Authorize.net

One of oldest payment gateway providers available, Authorize.net accepts most payments, such as online, virtual, mobile, and eCheck. It also provides the possibility for businesses to use various third-party integrations.

However, their flat-rate pricing rates are on the higher side, charging 2.9% + 30¢ per transaction if you opt for their all-in-one option. Plus, if you already have an existing merchant account, it may not be cost-effective to use Authorize.net, but rather see if your existing provider offers it, or opt for a reseller.

NMI Gateway

Also known as Network Merchants Inc., this payment processing company doesn’t target merchants, but rather Independent Software Vendors (ISVs) and fintech innovators, selling software to retailers. They provide extremely customizable APIs and powerful dashboards with granular reporting options—as well as tokenization for extra security.

That said, NMI doesn’t provide upfront pricing information, as they work with resellers and ISOs, which could lead to higher price quotes. This also means there’s limited reviews from customers on their service.

Stripe

Probably one of the most popular payment processing platforms today, Stripe is used by several big-name clients such as Lyft and Airbnb. They offer powerful developer tools and are great for international merchants, offering multicurrency support. They also offer upfront flat-rate pricing, although in most cases it will cost more than subscription-based processors such as Stax.

While they’re expanding their in-person payment options, Stripe is best known for its intuitive online payment options, meaning if your online business also relies on traditional merchant account services, they may not be the best choice.

Plus, it’s worth noting that Stripe primarily provides email or chat customer service, with minimal phone contact, while Stax aims to provide a more customer-centric approach.

Priority Payment Systems

Active since 2005, Priority Payment Systems has termed itself as one of the fastest growing payment providers, with over 200,000 merchant accounts. With an emphasis on small businesses, they offer PCI compliant payment industry solutions suitable for various verticals. In addition to payment processing, they offer a Merchant Suite, which is a full payment ecosystem custom-tailored to each customer’s needs.

Despite their popularity, their services rank low on most online services. With a 1-star average out of 15 Yelp reviews, it’s clear many customers aren’t pleased with the service. It’s not just customers either – expert reviewers pan the company as well. Phillip Parker gave them a 1-star review on Compare Merchant Services.

Adyen

Another payment platform used by several major companies, Adyen provides a one-stop platform to accept hundreds of payment methods in over 100 currencies. It also provides its own proprietary risk management tool that analyzes transaction behavior, along with several other advanced functionalities.

However, Adyen may not be the best fit for smaller businesses: with a minimum invoice requirement dependent on your niche or industry, companies with lower turnover will likely find Adyen’s pricing model unsustainable in the long run. Customers also frequently mention in reviews that Adyen’s interface is very difficult to use.

Stax’s Gateway Credit Card Processing Services

With so many payment gateway services available, it’s clear that there is no “one size fits all” solution. But by following the guidelines we mentioned earlier, you’ll be able to find a provider that’s a great fit for you.

We’ve been around the payment processing block here at Stax, and are confident we offer what we like to call “The Stax Difference.” Our holistic and scalable payment services are built on secure technology, and we offer an intuitive setup with modular payments API for full customization.

Most importantly, our upfront subscription-style pricing eliminates unexpected fees and extra markups, granting you access to direct interchange rates and much more. And with industry standards such as real-time data analysis and PCI compliance, Stax’ payment gateway solutions are a trustworthy choice for online businesses looking to sustainably scale up.

Stax provides an all-in-one gateway credit card processing platform, with simple pricing and no contracts. We offer customizable hardware and software solutions for all businesses, so you can grow and increase your profits.

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Hosted Payment Page: A Complete Guide to Creating One For Your Business

When your business is processing payments online, you need to give customers reassurance that transactions will be handled smoothly and securely.

This isn’t just a matter of removing hesitation to purchase—it’s also about making sure that your business isn’t responsible for any data breaches.

With more people shopping online than ever before, it’s not surprising that payment security is top of mind for many consumers. 48% of consumers say they’re more concerned about data security than they were before the pandemic, while 66% say they would never return to a shop where eCommerce fraud had occurred.

So, what can your business do to create a seamless and secure checkout experience?

It all starts with a hosted payment page.

In this blog, we’re going to cover everything you need to know about hosted payment pages, and why they are a great fit for emerging and established businesses.

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What is a Hosted Payment Page?

A hosted payment page (HPP), also referred to as a hosted payment gateway, is a secure portal that enables businesses to accept payments online. A hosted payment page is operated by a third-party provider who offers data security and payment processing services in exchange for a small fee.

When a customer wants to make a purchase, they are directed to this external page to enter their card information. This differs from a self-hosted payment page, where customers will stay on your business’ website for the duration of the checkout experience.

Because your business is not responsible for managing credit card transactions directly or storing payment information, this frees up more time to focus on other areas of your business.

There are various use cases for an HPP. eCommerce businesses can use a hosted payment page to reduce liability and ensure they’re not capturing sensitive payment data.

Hosted Payment Page_Stax Pay Website Payment Link (Hpp)_Body Image
Stax Pay Website Payment Link (HPP)

An HPP is also helpful for businesses to easily accept payments online in versatile ways. For example, if you offer legal services, you could direct your clients to a hosted payment page and complete the transaction from there.

