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.
TL;DR
- Selecting your new payment processor takes a few steps from understanding your business’s needs to going through product demos.
- Understand the difficulties you may face with a processor’s pricing or support.
- There are many payment processors on the market but there are 10 specific ones you should evaluate.
7 Steps to Select the Best Payment Processor for Your Small Business
1. Identify Your Business Needs
The first step in selecting a payment processor is to understand the specific needs of your business. A general checklist of factors, features, and more to consider:
- Determine the type of payments you plan to accept. (Online? In-person? Mobile? A combination of these?)
- Consider the average transaction size and volume your business handles, as some processors are better suited for larger transactions, while others are ideal for high-frequency, low-amount payments.
- Does your business model include recurring billing? Need to send invoices or only take payments at a point-of-sale? Are you operating internationally?
2. Compare Pricing Structures
Payment processors offer various pricing models, such as flat-rate, interchange-plus, or tiered pricing. (Read the complete guide on these pricing models here.)
It’s essential to evaluate these structures to find one that fits your transaction patterns and business model. Keep an eye out for hidden fees that may not be immediately apparent, like setup fees, monthly maintenance fees, PCI compliance fees, or chargeback fees.
3. Request Product Demos and Trials
Before committing to a payment processor, it’s crucial to request a demo or a free trial period. This hands-on experience allows you to explore the platform’s interface, understand its features, and assess its compatibility with your business systems and daily operations. The demo and trial stages are valuable opportunities to engage directly with the product and its support team, providing insight into whether the solution aligns with your needs.
Key Actions During the Demo and Trial:
- Test core features such as the ease of processing transactions, managing refunds, issuing invoices, and handling recurring billing if applicable. Make sure these processes are straightforward and efficient, aligning with your operational workflow.
- Explore reporting capabilities. Ensure that the processor offers robust reporting options that can be tailored to your specific business needs.
- Involve your technical team. Their expertise is invaluable for assessing the technical compatibility of the payment processor with your systems, especially if custom integrations or API usage is required.
- Pay close attention to how intuitive and user-friendly the interface is. A simple, easy-to-navigate platform will minimize employee training time and reduce the likelihood of errors during transactions, which is especially important in high-volume environments.
- Ask about the training resources and onboarding support the processor provides. Some companies offer in-depth training sessions, webinars, or live, real-time customer support to assist in onboarding, which can be critical in getting your team up to speed quickly and efficiently.
- If the trial period includes live transaction processing, test the platform’s performance. Evaluate the speed of transactions, any potential downtime, and how quickly funds are settled. Real-world testing during the trial period will give you a better understanding of how the processor will perform under typical business conditions.
4. Check for Tech Stack Compatibility
Compatibility is key when integrating a payment processor into your business systems. Ensure that the processor you choose can work seamlessly with your existing point-of-sale (POS) system, eCommerce platform, or accounting software. This integration may be pre-built by the payment processor, or may be available for your team to build on an API.
Additionally, look for a processor that offers flexibility in accepting various payment methods, such as credit and debit cards, mobile wallets like Apple Pay and Google Pay, and ACH transfers, to accommodate customer preferences and provide a convenient payment experience.
5. Evaluate Security Measures
Security is a critical factor in selecting a payment processor. Verify that the provider is PCI-DSS compliant to ensure that your customers’ data is protected according to industry standards.
Beyond compliance, look for processors that offer advanced security features like tokenization and encryption, which add layers of protection to payment information. Fraud detection tools are also valuable, as they help minimize the risk of fraudulent transactions and safeguard your business and customers against data breaches.
6. Examine Customer Support and Reliability
A reliable payment processor should offer robust customer support options, as any issues with payment processing can significantly impact your business operations. Research the provider’s customer support availability and the modes of support offered, like live chat, phone, or email.
During the sales process, engage with the support team to assess their responsiveness and knowledge. This initial interaction can provide valuable insight into the level of service you can expect once you become a customer.
7. Consider Flexibility and Scalability
As your business grows, your payment processing needs may evolve, so it’s important to choose a provider that offers flexibility and scalability. Look for options that support:
- Multi-currency processing
- International payments
- Advanced reporting features
- Offer an open API
Such capabilities can be invaluable as your business expands into new markets or scales up operations. Also, ensure that the contract terms are not overly restrictive; a flexible agreement will allow you to upgrade or switch providers without incurring significant penalties or fees.
8. Read User Reviews and Seek Recommendations
To gain insights into the performance and reliability of payment processors, read user reviews and testimonials from other small business owners. This feedback can provide valuable information on the pros and cons of each provider.
One area that reviews can be particularly enlightening is for customer service. Reviews will often provide insight on how responsive and effective their support team is in resolving issues, providing you a chance to examine the processor’s track record for reliability, including uptime and processing speed, to ensure that you won’t face any interruptions in service.
Additionally, seek recommendations from your professional network or industry groups to discover options that have a proven track record within similar business types.
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.
Subscription
This model uses a 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’s 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 disappearing 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.
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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. Stax seamlessly integrates with many types of payment terminals and a variety of 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 4.4 star rating from U.S. News and a 4.5 star 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 interchange plus 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.
- Payment Depot
Payment Depot runs on an interchange plus pricing model, but prides itself on affordability compared to other interchange plus competitors. They offer live, U.S.-based customer support, no long-term contracts and a user-friendly online dashboard to manage payments. 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.
- 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.
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 currently 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.)
- 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, are prohibited.
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.
