Picking a merchant services provider out of all credit card processing companies available is difficult from the start. Different payment processing companies 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 of information to consider for a new business.
Who are the Major Credit Card Processors?
Today, we’ll be demystifying some of the most popular payment processing companies and credit card processing companies out there.
|Early Termination Fees||No||No||No||No||Yes|
|Card Present Processing Pricing||$99/month
+ 8¢ per transaction
|2.9% + 30¢ per transaction (includes interchange)||2.6% + 10¢ per transaction (includes interchange)||2.29% + 9¢ / transaction (in person); 3.49% + 49¢ for key-in and scanned cards||Varies;
1.8-3.5% per transaction +15-30¢ per transaction
|Card-Not-Present Processing Pricing||$99/month
+ 15¢ per transaction
|2.9% + 30¢ per transaction (includes interchange)||3.5% + 15¢ per transaction (includes interchange)||2.99% + 49¢/ transaction (includes interchange)||Varies;
1.8-3.5% per transaction +20-30¢ per transaction
Cost Breakdown Per Credit Card Processing Company
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 payment technology provider.
Credit Card Processing Scenario 1: Card Present Costs
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 each company’s credit card processing costs affect you?
|$359||$480||$405||$357 to $597||$570|
Credit Card Processing Scenario 2: Card-Not-Present Costs
Now, let’s break down what you would pay if you have a higher cash flow. 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?
|$887||$1,071||$1,273.5||$1120 to 1300.5||$1,287|
*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.
Who Are the Best Credit Card Processing Companies for Small Businesses?
Stax Payment Processing
Stax 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, Stax 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.Learn More
Square Credit Card Processing
Square offers one card-present for card-present payments at 2.6% + 10¢ per transaction. While Square has no monthly minimums, you can only process transactions in-store, online, or on mobile. Square now offers a point of sale system in addition to their mobile readers and tablet applications. These can be pricey.
Given Square’s pricing and capabilities, it’s a good fit for business processing under $7,000 a month.
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.
PayPal Credit Card Processing
PayPal offers a 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 its online payment platform, PayPal also offers new accounts as 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 3.49% plus 49 cents a transaction. That’s the highest card-present rate that we’ve seen on the market. This also applies to any form of payment online and even invoicing as this is now their standard Digital Payments transaction rate. 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.
For businesses looking for on the go options, PayPal offers their PayPal Here mobile payments solution, but at a cost. Businesses wanting the flexibility to collect payments from anywhere are charged 2.7% for card present payments, and the high rate of 3.5% plus their fixed fee for anything keyed in.
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 payments.
If you want to accept cards directly through your website or take them over the phone, you’ll have to pay $30/month for a PayPal Payments Pro account to key-in not-present cards.
Bank Merchant Services Companies
Most banks offer payment processing. Some banks that have gotten into credit card processors 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. Stax
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 support team. 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 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.
Stax sells 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.
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 payment technologies. That means that if you want to later switch to a new provider, you’ll have to buy all new equipment.
Stax sells affordable Dejavoo card readers and BBPOS, mobile card readers, to 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. Stax
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 cards 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. Stax
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 or about monthly fees until you give up your business information.
Choosing the Right Credit Card Processing Company
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 payment processing companies should be transparent and serve your business needs.
Stax uses a subscription-stye pricing model to give business owners flexibility and convenience. You’ll also have access to a top-rated customer success team whenever you have questions or concerns. If you need a terminal or mobile reader, Stax offers a host of products to choose from.