Best Credit Card Processing Companies of 2021

Best Credit Card Processing > For most businesses, the ability to accept credit and debit card payments is a necessity, and this requires a credit card processing company. A credit card processor acts as an intermediary between your business and your customers’ credit card companies. Whether your business has a physical location or is entirely online, you need a payment processor to accept credit card payments. However, choosing the right processor for your business can be a headache with so many different fees, requirements, and options available.

We're here to help. We’ve looked at transaction fees, pricing models, customer support, third-party integrations, hardware options, and security features to help you narrow down your choices. We’ve also gone through the data to select the Best Credit Card Processing Companies of 2021.

Credit card processors and point-of-sale (POS) systems often work together to accept and process sales. Visit our rating of the Best Point-of-Sale (POS) Systems of 2021 for more information.







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    Stax by Fattmerchant »

    4.2 out of 5
    $99 & UpInterchange + 8¢Interchange + 15¢View Prices »
    Helcim »

    4.1 out of 5
    $0VariesVariesView Prices »
    Dharma Merchant Services »

    4.1 out of 5
    $20VariesVariesView Plans »
    Payment Depot »

    4.0 out of 5
    $49 & UpInterchange + 15¢Interchange + 15¢View Plans »
    National Processing »

    4.0 out of 5
    $9.95 & UpVariesVariesSee Review »
    Square »

    4.0 out of 5
    $0 & Up2.6% + 10¢3.5% + 15¢View Prices »

    Credit card processing companies serve merchants by facilitating credit and debit card payments. While the process happens in seconds on the surface, a lot is involved on the back end of a transaction. The processor acts as the go-between for the customer’s bank (where the payment comes from) and the merchant’s bank (where the payment ends up).

    Merchants who wish to accept credit or debit card payments must partner with a credit card processing company. Processing companies can facilitate other forms of payment as well, such as Apple Pay, Google Pay, PayPal, ACH, and checks.

    When choosing a credit card processing service, remember that there is no one-size-fits-all solution. It’s important to find one that matches your business needs, budget, and goals. Some specialize in online payments while others focus on in-person transactions and point-of-sale (POS) systems, and still others provide an all-in-one solution for all types of sales.

    Credit card processing companies may cater to specific types of businesses or merchants that process a certain level of volume.

    For more information, read our What Is Payment Processing? Guide.

    Credit card processing is a complex system whereby card data is routed back and forth behind the scenes while providing customers a seamless checkout experience. How it all happens involves many moving parts and complex back-end technology. Before we break down the process, you should first understand all of the parties involved:

    • The cardholder: The consumer who is making the purchase.
    • The merchant: The business owner who is selling the product or service.
    • The issuing bank: The bank that issues the credit card being used (or the customer’s bank).
    • The acquiring bank: The merchant’s bank.
    • The payment network: The credit card operating networks, including Visa and Mastercard.
    • The credit card processing company: The processor that routes the payment data to the card network and helps facilitate communications during a transaction.

    The credit card processing journey begins when a customer decides to make a card payment to a merchant either in person or online.

    Step 1: The merchant takes the cardholder’s payment information, either at an in-store card terminal or online.

    Step 2: The credit card processor routes the customer’s card information to the credit card payment network. This requires an internet connection.

    Step 3: The payment network sends the transaction data to the issuing bank to request authorization.

    Step 4: Once the bank validates the payment information, it authorizes the transaction amount, and the authorization is sent back to the merchant via the payment processor. If there aren’t adequate funds or if there is a suspicion of fraud, the transaction will be denied.

    Step 5: After the transaction is authorized, a hold is placed at the issuing bank for the amount.

    Step 6: The merchant then must settle their batch of transactions, which is usually done once per business day. That function is facilitated by the payment processor and follows the same route as before: merchant to payment network to issuing bank, and then back.

    Step 7: The issuing bank releases the funds to the acquiring bank.

    Step 8: Funds are deposited into the merchant’s bank account, minus any interchange and processor fees.

    In general, it takes less than a minute for a transaction to be authorized. Once transactions are settled, it takes an average of two business days for the payment to be deposited into the merchant’s bank account. Some processors offer same-day or next-day deposits, while some situations might require a longer payout time period.

