Picking a merchant services provider out of all credit card processing companies available is difficult from the start. Processors might offer tiered pricing, flat-rate, or interchange-plus pricing. And depending on the company, you might get locked into a contract. That’s a lot to consider for a new business.
Today, we’ll be demystifying some of the most popular credit card processing and merchant services companies out there.
Updated March 2019
Let’s use a couple of examples to see what this means in practice for both card present (CP) and card not present (CNP) companies. Then, we’ll get into the details of each credit card processor and merchant services provider.
First, let’s say your business processes $15,000 CP payments per month with five $100 sales per day for thirty days. How much will credit card processing costs affect you?
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Now, let’s break down what you would pay if you have a higher cash flow. Let’s say you take payments using online invoices or over the phone. Your business keys in three $400 sales per day for a total of $36,000 per month in CNP processing. How much would this cost your business?
Interchange is set by the card associations like Visa and Mastercard and is a required cost for taking credit cards. The exact interchange rate for each transaction is affected by dozens of factors. Interchange can be less than 1% for certain in-person debit cards and over 2.7% for some keyed-in rewards credit cards.
For these examples, we averaged a number of common interchange rates and applied 1.65% for card present transactions and 2.15% for card not present purchases. Read more about interchange.
Fattmerchant Payment Processing
Fattmerchant is built on transparency and helping to provide business owners with the power to manage their company effectively. Merchants pay $99 per month, then the flat rate of interchange plus a set cents per transaction. That means the more you process, the less it costs on average per transaction. For companies that process over $500,000 annually, the monthly price increases, but our Payment Consultants will work with you on a custom package to help your business save money.
We sell our merchants terminals outright instead of leasing equipment; this way, you won’t be charged monthly terminal fees and you’re in control of your equipment. There are no contracts and no cancellation fees. Plus, you can add-on services like next day funding, ACH processing, and QuickBooks Online Pro Sync to help you save time and get paid faster.
Generally, Fattmerchant is the best fit for companies processing over $7,500 per month and who don’t process microtransactions. Our team can analyze your existing statements for free to calculate how we compare to your current processor.
Request a demo of our platform and find out how much you can save.
Stripe Payment Processing
First, Stripe charges almost 3% per transaction plus a 30¢ transaction fee. With these costs combined, this particular pricing model gets expensive the more you process or for the higher quantity of purchases processed.
Beyond pricing, Stripe offers mobile and online processing and supports recurring transactions. They use a deposit schedule for merchant accounts and don’t offer Next Day Funding. You can expect your deposit in 2 days or 7, depending on your business and if you’re located in the US.
Currently, Stripe doesn’t offer in-person payments aside from through an app and their invite-only terminals. You can apply to get the chance to purchase one of their terminals, but the process is unclear at this time.
Square Credit Card Processing
Square offers two different pricing models: $275 per month or 2.75% per swipe. While Square has no monthly minimums, you can only process transactions in-store, online, or on mobile. Square doesn’t currently offer a point of sale system. Instead, customers receive a Square mobile reader and can opt-in to use Square for Retail or Square for Restaurants for an extra fee of $60 a month.
Given Square’s pricing and capabilities, it’s a good fit for business processing under $7,000 a month.
PayPal Credit Card Processing
PayPal offers quick set-up, but you’ll end up paying more for the convenience in the long run. While they say that you can start an account in 15 minutes, you’ll end up paying higher rates per sale. Plus, you’ll find a lot of add-ons in what you pay: if you want recurring billing, that’s an additional $10 per month. For “advanced fraud protection,” you’ll pay $10 per month plus an additional 5 cents a transaction on every charge. Instead, we would recommend becoming PCI compliant to mitigate your risk and prevent fraudulent activities.
While known mostly for their online payment platform, PayPal also offers new accounts a free mobile reader. But watch out for the higher rates you’ll pay for convenience! If you use the “scan card” feature or key-in a card to the mobile app, your processing rate goes up to 3.5% plus 30 cents a transaction. That’s the highest card-present rate that we’ve seen on the market. And if you accept American Express, it’s a set 3.5% per transaction – even though AmEx no longer costs that much more than other cards.
