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Published: Nov 08, 2022 24 min read

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Money’s Top Picks

Square: Best for Low-Volume E-Commerce
Flow Payments: Best for High-Risk Businesses
National Processing: Best for High-Volume Businesses
Fattmerchant: Best Subscription-Based Credit Card Processing
PayPal: Best for Low-Risk Microbusinesses

With credit card usage on the rise, credit card processing services are essential for any business to grow and stay competitive. This guide has everything you need to know about this business solution, including our top picks for the best credit card processors.
Credit cards are one of the most common mobile payment methods, accepted by every type of merchant, from the small gas station in the middle of nowhere to the giant online retailer. This is no surprise, considering that 4 out of 5 customers prefer paying via credit card rather than cash.

For your business to start accepting credit card transactions, you need the services of a credit card processing company. These companies act as intermediaries between you, your customer and all other parties involved in credit card payments. They make sure each transaction is secure and quick, with minimum chance of fraud.

There are hundreds of credit card processing companies to choose from. Picking the right one may be confusing, especially when most options offer nearly identical services. To make your job easier, we vetted dozens of companies by evaluating factors such as pricing and fees, contract terms, customer service and hardware options.
After comparing these factors and digging into each company’s terms and conditions, we found the best [data-id=">best credit card processing companies of 2022.

Key Takeaways:

  • High-risk businesses pay much higher processing fees than low-risk ones.

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More on Money's top picks

Square stands out in a very crowded field due to its flat rate pricing, zero monthly fees, ease of use and advanced mobile capabilities. The company's features and equipment make it one of the most popular credit card processing solutions for low-volume e-commerce and brick-and-mortar businesses.

Since Square charges no monthly fees, it is ideal for business owners looking for cost predictability. Additionally, the company has a flat-rate pricing system, currently at 2.6% + $0.10 for contactless payments, swiped or inserted chip cards and swiped magstripe cards. It also charges 3.5% + $0.15 for keyed-in transactions and 2.9% + $0.30 for online transactions.

Square's Point of Sale app, available for free at the Apple and Google app stores, is the central hub where all credit card transactions take place, whether in-person or online. The app is one of the most feature-rich in the credit card processing industry. You can sync it to Square's free online store, which includes invoicing, recurrent billing, inventory counts and more.

If you do most of your transactions in person rather than online, you should know that Square offers a free mobile card reader for iOS or Android to anyone who signs up. The card reader allows you to accept magnetic card payments directly from your tablet or smartphone.

Square provides three options for merchants to retrieve their funds: within one or two days (free of charge); same day (1.5% on the transfer amount); or through the Square Card, a Mastercard that gives you access to your funds anytime you want.

However, there's this: Square's customer support is only available via phone, Monday through Friday, between 6am and 6pm.

High-risk businesses can have a very hard time shopping for good and affordable credit card processing services. While many companies simply refuse to offer services to these businesses, some that do will engage in predatory practices and require less-than favorable terms. For these merchants, there are companies like Flow Payments.

With over 40 years of experience in high-risk credit card processing, Flow Payments has been able to turn its partnerships with multiple banks, technology providers, and processors into lower-than-average pricing options for all its high-risk merchants. In fact, it even offers interchange-plus pricing to qualifying merchants, a solution that is almost always inaccessible to these types of businesses. Moreover, while most high-risk credit card processing companies use offshore accounts, Flow Payments is the only one that works exclusively with US-based banks.

Regarding specific rates, here’s the caveat: while we valued transparency in pricing when evaluating our top picks, the reality in high-risk credit card processing is that most companies, including Flow Payments, will need to assess your business needs thoroughly — taking into account your risk type, sales volume, and more — before deciding on a rate. For this reason, the company doesn’t publish “one-size-fits-all” rates. If you want to find out Flow Payment’s rates for your business, you must request a quote.

Aside from credit card processing, Flow Payments also offers comprehensive business solutions that include cashless ATM, E-Check, ACH processing, credit card terminals, online payment gateways, and online shopping carts. Lastly, every business gets its very own support and consulting team, available 24/7.

For a complete list of the high-risk business types serviced by Flow Payments, click here.