    Best Credit Card Processing
    Best Credit Card Processing

    With the use of cash declining in recent years, the ability to accept payment via debit and credit cards is becoming increasingly necessary. Choosing one that's too complicated, doesn’t offer the features you need, or is too expensive will make life difficult. Below are a series of questions to ask as you search for the right credit card processor for your business.

    1. What is your monthly sales volume? Some companies offer different processing rates for low-volume and high-volume sellers. Look at the rates for your company’s sales volume.
    2. Do you need a merchant account or a third-party processor? Sometimes called payment aggregators, third-party processors let merchants bypass setting up a merchant account. For smaller businesses with low transaction volumes, third-party processors like Square or PayPal may offer the simplicity and affordability they are seeking. Usually, you only pay third-party processing companies when you make a sale. Third parties take on the burden of PCI DSS compliance since transactions take place outside of your platform and network. Merchant account providers tend to be a better fit for larger or growing businesses. They typically offer more options for customization and provide a more stable solution, and the entire transaction takes place within the merchant’s network. StaxHelcim, and Dharma Merchant Services are examples of merchant account providers. Per-transaction costs are typically lower with this type of processor, and merchants have greater access to in-house customer service. However, there is an underwriting process to be approved for a merchant account, which could be a roadblock for some businesses.
    3. Do you sell primarily online or in-store? While most companies offer both online and brick-and-mortar selling options, some are geared more toward one or the other. Some payment processors even offer their own e-commerce platforms. Also, the transaction fees for online payments compared to in-person sales are usually higher.
    4. Do you sell internationally? Not all processors accept non-U.S. currencies. If you are a U.S.-based operation that regularly conducts business internationally, make sure that the companies you're considering accept payments in the currencies of the regions where you do business.
    5. What's your budget? Have a clear budget in mind, including what features and fees you can afford.
    6. What is the company’s fee structure? Working with a company that prioritizes transparent pricing and doesn’t tack on unexpected fees is crucial. Getting access to all of the pricing options is just the start. You also need to figure out the right pricing model for your business needs. While all the companies on our list have transaction fees, these are not all based on the same pricing model. A few companies offer flat rates, while others offer interchange-plus rates. Also, while some companies have a pay-as-you-go subscription model and recurring monthly fees, others don't.
    7. What hardware does it use? If you already have hardware, check to see if your new processor integrates with it. Some companies will reprogram existing hardware, while others have their own hardware or work with specific hardware companies. In addition, find out if a processor offers options like a mobile card reader.
    8. What software does it integrate with? Take inventory of what software you will be using or are currently using. Does the processor integrate with it or offer an API to facilitate integration? If you’re using other vendors for your POS system, accounting, or other business functions, such as customer relationship management (CRM), it’s helpful if your processor allows your transaction data to integrate with those platforms.
    9. Will you require a separate point-of-sale system? A number of companies on our list, such as Square and Clover, offer their own point-of-sale systems. If a POS system is important to you, look to see which POS integrations are offered by the processors you're interested in. For more information on POS systems, see our rating of the Best Point of Sale (POS) Systems of 2021.
    10. What customer service options does the company offer? Make sure you have access to customer support when you need it. Poor service and technical difficulties can cause you to lose business, so it’s important to choose a company that offers ample support. The more complex your credit card processing needs are, the higher the level of service should be. Find out if the companies on your shortlist have an in-house technical help desk or if it’s outsourced. Is it available 24/7 or just during set business hours? Some companies may also have online troubleshooting guides or community pages where members can try to help you.
    11. Is it PCI compliant? PCI DSS is a set of security standards to which merchants are held to ensure that cardholder data is protected. There are different levels of PCI compliance. For any business that accepts, transmits, or stores cardholder information, it’s important to work with a processing partner that understands and can help you with PCI compliance. Some processors will automatically ensure your compliance, while others will require you to fill out annual questionnaires.