The PayPal Payments Standard platform has no monthly fee, but does not include a virtual terminal. For an online shopping cart, your customers will have to navigate away from your site to complete their payment. If you want to accept cards on your website or take them over the phone, you’ll have to pay $30/month for a PayPal Payments Pro account to be able to key-in not-present cards.
Bank Merchant Services Companies
Most banks offer payment processing. Some banks that have gotten into merchant services include:
- Chase Merchant Services – formerly Chase Paymentech
- Wells Fargo Merchant Services
- Bank of America Merchant Services, also known as BOA Merchant Services
- Citi by First Data
It might seem convenient to process with the same bank that your business already works with. However, bank merchant services are usually the most expensive option for businesses. Like other processors, banks often require contract terms with early termination fees. At the same time, many banks use a third party company for the actual payment processing. This means you’re paying more fees but it’s harder to tell where they’re coming from.
Cost of Bank Merchant Services vs. Fattmerchant
Most banks make you apply for their services before telling you what you’ll pay. That means you don’t know if you’re getting a good deal or are paying more than other businesses. Choosing a larger bank for a processor can also mean your account probably won’t have a dedicated account manager. You won’t get the same attention as if you worked directly with a processor. That’s why they’re not usually recommended for small businesses. Here are some of the pros and cons of each of these banks:
Chase and Wells Fargo give estimates before you buy, though they don’t include the small print of other monthly fees you’ll get. For instance, if you don’t bank with Wells Fargo, you’ll be charged an additional fee for batching.
Chase Merchant Services vs. Fattmerchant
Chase advertises 2.99% + 15¢ per transaction for in-person credit card charges and 2.90% + 25¢ per transaction for online payments. If you lease their terminals instead of buying them, you could get stuck in a long-term contract.
Fattmerchant sells our terminals outright, so you’re not locked into a contract. The high per-transaction cost means the more you make in a month, the more you pay with Chase.
Wells Fargo Merchant Services vs. Fattmerchant
Meanwhile, Wells Fargo charges 2.6% + 15¢ for in-person and 3.4% + 15¢ for online transactions. Plus, they charge a monthly fee per location. In addition, Wells Fargo’s preferred physical terminals are all Clover products. Clover is a notoriously expensive POS system, which does not integrate with many other merchant services. That means that if you want to later switch to a new provider, you’ll have to buy all new equipment.
Fattmerchant sells affordable Dejavoo card readers and BBPOS mobile card readers to our merchants. That way, they have total control over their processing and aren’t charged costly monthly terminal leasing fees. We never charge batch fees or other unnecessary fees.
Bank of America Merchant Services vs. Fattmerchant
Bank of America also uses Clover devices for their payment processing. However, they do sell them outright instead of just leasing – at around $500-$650 per terminal. Not only will you be locked into a Clover device, but you also may get locked into a cellular contract. These devices require T-Mobile or AT&T to connect with your BOA merchant services.
As far as pricing, you can expect around 2.7% for in-person transactions and 3.5% + 15¢ for card not present – one of the highest rates we’ve seen. If you don’t have a business checking account through Bank of America, you’ll also be paying an additional monthly fee.
Citi Merchant Services Provider vs. Fattmerchant
Citi merchant services are actually provided by First Data. As mentioned before, this means that as both the processor (First Data) and the services provider (Citi) need to make money, you’ll likely be paying a higher rate. First Data owns Clover so again, you’ll be locked into those pricey POS choices.
Plus, Citi doesn’t share its pricing, so you won’t know how much you’ll be paying per transaction or about monthly fees until you give up your business information.
Most credit card processing companies will claim to be the best at what they do. But choosing a processor that’s the right fit for your business could mean you need a suite of products or just a mobile reader. The right merchant services company should be transparent and serve your business’ needs.
Fattmerchant uses a subscription-based pricing model to give merchants flexibility and convenience. You’ll also have access to our customer service team whenever you have questions or concerns. And if you need a terminal or mobile reader, we offer a host of products to choose from. Learn about our card-present and online processing solutions!