Businesses processing over $10k per month should look to National Processing, a payment processing company offering one of the most comprehensive and affordable full-service merchant accounts. One of the things we liked most is its lower-than-average interchange-plus tiered pricing, with several tiers according to sales volume and industry type:

  • Restaurants processing up to $75k: Monthly cost of $10 + interchange / Transaction fees of 0.15% + $0.07
  • Retail businesses processing up to $75k: Monthly cost of $10 + interchange / Transaction fees of 0.20% + $0.10
  • E-commerce businesses processing up to $75k: Monthly cost of $10 + interchange / Transaction fees of 0.30% + $0.15
  • All businesses processing between $75K and $200K: Monthly cost of $59 + interchange / Transaction fees of 0.0% + $0.09
  • All businesses processing over $200K: Monthly cost of $199 + interchange / Transaction fees of 0.0% + $0.05

While National Processing does not charge any setup, annual, monthly minimum, or termination fees, it does charge for other services such as PCI compliance and chargebacks. Month-to-month contracts are the norm with this company, meaning that you can easily look elsewhere if you’re not satisfied with the services.

National Processing has partnered with some of the leading credit card processing hardware providers — including Clover, Pynt, and SwipeSimple — to offer a wide array of countertop terminals, point-of-sale systems, and mobile processing tools. For ACH/eCheck transactions, the company has its own proprietary software starting at $15 per month + $0.48 per transaction. Finally, your National Processing account can be easily integrated with online selling platforms like Shopify, WordPress, and WooCommerce.

Medium-sized businesses looking for the stability that comes with subscription-based credit card processing should consider Fattmerchant. What makes the company unique is its pricing structure. Instead of charging a percentage markup, Fattmerchant charges a monthly fee (per payment method) and a per transaction fee on top of interchange and assessment fees (the latter two are called “direct” costs by the company). Not having a percentage markup means that, regardless of your sales numbers, you’ll always pay the same rate.

To further explain, here’s a rundown of Fattmerchant’s subscription-based tiers:

  • Businesses processing up to $500k per year: Starting at $99 per month + 8¢ per transaction (swiped) or 15¢ (keyed-in) + direct costs
  • Businesses processing over $500k per year: Starting at $199 per month + 6¢ per transaction (swiped) or 12¢ (keyed-in) + wholesale costs

Businesses selling over $5 million annually must request a quote, since the pricing will depend on their specific needs.

Fattmerchant does not charge any batch, cancellation, PCI compliance, and statement fees. All its subscription plans include access to the Omni Integrated Processing Platform, which offers online and offline syncing, a virtual dashboard, inventory and customer management, invoicing tools, business analytics, chat, email, and phone support, Level 1 PCI compliance, and encrypted customer data, among others.

Even if you don’t know anything about credit card processing, you’ve probably heard about this one. In the years since its creation in 1998, PayPal has become synonymous with payment processing and one of the most — if not the most — recognized credit card processing brand in the US. This is a big plus for up-and-coming low-risk and very low-volume solopreneurs selling less than $2,500 per month, since they can take advantage of customers’ overall recognition and trust in the brand.

PayPal has one of the most affordable flat-rate pricing structures on the market and does not charge any setup, cancellation, startup, or monthly fees — though there is a hefty $20 chargeback fee. As of this writing, its transaction rates are:

  • 2.9% + $0.30 per online transaction
  • 2.7% per transaction using the PayPal Here app and a card reader
  • 3.5% + $0.15 per keyed-in transaction
  • 3.1% + $0.30 per transaction using PayPal’s virtual terminal

PayPal is one of easiest payment processors to setup and use, and your account can be synced across websites, apps, card readers, and virtual terminals. It is also great for international transactions, as the company currently operates in more than 200 countries and accepts over 26 currencies.

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Our methodology

In order to find the best credit card processing companies, the first thing we did was to get a general overview of the industry. What we discovered was a bit discouraging. Since there are hundreds of credit card processing companies offering very similar services, many of them lure small business owners with misleading offers rife with hidden fees and predatory contract clauses.

For this reason, we decided early on that only the most transparent credit card processing companies would make our cut. This meant that, for us to give a processing company further consideration, it would have to be 100% upfront and clear about its fees, its rate structure, and any other pricing information.

Once this initial vetting process was complete, we evaluated each company according to three factors: affordability, customer service, and contract terms. By digging into and comparing these factors, we narrowed down the options until we arrived at the very best credit card processing companies.