    With so many aspects to credit card processing services, it can be difficult to know which features you should be interested in and which you can tune out. For example, free equipment can be enticing, but if it isn’t equipment you will use then this is of little benefit. There is no such thing as a one-size-fits-all solution for business owners. It's about finding the processor that's easy to use and has the features that matter most to you.

    If you sell items only occasionally, you might be interested in a company like Square that has slightly higher transaction fees but is easy to use and transparent when it comes to costs. On the other hand, if you have a small business with a higher sales volume, then a subscription-based company with a monthly fee like Payment Depot might be better due to its lower transaction costs.

    Also consider a processor that offers a merchant account, a payment gateway, and PCI compliance. These features might cost more but will make your life easier.

    • PCI compliance: Maintaining PCI-DSS compliance helps to authenticate data and ensure cardholder privacy. Meeting this standard will help protect the data of you and your customers.
    • Merchant account: A merchant account is also required to accept card payments. It acts as a holding account while the payment is processed.
    • Payment gateway: A payment gateway is the vehicle through which your processor, various banks, and merchant accounts interact. It also acts to encrypt the data to ensure security during the payment process. Payment gateways are needed to process credit cards online.
    • Point-of-sale systems: A bundled or integrated point-of-sale system can be a huge boon for your business, allowing you to track inventory, manage your payroll, and synchronize vital information across multiple locations.
    • Third-party integrations: Companies need a lot of software, including e-commerce platforms, POS systems, and accounting, scheduling, and customer relationship management (CRM) software. It's important to make sure they all work together seamlessly.
    • Hardware: If you only sell online, you may not require a lot of hardware. But if you have an online store and several brick-and-mortar locations, and occasionally sell at fairs, festivals, or other markets, your processor should have the hardware needed to facilitate all of those transactions.
    • Next-day funds: While most processors deposit funds from transactions within one to two business days, some offer guaranteed next-day deposits for an extra fee.

    How Much Does Credit Card Processing Cost?

    Credit card processing fees can vary widely between processors, especially if they are using different pricing models. There are vast differences between transaction rates and monthly fees. However, there are some common elements that may factor into the processing fees that businesses ultimately will pay.

    Interchange rate: This rate is the same no matter which processing company is used because it is charged by the card payment networks. When someone swipes a Visa, Mastercard, Discover, or American Express card, those networks will collect a fee. Interchange fees are typically a percentage of the transaction plus a flat rate and can differ depending on whether the customer is using a debit, credit, or business card, as well as whether the transaction is keyed in or swiped.

    When comparing fees between credit card processing companies, you’ll really be evaluating fees that are on top of the interchange fees, because interchange fees are nonnegotiable.

    Assessment fee: Like the interchange rate, the assessment fee is not something that you can change because it is related to the payment networks. This fee is usually paired with the interchange rate, and together they comprise the interchange fee.

    Markup fee: You’ll want to look at this fee carefully when comparing credit card processing companies. It refers to how much you’ll pay to the actual processor per transaction on top of the interchange fees. These fees might seem small, but they can add up and cut into a company’s profits.

    Flat fees: Some credit card processing companies may charge a monthly service fee to use their platform and software. In some cases, a higher monthly fee might end up being more cost-effective if it’s paired with lower transaction fees.

    Credit card processing may come with other fees on top of any monthly services and transaction costs. These can include:

    • Chargeback fees: If a customer disputes a charge and it results in a refund, most processors will charge you per occurrence.
    • PCI compliance (and non-compliance) fees: If your processor provides PCI-DSS compliance services, there can be an additional fee. Less-than-transparent companies might also try to sneak this in as a hidden fee, so be sure to ask when you begin working with a processor. If your business is noncompliant, some merchant account providers may charge a penalty fee each month.
    • Monthly minimum fees: Some processors may require that you process a minimum amount per month to avoid a fee being added to your bill.
    • Equipment leasing fees: If you do not purchase your terminal equipment upfront, you can sometimes pay to lease or rent it. This can end up being more costly than buying the hardware outright.
    • Batch fees: Look out for this pesky fee that some processors may charge each time you send over a batch of payments (usually daily).
    • Payment gateway fee (if not included in your payment processor plan): If your payment processor uses a third-party gateway, you might have to pay an additional fee for that service.