How Do Hosted Payment Pages Work?

A hosted payment page workflow will progress as follows:

  1. The customer or client agrees to purchase your products or services. This could mean adding items to their shopping cart or signing a service contract.
  2. The customer is directed to your hosted checkout page on an external server.
  3. The customer provides their payment details and selects ‘submit’
  4. The payment gateway will process the transaction and transfer money to your merchant account.

To summarize, customers navigate hosted payment pages in the same manner as regular onsite checkout. The only difference is that none of their information (e.g. card number, and other cardholder data) will pass through the merchant’s website.

Why Use a Hosted Payment Page?

For many businesses, implementing a hosted payment page makes a lot of sense. Here’s why.

Secure checkout with less liability

Running a business involves far more than generating sales. If your checkout page is self-hosted, this means you are responsible for the security of the payment process and protecting customer data. The cost of not maintaining Payment Card Data Security Standard (PCI DSS) compliance can be high; if you experience any kind of data breach, your business will be liable for any customer losses.

By using a hosted payment solution, your business is outsourcing data security and authentication to a third party that maintains high security standards. Because online payment data isn’t passing through your website directly, you aren’t responsible for meeting the majority of PCI requirements. This lessens your obligations while still providing customers with a secure payment and checkout experience.

It’s easy to set up

Hosted payment pages are a quick and convenient solution for online stores. Most payment gateways will offer a payment page as an optional extra via open API integration. This means little to no technical work is needed on your end to begin accepting online payments.

Optional recurring billing

One of the biggest advantages of using a hosted payment page is that it opens up new capabilities you won’t find with a standard payment gateway. Many hosted payment pages offer subscription billing, which gives your business the ability to offer recurring services or product replenishment. Additional features like this give you wraparound support and more robust selling opportunities.

For example, if you’re selling recurring services or products, having an HPP provider with built-in subscription features allows you to put your billing needs on autopilot.

Accept multiple payment methods

Today’s consumers expect to make online payments using a variety of methods. In addition to standard credit and debit cards, Buy Now, Pay Later, ACH, and digital wallets like Apple Pay and Google Pay are all standard options that are key to a smooth payment experience.

Using a third-party checkout enables your business to offer customers many different payment options. The more payment types you can accept, the more flexible and friction-free your checkout is.

A streamlined checkout experience

It’s not an exaggeration to say the checkout process can make or break the customer experience. According to Baymard Institute, “a long and confusing checkout” is the third biggest reason for cart abandonment in online commerce.

Even when customers have items in their shopping cart, it only takes one moment of friction to trigger cart abandonment. Whether it’s difficulty entering payment information or the web page being slow to load, the checkout process is full of potential interruptions that cause customers to shop elsewhere.

In the realm of professional services, an unsecured or cumbersome online payments process can ruin the client experience. When your clients can’t make payments easily, they may choose to take their business elsewhere.

A hosted checkout is one of the best ways to simplify the checkout process because it’s designed with your customer’s convenience in mind. From single-page payment forms to guest checkout options, hosted payment pages help to remove many of the barriers that result in cart abandonment.

What Types of Businesses Should Use a Hosted Payments Page?

There are very few businesses that won’t benefit from using a hosted payment page. Here are some instances where a hosted page is particularly helpful:

You don’t want the hassle of managing payment processing. No matter the size of your business, managing a checkout takes up a lot of time and energy that could be put towards generating sales or refining your marketing strategy. By using an external checkout provider, you can let the experts handle your payment page and focus on what your business does best.

You’re considering offering services that require recurring billing. If your business wants to offer a subscription box, some kind of replenishment service, or a retainer agreement,  you need a payment gateway with recurring billing capabilities. By getting a hosted payment page sorted out now, you won’t have to worry about changing your payment processing system in the future.

You’re a large business with more complex PCI compliance requirements. The more transactions you process, the more requirements there are to stay compliant. If you run a sizeable business, the hassle of keeping up with these regulations is very time-consuming. It makes far more sense to outsource PCI compliance to an external service provider to save both time and money.

>How to Set Up a Hosted Payment Page

How exactly can you set up a hosted checkout page? Below, we’ll go over the steps you should take.

1. Choose a Hosted Payment Page Provider

To set up a hosted payment page, your business needs to select a payment processing provider. Here are the key questions you need to ask as you compare different providers and their wide variety of payment solutions:

How do they maintain PCI compliance?

Not having the burden of PCI compliance is one of the biggest benefits of using a hosted payments page. But it’s important to note that there are different levels of compliance, depending on the number of transactions being processed:

  • Level 1: 6 million card transactions per year.
  • Level 2: 1 to 6 million transactions per year.
  • Level 3: 20,000 to 1 million transactions per year.
  • Level 4: 20,000 transactions per year.

So, when a provider says they are “PCI compliant” it’s important to dig a bit further to check whether they offer the right level of compliance for your business needs. Stax, for instance, is a Level 1 PCI compliant provider, which means we offer the highest level of security as determined by the Payment Card Industry Security Standards Council.