Furthermore, because no two businesses are exactly the same, we broke down our “best of” list into categories that reflect the varied realities of businesses in 2020. In sum, we think you’ll find that all the credit card processing companies included in this list offer more for your money, are transparent regarding their fees, and provide credit card solutions that make sense for you.

What you need to know about credit card processing

Credit card processing is a complex process involving multiple parties working in tandem to make sure that credit card transactions run smoothly and securely. Let’s take a look at how it works, how fees are determined, and what you can do to avoid paying more than you should.

How credit card processing works

When a customer uses a credit card as a form of payment, the following chain of events unfolds in just a few seconds: the credit card info is sent to a credit card processing company, who forwards it to the card issuer, who then in turn sends it to the customer’s bank account, which, after approving or declining the transaction, forwards their decision to the processing company, who then sends this information to the merchant. While this system guarantees efficiency and safety in every transaction, each of the steps described above carry fees that, in some cases, can be very steep.

There are two basic types of credit card processing companies: payment service providers (PSPs) and traditional merchant accounts (MAs). In a nutshell, the main difference between the two has to do with personalization and customization. While PSPs bundle all merchants (businesses like yours) under one umbrella account and provide “prepackaged” all-in-one solutions, merchant accounts are individualized accounts that are tailored to fit the merchant’s specific needs. Aside from costs — PSPs tend to be pricier due to their bundled tools and services — the other main difference between these two types of credit card processing is that, whereas PSPs act as intermediaries between you and the bank, merchant accounts are usually administered by banks themselves.

Most common fees and rates

There’s no way of escaping credit card processing fees. Every intermediary in the credit card transaction chain requires a fee, some of which are non-negotiable. In this respect, the best a business owner can do is: 1) shop around until they find a company that offers affordable rates and, 2) undertake a business strategy designed to lower processing costs.

Below, you’ll find eight of the most common credit card processing fees.

  1. Interchange fees: This is the fee that banks charge for the services they provide during each transaction. While the fees are the same across all credit card companies, they can vary depending on card type. One of the unique aspects of this fee is that it is non-negotiable, meaning that business owners can’t do anything to lower it.
  2. Assessment fees: This fee is charged by credit card companies, such as Visa, Mastercard, and others, to cover for processing costs. The fee is also non-negotiable.
  3. Merchant account fees: This fee, which is exclusive to merchant accounts, is the amount your merchant account provider — usually a bank — charges on top of interchange rates. Because merchant accounts are tailored to fit a specific business’ needs, these rates can be negotiated and will vary depending on sales volume and business type.
  4. Setup fees: Some credit card processing companies charge an initial setup fee in order to get you started. Whenever possible, it’s best to forgo companies that charge this kind of fee.
  5. Monthly or annual fees: This is charged mostly by credit card companies with membership pricing models (more on this below). In most cases, this fee will be charged on top of all other fees.
  6. Security fees: To cover the costs of PCI-compliance and reduce the risk of fraud, some credit card processing companies charge an annual security fee.
  7. Customer service fees: This charge goes toward covering any costs related to call centers and support departments. Much as with setup fees, you should look for companies that offer customer service for free.
  8. Cancellation fees: If you cancel your credit card processing contract before its active period has expired, you may be charged a cancellation fee. One of the ways of avoiding this is by choosing monthly rather than yearly contracts.

One of the most important things you should do before choosing a credit card processing company is to carefully evaluate their fee structure. If you are not sure, ask a representative any and all questions you may have. If you are still unsure, maybe it’s better to look for another company. As we’ll discuss later on, rate transparency is one of the most essential things you should be looking for in a credit card processing company.

Now that you know about fees, let’s take a look at the four most common rate structures offered by credit card processing companies.