    How to Save Money on Credit Card Processing Fees

    Working with outside vendors always requires some research and comparison shopping to find the best match for your budget. For credit card processing companies, it comes down to understanding the fees and pricing models being used, and how that might look when applied to your transaction totals.

    “When you’re looking at the different processing options, you're looking at the processors' fees to try to find a break on,” says Brennon M. Wilson, volunteer with SCORE, a resource partner of the Small Business Association. He points out that interchange fees are nonnegotiable and standard across the board. It’s “abnormal to find a processor that’s charging more than 3% plus 30 cents,” says Wilson, who is also the chairman of the Canton, Ohio chapter of SCORE. “That’s a big red flag.”

    Other key considerations, according to Wilson, include your monthly transaction volume and whether there are minimum fees. Your volume will dictate whether it makes sense to go with a flat-rate model with higher per-transaction costs or pay for a subscription-based one with lower transaction fees.

    Depending on the credit card processor, sometimes you will have to do some number crunching. “Simple rates looks more consumable, like a flat rate. However, the more complicated rates are actually lower,” says Kevin Jones, president and chairman of the Electronic Transactions Association, a trade association for the payments industry, and CEO of Celero Commerce. That’s because there are multiple levels of interchange fees, and processors that lump them all together typically create a higher overall rate.

    “I recommend having the potential processor do a pricing model,” says Jones. Flat rates could still be the best deal depending on volume. “For small merchants, be sure that any fixed monthly fees are carefully considered as part of the net rate,” he adds.

    No matter what you end up paying your processor, it’s likely that accepting additional payment methods will have a positive impact on your business overall. “Statistically, people spend more and spend at places that accept such payments because of the convenience, rewards and trackability of spending,” Jones says. “From a convenience perspective and to encourage spending, having a nice variance of spending options is critical to business growth.”

    Payment Gateway vs. Credit Card Processing Company

    These terms are often confused or used interchangeably, but they are two different things. Credit card processing companies are the facilitators of the transaction. They provide the equipment and platforms to accept payment.

    A payment gateway transmits and authorizes online (or “card not present”) payments. It’s essentially the delivery mechanism that helps approve or deny an e-commerce transaction.

    Put another way, a payment gateway authenticates a customer’s digital payment information. In-person transactions don’t need to use a payment gateway because a physical card is swiped or dipped at a POS terminal.

    Some credit card processing companies offer their own payment gateway as part of their bundled services. Dealing with a single provider means that if you have any technical issues, you know exactly who to contact. There are also reliable third-party payment gateways that offer exceptional service; so as long as your payment processor uses a reliable partner, you should be covered. In some cases, using an outside payment gateway might incur an additional fee.

    The equipment required for your business to process credit card transactions will depend on the way you sell products and services. The needs of online merchants often differ from those with storefronts. If you conduct business over the phone, you may even find that no equipment is necessary.

    If most of your sales are in person, you will likely need equipment to process transactions. Brick-and-mortar businesses will likely benefit from a point-of-sale (POS) system. Terminals, registers, and tablets can offer a fully customizable POS system for your business. They function similarly to classic cash registers, but integrations and POS software can extend their functionality to include inventory tracking, time and attendance, and customer relationship management (CRM). For businesses without a storefront or doing a mix of in-person and online sales, a credit card reader may be all you need. Credit card readers are great for on-the-go businesses that need a mobile payment processing solution. Card readers can plug into your iPad or cellphone, giving you the flexibility to make sales at trade shows, craft fairs, and farmers markets. Some credit card processing companies, such as StripeSquare, and National Processing, provide free card readers to new customers. You can also get card readers that accept chip and contactless payments.

    If you primarily sell your products online or over the phone, you likely won't need any equipment. Payment processors can generally integrate with your e-commerce site, and many processors will even host an online store for you, sometimes for an additional fee. If most of your sales are over the phone, you may not need any equipment either. Transactions can be keyed into a virtual terminal or on some mobile apps. However, it is important that you keep in mind, keyed-in transactions generally have higher processing fees.

    Credit Card Processing Companies


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