Businesses have dramatically evolved due to consistently changing consumer needs and behavioral patterns. Digital transactions, in particular, are responsible for this change. For consumers, going cashless using credit cards is a compelling alternative as it is instant, convenient, and offers them incentives. Unsurprisingly, businesses that facilitate credit card transactions are more likely to generate higher sales. And to manage credit card transactions, a business needs a credit card processing company.
A credit card processing company’s job is to process the information when your business initiates a transaction using the client’s credit card. It has to go through the customer’s bank and the card network, such as MasterCard, Visa, American Express and Discover for approval. Paying by credit card might be the best option for most consumers but it can turn into a pricey monthly expense for your business. This is because there are many credit card merchants with different pricing models. Moreover, these might be only apt for a certain kind of business. Therefore, before settling on a credit card processing company for improving sales prospects, you must ensure to consider these factors.
- Type of credit card processor
As mentioned earlier, every credit card merchant is different. Your first step is to analyze your business’ monthly revenue that’s generated using a credit card. For example, if you only make $5,000 a month, then look for processors that charge zero monthly or annual fees. Conversely, if you make more than $40,000 a month, then pick a credit card merchant that offers a cost-effective plan that charges you monthly or annually. In this way, you will be saved from the per-swipe fee that can prove to have a counterproductive effect on your earnings. - Reflect on how you plan to accept credit cards
Have a brick-and-mortar store? Opt for a mobile card reader or a countertop checkout station. On the other hand, if you plan to accept payments via multiple mediums like in-store and e-commerce platforms, then select a processor that allows both. Preferably, you shouldn’t pick two different processors as they might ultimately increase your expenditure on digital payments, not to mention the hassle that comes with managing multiple accounts. Similarly, you might breach the contract in case your processor has drafted any exclusivity clauses. - Get a minimum of three quotes
It wouldn’t be wise if you settle on the first option you find. So make sure you research and compare quotes from at least three different credit card merchants to know your best bet. Consider parameters like what mediums they are compatible with such as per-swipe, monthly, or annual fees and customer service.
Hidden fees are a big issue many business owners have to deal with. So look up for the latest customer reviews to make sure that the merchant you are planning to use offers a transparent breakdown of all the required expenses. Apart from monthly or annual expenses, some common types of fees that you might have to deal with are batch, chargeback, gateway, payment card industry (PCI) compliance, and network fees. Membership, online reporting, and technology charges are some fees for added features that should be avoided, especially if you own a startup or small business.
- Purchase processing equipment
Typically, it is cheaper to buy basic processing equipment than leasing it. The latter will only increase your cost in the long run, and at the same time, you will have to put up with the trouble of agreeing to unfavorable contract terms. The worst part is that such lease contracts can’t be canceled. In simple words, if you were to return the equipment, you will still have to pay the monthly charges until the contract expires.
Once you decide to hire the services of a credit card merchant, stick to a monthly plan to gauge how they deliver. If their services are satisfactory, you can opt for an annual plan in the future. If not, then you can move on to a new merchant. This also saves you from the wrath of any early cancellation penalties. Before signing any contracts, ensure that you read the terms and conditions to avoid any unpleasant surprises later.
5 best credit card merchants of 2019
PayPal – Suitable for virtual credit card processing
A highly popular credit card merchant for numerous online businesses, PayPal is simple to use and affordable. It makes the process of integration into payment gateways effortless, enabling e-commerce sites to enjoy faster transactions.
Since it charges no monthly fees, it is a perfect pick for small businesses making less than $10,000. The transaction fees charged by PayPal are based on your total sales. At the moment, this provider will charge you a transaction fee anywhere between 1.9% and 3.4% of the sales volume. Almost every shopping cart is designed to house PayPal transactions; however, it can be employed as a standalone service for managing individual payments for clients. For using this feature, all you need to do is paste a payment button code in the email. Additionally, PayPal renders features such as taking in-store payments via a card reader.
In a nutshell, choose PayPal if you are planning to launch a startup or run a small online business and need a reasonably priced credit card merchant. It also has a mobile app, but you have to pay $15/month to use it.
Fattmerchant – Suitable for medium to big-sized businesses
Fattmerchant is apt for businesses that involve more than $32,000 monthly in credit card processing. It processes in-store, online, and mobile credit card transactions. What makes this credit card merchant standout is its flat pricing plans. It is also one of the few processors following a direct-interchange fee structure. This price model gives you access to the cheapest interchange rate with an 8¢ markup. Likewise, it doesn’t levy any extra fees including batch or statement charges.
The basic plan is priced at $99/month for businesses making less than $500,000 in annual sales. On the other hand, they have an enterprise-level plan worth $199/month for companies generating revenue of more than $500,000 annually. This plan also throws in a 6¢ markup on every transaction along with interchange fees.
Dharma Merchant Services – Suitable for small to medium-sized companies
Presently, Dharma offers the most competitive prices among all the credit card merchants. The provider is suitable for all businesses that have an average monthly transaction range from $10,000 to $32,000, ideal for retail stores, restaurants, and nonprofit organizations. They will charge you with a flat monthly fee of $20, making it a more attractive option than its competitors. Dharma is significantly less expensive than its counterparts, however, it doesn’t compromise on additional, useful features for small businesses such as an online management dashboard, exporting settlement reports, and a dedicated customer support line.
Dharma does have a dedicated customer support line but fails to provide 24/7 assistance. You can only reach out to their staff for queries from 8 am to 5 pm on regular business days. Therefore, if immediate assistance is crucial for your business operations, then you should pick another credit card merchant. You can use Dharma Merchant Services for online and in-store transactions.
Square – Suitable for small businesses
Best suited for startups and businesses selling low-priced commodities, Square imposes no monthly, annual, setup, PCI compliance, or early termination charges. Although rare, they don’t even levy any chargeback fees. But they have a per-swipe-fee that is around 2.75%. Likewise, you might have to spend on the credit card hardware, which can cost up to $1,000.
Square also offers a great mobile credit card processing app that not only lets you accept payments but also has a whole variety of features like customer information management, running sales reports, and point-of-sale software. The fact that it is free excluding the processing charges is an added advantage. You can pay more to incorporate additional features such as email marketing, payroll, and integration with third-party apps.
Payline Data – Suitable for businesses involved in high-risk transactions
If your business specializes in high-risk credit card transactions involving travel, gaming, online tech agents, or sale of items like supplements, then Payline Data is your best bet. As compared to other sites, Payline Data will charge more for processing credit card transactions. Unfortunately, it doesn’t reveal the pricing model for its high-risk transactions, so you will have to request a consultation to know more about it. Unlike other credit card merchants, Payline’s services can be used by both, small and big businesses. However, if your business makes transactions less than $5,000 per month, then it is better to stick to options like PayPal and Square as they come with better pricing models.
Choosing the right credit card merchant can be a bit daunting, particularly if you have just started a business. So, it is imperative that you scrutinize your business’ nature and needs. Once you have shortlisted your options, dig deeper and compare its features, especially the price points to hire the best service.