What payment methods are accepted?

Not every hosted checkout page will offer the same range of payment options, so you’ll need to consider what payment methods you want to accept.

While just about every provider will process a standard credit card like Visa or Mastercard, they might not accept Apple Pay and Google Pay or ACH payments. If your customers want to pay using these methods and are unable to do so, this could result in a high rate of cart abandonment.

Whatever service provider you decide on, make sure that they offer a wide range of payment options to accommodate your customers. This includes making sure that your page can be configured to accept store-branded gift cards.

Does it offer customization?

The look and feel of your hosted payment gateway might not seem like a top priority, but it’s critical to prevent customers from abandoning cart when they reach your payment form.

Redirecting customers away from your website might save you a lot of liability, but it does have the downside of interrupting the flow of the shopping journey. If your payment page template can’t be branded to reflect your brand identity, security-conscious consumers may decide not to complete their purchase.

Make sure to look for a hosted payment page provider that offers CSS and HTML markup tools so you can customize your page with your company name, logo, and brand colors. Note that customization options are not available within the iframe itself, as this form is protected by 3D secure.

Is it easy to integrate into your website?

Your business doesn’t want to spend any more time than necessary connecting your hosted payment page with your eCommerce store or company website. Your service provider should offer an easy setup process so you can start processing payments quickly. If it requires the expertise of a developer, you may want to look for another solution.

2. Configure the Settings for Your Hosted Payment Page

Once your payment page has been set up, you need to go into the settings tab to make sure that everything meets your specifications.

This includes any customization of your page, selecting available payment options, and setting up CTAs for directing customers to the checkout. In addition to the shopping cart itself, you may have the option to redirect customers to your hosted payment page via email and invoicing.

3. Make a Test Transaction

Ready to start accepting payments? Before setting your hosted payment page to live. Be sure to make a test transaction or two to check that your page is functioning as it should in a variety of scenarios. This includes:

  • Testing out each of your payment options.
  • Using expired credit cards to check for failed payment notifications.
  • Setting up recurring payments (if applicable).
  • Making secure transaction fees are charged correctly e.g. passing them onto your customer.

Final Words

Payment processing is never a merchant’s favorite activity to manage. By bringing a hosted payment page provider into the fold, your business can spend more time focusing on generating sales and customer relationship management—all with the confidence that your provider is handling all the nuts and bolts.

Be sure to customize your page and offer a broad spectrum of payment options to offer a seamless payment experience that keeps customers coming back for future purchases. Remember, a better payments experience = a healthier bottom line!

Looking into ways you can leverage payment links for an even better way to collect payments from customers? Contact Stax to discuss your needs and how Stax Pay helps you go beyond just standard hosted payment options.

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FAQs about Hosted Payment Page

Q: What is a hosted payment page?

A hosted payment page, also known as a hosted payment gateway, is a secure portal that allows businesses to accept payments online. It is operated by a third-party provider who offers data security and payment processing services for a fee.

Q: How does a hosted payment page work?

A hosted payment page works by directing customers to an external page to enter their card information when they want to make a purchase. The payment gateway processes the transaction and transfers money to the merchant’s account. This system eliminates the need for the business to handle credit card transactions directly or store payment information.

Q: Why should a business use a hosted payment page?

Using a hosted payment page offers several benefits. It provides a secure checkout with reduced liability, as the business isn’t responsible for the security of the payment process or protecting customer data. It’s easy to set up, offers optional recurring billing, accepts multiple payment methods, and provides a streamlined checkout experience.

Q: What types of businesses can benefit from a hosted payment page?

Almost any business can benefit from a hosted payment page, but it’s particularly useful for businesses that don’t want to manage payment processing, are considering offering services that require recurring billing, or are large businesses with complex PCI compliance requirements.

Q: How can a business set up a hosted payment page?

To set up a hosted payment page, a business needs to select a payment processing provider, configure the settings for the payment page, and make a test transaction to ensure the page is functioning correctly.

Q: What are the key considerations when choosing a hosted payment page provider?

Key considerations when choosing a hosted payment page provider include their level of PCI compliance, the payment methods they accept, the customization options they offer, and the ease of integrating their service into your website.

Q: Are hosted payment pages customizable?

Yes, many hosted payment page providers offer CSS and HTML markup tools for customizing your page with your company name, logo, and brand colors. However, customization options may not be available within the iframe itself, as this form is protected by 3D secure.

Q: Do hosted payment pages offer recurring billing options?

Yes, many hosted payment pages offer subscription billing, which allows businesses to offer recurring services or product replenishment.

Q: Can a hosted payment page accept multiple payment methods?

Yes, using a third-party checkout enables your business to offer customers many different payment options, including standard credit and debit cards, Buy Now, Pay Later, ACH, and digital wallets like Apple Pay and Google Pay.

Q: What is the role of a hosted payment page in PCI compliance?

A hosted payment page helps businesses meet PCI DSS compliance by outsourcing data security and authentication to a third-party provider. Since online payment data isn’t passing through the merchant’s website directly, the business isn’t responsible for meeting the majority of PCI requirements.