The 7 Best Credit Card Processing Companies of 2020 - Investopedia

The 7 Best Credit Card Processing Companies of 2020 - Investopedia


The 7 Best Credit Card Processing Companies of 2020 - Investopedia

Posted: 15 Oct 2020 09:07 AM PDT

What Is a Credit Card Processor?

If you're a business owner who wants to accept credit cards, debit cards, or mobile payments, then you're called a merchant. Credit card processors, also called merchant service providers or acquiring service providers, administer a service so you can accept credit card payments at your business. 

Merchant providers offer software so you can view your transactions, fees, chargebacks, and more on a single dashboard. Typically, business owners can purchase or lease hardware, including devices like card terminals or mobile readers.

Any business that accepts credit cards, whether it's a restaurant or retail shop, uses a service and devices for credit card processing. Merchant services may also integrate with point of sale (POS) systems, customer relationship management (CMS) software, or accounting programs. 

Although it only takes seconds to accept a credit card payment, there's an intricate (and fast) process that involves authorization and authentication behind the scenes. Various security protocols are followed, and information is transferred to both the credit card network and the credit card's issuing bank. 

How Do Merchant Providers Work?

Merchant providers are the go-between service that connects everything behind the scenes. Providers connect to the credit card network, thousands of issuing banks, and your banking services. To ensure the utmost security, most credit card processors are PCI-compliant and use advanced encryption methods.

To select the right credit card processing services, it's essential to review your current or projected credit card payment volume and where customers pay (online, at your cash register, or via mobile devices). Then compare companies by looking at how much you'll pay for processing while assessing customer support and extra services. 

What Equipment Do I Need to Accept Credit Cards?

From a small Square phone device to a freestanding POS register, your processing equipment depends on your merchant service provider requirements, what systems you already have, and how you want to accept payments. As more stores add mobile options, you may have kiosks or mobile payment devices available in your store, along with a card terminal at your checkout counter. 

Although you don't need special devices for e-commerce payments, many credit card processors may charge different online purchase rates or require you to purchase a separate plan for online services. 

What Are the Costs of Credit Card Processing?

Merchant credit services charge various per-transaction fees and offer monthly subscription programs. The most common cost is the interchange rate. Credit cards like Visa charge this fee, and it gets passed to you. 

Most processors use an interchange-plus pricing model. This fee includes a percentage of your sale that goes to the processor and a rate per payment fee. Prices vary by company but typically have the following ranges: 

  • Monthly fees: $0 to $599 per month
  • Transaction fees: 0% to 3.5% per payment
  • Flat-rate fees: $0.05 to $0.30 per transaction

How We Chose the Best Credit Card Processing Companies

To narrow our credit processors list to only seven, we looked at dozens of reputable merchant providers. To make our top list, providers had to be PCI-compliant and accept all standard credit cards. For providers servicing high-volume accounts, 24/7 customer service was a must.

However, we know business owners need more than just one more service. Integrations with your software are key, which is why we looked at processors that offer syncing capabilities with your CMS, accounting, and POS systems. 

We narrowed our list further by assessing total cost differences between companies with subscriptions or transaction fees while balancing out the benefits of extra services or software options, like inventory management software. Furthermore, we combed through data to uncover details about processing times and ease of setup.

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