  • Flat Rates: This is the simplest rate structure, in which you pay a predetermined monthly percent for every credit card transaction, regardless of sales volume or how much money is involved. The main benefit of this structure is that you know exactly how much you’ll pay. The downside, however, is that the more transactions you make, the more you’ll pay.
  • Interchange-Plus Rates: In this rate structure, you pay a fixed amount per transaction, on top of the interchange rate. This is by far the most transparent of all rate structures, as it singles out every transaction fee in every statement so that merchants can pinpoint exactly what they’re paying for. While more complex than flat-rate structures, interchange-plus gives you — the business owner — far more control over your finances.
  • Tiered Rates: With this rate structure, the fees charged on top of your interchange fees will vary depending on business type and sales volume. As the name says, tiered-rate statements bundle all fees according to tiers, making it virtually impossible to know how many fees you ended up paying per transaction. Because many factors can affect your overall fees, this is the most complex and expensive type of rate structure.
  • Subscription Model: With this type of rate structure, you’ll pay a fixed monthly price to cover all interchange fees, as well as small, additional fees per-transaction. In many cases, you’ll also be charged an extra monthly or yearly subscription fee. What makes this rate structure unique is that, instead of a percentage of your sales, you’ll be charged a fixed amount.

How risk influences credit card processing fees

Credit card processing fees are very complex, and vary on a case to case basis according to diverse factors, including sales volume and amount, how the transaction was completed — swiping a card carries less fees than keyed-in transactions, for example — the security standards adopted by your business, and the rate structure of your credit card processing contract.

However, the factor that most affects how much you will pay for credit card processing fees has to do with risk; specifically, whether your business is categorized as low or high risk.

Credit card processors get the only word in determining which of the two categories applies to your business. Each processing company has its own standards for determining merchant risk, and the list of businesses deemed high risk can be very long, including everything from adult entertainment and cannabinoid supplements to traveling and tech support.
While many credit card processing companies will not provide services to high risk businesses, the ones that do will charge much higher rates and require longer-term contracts that include early cancellation penalties and a rolling reserve (an amount set aside for any unexpected expenses).

While high risk credit card processing is, unfortunately, fertile ground for predatory practices, the good news is that there are several reputable, affordable, and trustworthy companies specializing in high risk merchants. If your business falls into the high risk category, check out our review of Flow Payments, which we found to be the best credit card processing company for high risk merchants.

Is credit card payment processing secure?

Fortunately, credit card processing is fairly secure and risk-free, as long as you follow the Payment Card Industry Data Security Standard (PCI DSS), a set of rules developed by Visa, Mastercard, American Express, and JCB in 2006 to prevent credit card fraud and guarantee trust in credit card transactions.

To further secure your business from fraud, you can make sure your processing company offers you Level 2 or Level 3 card data instead of Level 1 — higher levels mean more customer data, which in turn makes every transaction safer. Lastly, upgrade your card reader so it accepts EMV cards (chip), since this type of technology offers more transaction safety than traditional magnetic stripe card readers.

A quick word on equipment and contracts

If you’re accepting credit cards in person, you need hardware, such as card readers and POS systems. For business owners, there are two ways of acquiring this equipment: leasing or buying. While leasing may be tempting because it’s more affordable in the short run, there are two main downsides to this approach.

First, you’ll be required to sign lengthier contracts, lasting one or more years. Since you’ll be paying for the equipment on a monthly basis, the processing company wants to make sure you’ll stick around at least until it has recouped the costs of the leased equipment. Second, you’ll end up paying more in the long run, as usually happens with long-term financing.

For these reasons, we recommend you purchase your own credit card processing hardware. You’ll be free from lengthy contracts and, most importantly, save money in the long run.

FAQs on Credit Card Processing and Merchant Services

If my business starts accepting credit cards, how long will it take for the funds to be available?

The industry standard is 2 to 3 days waiting time until business owners get access to the funds related to credit card transactions. Some credit card companies, however, offer next-day or even same-day availability for an extra cost.

What can I do if my business has been categorized as “high risk”?

Unfortunately, if your business has been deemed high risk by a credit card processing company, there’s not much you can do other than look for another company that will: 1) consider your type of business as low risk, since categories may vary between credit card processing companies or, 2) look for a credit card processing company specializing in high risk merchants, such as Flow Payments.

What you should NEVER do is provide false information to the credit card processing company in order to get a low-risk categorization. The credit card processing will most likely discover, and your business will be placed in the Terminated Merchant File (TMF) or MATCH (Member Alert to Control High-Risk) list, which includes the name of all merchants whose credit card processing services have been terminated due to unethical practices and excessive chargebacks. Businesses included in this list — which is consulted by all credit card processing companies prior to providing services to a merchant — will have a hard time getting credit lines or any merchant services.