Best credit card processors for small business
Credit card processing for small businesses
Credit card processing is a crucial aspect of running a small business. It allows customers to pay for products and services with the convenience and security of a credit card. Without the ability to accept credit card payments, a small business may miss out on potential customers who prefer to pay with credit. In today's digital age, customers expect to be able to pay with their credit card, and a small business that can't accept them may be perceived as outdated or untrustworthy. Additionally, credit card processing can also help small businesses increase their sales and revenue, by making it easier for customers to make purchases.
Overview of different types of credit card processors
There are several types of credit card processors, including:
Merchant services providers (MSPs): These companies offer a variety of payment processing services to merchants, including credit and debit card processing, e-commerce solutions, and payment gateway services.
Independent sales organizations (ISOs): These companies act as intermediaries between merchants and banks, offering merchant services and obtaining merchant accounts on behalf of merchants.
Payment service providers (PSPs): These companies offer a range of payment processing services, including online payments and mobile payments, to merchants and other businesses.
Aggregators: These companies provide a platform for multiple merchants to process payments through a single merchant account.
Direct processors: These companies provide merchant services directly to merchants, and are often banks or other financial institutions.
Mobile card readers: These are small, portable card readers that connect to a smartphone or tablet and allow merchants to process credit and debit card transactions on the go.
It's also important to note that some of these types of processors also have different models, like tiered pricing or interchange plus pricing, which are pricing models offered by credit card processors. And also, some processors have different types of contracts, like month-to-month or multi-year contracts.
Key factors to consider when choosing a credit card processor
When choosing a credit card processor, it is important to consider the following factors:
Fees: Different processors charge different fees, including transaction fees, monthly fees, and early termination fees. Be sure to understand all of the fees associated with a processor before signing up.
Security: Security is an important consideration when choosing a credit card processor. Look for processors that are PCI-compliant, meaning they follow industry security standards to protect customer credit card data.
Payment types: Some processors only support certain types of payments, such as credit cards or ACH payments, so make sure the processor can support the types of payments you need.
Integration: Ensure that the processor integrates with your Point of Sale system or e-commerce platform.
Customer service: Good customer service is important when choosing a processor, as you may need assistance with setup, troubleshooting, or other issues. Consider a processor that offers 24/7 customer service and has a good reputation for customer service.
Reputation: Research the reputation of the processor you are considering. Look for reviews online and ask other merchants about their experiences with the processor.
Contract terms: Be aware of the contract terms and conditions of the processor, such as the length of the contract, termination fees, and automatic renewals.
Additional services: Some processors provide additional services like fraud detection, chargeback management, and recurring payments. Consider if these services are important for your business and if the processor you are considering provides them.
Pricing model: Different processors use different pricing models, such as tiered pricing or interchange plus pricing, so it's important to understand how each pricing model works and which one is the best for your business.
Scalability: If your business is expected to grow in the future, it's important to choose a processor that can handle your growing transaction volume.
Comparison of popular credit card processors for small businesses
Here is a comparison of some popular credit card processors for small businesses:
Square: Square is a popular choice for small businesses because of its easy setup and user-friendly interface. It offers a variety of features, including inventory management, appointment scheduling, and customer engagement tools. Square charges a flat rate of 2.9% + 30¢ per transaction, with no monthly or setup fees.
PayPal: PayPal is a well-known processor that offers a range of services, including online payments, invoicing, and mobile payments. It charges 2.9% + 30¢ per transaction for online payments and 2.7% per transaction for in-person payments. PayPal also offers a PayPal Here card reader for in-person transactions.
Stripe: Stripe is a popular processor for online businesses, offering a range of features such as recurring payments and subscriptions. Stripe charges a flat rate of 2.9% + 30¢ per transaction, with no monthly or setup fees.
QuickBooks Payments: QuickBooks Payments is an integrated payment processing solution designed for small businesses. It allows you to process payments, track expenses, and manage invoices within QuickBooks. It charges 2.4% + 25¢ per transaction for swiped, dipped, or tapped card payments, 3.4% + 25¢ for manually entered card payments, and 1% for ACH bank transfers.
Shopify Payments: Shopify Payments is a payment processing solution built into the Shopify platform, allowing merchants to easily process payments directly from their Shopify store. Shopify Payments charges 2.9% + 30¢ per transaction for online payments and 2.7% per transaction for in-person payments.
It is important to note that each of these processors may have different features, fees, and contract terms. It's best to research and compare the processors based on your specific needs and requirements.
Additional resources for small business owners looking to find the best credit card processor for their needs
There are several resources available for small business owners looking to find the best credit card processor for their needs:
Comparison websites: Websites like CardFellow, CardPaymentOptions, and Merchant Maverick allow you to compare the fees, features, and customer reviews of different processors.
Industry publications: Trade publications like Payment Week, PYMNTS, and Digital Transactions provide news and analysis on the payment processing industry, including updates on new processors and changes in the industry.
Business forums: Business forums like Small Business Community, Yelp for Business Owners, and LinkedIn's Small Business Owners group are great places to ask other business owners for their recommendations and experiences with credit card processors.
Government resources: The Small Business Administration (SBA) and the Federal Trade Commission (FTC) provide resources and guidance for small businesses on choosing a credit card processor, including information on fees and contract terms.
Consult with a payment industry professional: A payment professional or a payment consultant can help you to understand the different options available and which one would be the best fit for your business.
It's also important to remember that you should always read the terms and conditions, and any contract very carefully before signing up with a processor, and if you have any doubt, consult a lawyer.
Final thoughts
When choosing a credit card processor, small business owners should consider the following factors:
Fees: Different processors charge different fees, including transaction fees, monthly fees, and early termination fees. Be sure to understand all of the fees associated with a processor before signing up.
Security: Security is an important consideration when choosing a credit card processor. Look for processors that are PCI-compliant, meaning they follow industry security standards to protect customer credit card data.
Payment types: Make sure the processor can support the types of payments you need.
Integration: Ensure that the processor integrates with your Point of Sale system or e-commerce platform.
Customer service: Consider a processor that offers 24/7 customer service and has a good reputation for customer service.
Reputation: Research the reputation of the processor you are considering.
Contract terms: Be aware of the contract terms and conditions of the processor, such as the length of the contract, termination fees, and automatic renewals.
Additional services: Consider if additional services like fraud detection, chargeback management, and recurring payments are important for your business and if the processor you are considering provides them.
Pricing model: Understand how each pricing model works and which one is the best for your business.
Scalability: Choose a processor that can handle your growing transaction volume if your business is expected to grow in the future.
There are several resources available for small business owners looking to find the best credit card processor for their needs, including comparison websites, industry publications, business forums, government resources, and consulting with a payment industry professional. It's also important to read the terms and conditions, and any contract.
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