There are many factors that may be considered when evaluating credit card. Here are more details about the features that can be compared.


Cost and Fees

We gave preference to credit card processing companies with no or low monthly fees and transparent payment processing fees. Providers with high monthly fees were considered if they offered very low processing fees or added value with sales and business management tools, such as POS systems and online stores. Companies with clear fee structures listed on their websites or instant quotes received bonus points. Pricing accounted for 20% of the overall score.

Customer Support and Security

Companies we analyzed offered various customer support options, including hotlines, live chat and an online knowledge base. We looked for a variety of communication methods in addition to timeliness of responses and whether or not they offered 24/7 availability.

Processing credit cards means your business handles potentially sensitive client or customer information. All such payments need to be processed through secure terminals. We have ensured that all providers on this list maintain PCI compliance and give businesses the tools to keep payment data safe and secure.

These features account for 20% of the total weight.

Features and Functionality

We compared features and tools such as built-in POS systems, software integrations, data exports, online invoicing and a reporting dashboard when making comparisons. Versatility was key in this category, and providers who can process contactless payments, e-checks, ACH payments and more received higher scores than those who solely process card payments. This category makes up 25% of the total score.

Expert Score

To arrive at a final number, we leveraged our own expertise as well as widespread industry preference. We looked at products that were easy to set up and use. This included looking at how easy it was to import data, send invoices and view reports. While user-friendliness is important, as this criterion is more subjective than others, we weighed it at only 15%.

Reviews and Recognition

We analyzed how highly companies were ranked by websites such as Trustpilot and the BBB to account for 20% of the total score.



What Is a Credit Card Processing Company?

Credit card processors make it possible for you to take credit card payments by connecting the various services involved in the process. These include credit card networks, issuing banks and your own payment processing account.

When a customer swipes their credit card at a store or pays online, a credit card processing company enables the secure transfer of customer data for payment approval, collects the funds from the issuing bank and deposits those funds to the merchant’s account within one to two business days.



How To Choose the Best Credit Card Processing Company

The best credit card processing company for your business strikes the right balance of cost, functionality and support. Processing fees and monthly costs are the obvious starting points when comparing providers. However, considerations such as ease of use, support, integrated sales features and free software can help you spot the best value for your specific needs.

Here are a few questions to keep in mind when you shop for card processing services.

  • What is your average sales volume per month? Higher transaction volumes equal lower processing fees. A good rule of thumb is once you reach $10,000 in monthly transactions, you can benefit from an interchange-plus or tiered processing service. Before then, a flat-rate service such as Square, Stripe or PayPal is very economical.
  • Do you sell in-person, online, mobile or combined channels? Where you sell determines your processing hardware and system needs. If you sell in-store, you need checkout registers. If you sell on the go, you need mobile card readers and a mobile processing app or mobile POS. If you sell online, you need a secure payment gateway. If you combine sales methods, you need a payment processing service that seamlessly connects all of your sales within an integrated system.
  • Do you need free equipment and POS systems? Free equipment and POS software add value to a service, even when paired with higher processing fees. When comparing services, consider what any free perks would cost if you went with a lower-fee processor that doesn’t provide them.
  • Do you already have registers, terminals and POS software? A processing service that integrates with registers, terminals, POS systems or accounting software that you already use can save in upfront costs and minimize business interruptions.
  • Is your business high-risk? High-risk merchants generally find the lowest fees with traditional merchant accounts with tiered pricing.
  • Are you selling restricted items? Many popular card processing services limit what you can sell. If your business falls outside of their approved list, you’ll need a traditional merchant account provider.
  • How fast do you need your funds? Virtually all card processing companies deposit funds within one to two business days, but charge an added fee for same-day deposits. If you need quick access to funds, look for a provider that offers this for free.
  • Do you need 24/7 support? Most providers offer 24/7 service for network outages and other business-critical events, however, a few limit support at lower plan levels.
  • Do you sell globally? You need a processing service that supports international cards and exchange rates.
  • Do you use QR codes, payment links and online invoicing? You need a card processing service with an online portal feature that supports these cutting-edge payment methods.
  • Do you want to accept e-checks and bank transfers? Look for card processing services that support ACH payments.
  • Is your customer data going to be secure?It should go without saying that safely transmitting credit card information to your payment processor needs to be handled securely. Make sure that whatever company you choose adheres to payment card industry (PCI) compliance standards to keep these details safe.



How Does Credit Card Processing Work?

Within the few seconds it usually takes for a credit card transaction to be approved or declined, several small steps are taken via an internet or phone line connection. Two main stages make up credit card processing: authorization and settlement.


Card details and purchase amount must be first verified and authorized by the issuing bank. This happens in the few seconds it takes for a cardholder’s credit card to be approved or denied. The message often shows up on the card machine after a cardholder swipes or enters a card.

  • Step 1: The cardholder swipes, taps or inserts their card into a merchant’s card machine to make a purchase. (Or enter a card number if purchasing online.)
  • Step 2: The merchant’s credit card machine sends the card information and transaction details to the acquiring bank (or merchant bank) via the internet or phone line.
  • Step 3: The acquiring bank receives the information and sends it along to the appropriate card network like Visa, Mastercard, Discover or American Express.
  • Step 4: The card network routes the information to the cardholder’s issuing bank.
  • Step 5: The issuing bank receives the information and checks the card details such as the card number and Card Verification Value (CVV) code to make sure the transaction is not fraudulent. The bank also ensures the cardholder is in good standing and has enough remaining credit to cover the purchase (or has sufficient funds to cover the transaction if using a debit card).
  • Step 6: The issuer sends a response back via the card network to the acquiring bank.
  • Step 7: The response is received at the merchant’s credit card machine or terminal. If all the credentials in Step 5 check out, the transaction will be approved. Otherwise, it will show a message like “denied” on the machine. The cardholder sees this information right away and finishes the transaction while the response code is stored on the merchant’s machine for stage two of processing.

This process may vary slightly depending on whether the transaction happens in-store or online. Traditionally, merchants set up a merchant account with an acquiring bank and link the point-of-sale system to an account. Merchants can set up accounts with merchant service companies like Square. Doing so removes the need for merchants to set up a direct relationship with an acquiring bank but adds another middle person to the equation.


The second stage of credit card processing—settlement—happens among the merchant, acquiring bank, card network and issuing bank. This process involves much back and forth from party-to-party and includes the addition of processing fees charged to the merchant.

Each credit card authorization is stored in a merchant’s point-of-sale system. Typically at the end of the business day, a merchant sends a batch of authorizations to the acquiring bank. The acquiring bank will then confirm each authorization and send the batch via the card network to the appropriate issuing bank. The acquiring bank will also deposit the funds owed to the merchant into the merchant’s account, minus any processing fees.

The issuing bank pays the acquiring bank via the card network. Then, the card network debits the issuing bank for each transaction amount and credits the acquiring bank, essentially acting as a conduit between the two.

When a cardholder checks their spending activity via their online account, he or she may see a recent charge go from “pending” to “posted.” This usually takes one to three business days as the merchant settles sales with the other parties. The cardholder later pays the issuing bank what they owe for every purchase plus any fees or interest accrued as per the card agreement.

Related: Best Business Credit Cards

Credit Card Processing Fees and Costs

All credit card processing companies base their pricing structures on four primary fees. These include interchange fees, assessment fees, processor markup fees and monthly account or statement fees. Knowing what goes into credit card processing fees can help you understand your options and spot the best payment processing service for your business.

Interchange Fees

Interchange fees are set by Visa, Mastercard, Discover and other card brands. These are the unavoidable, base-level costs of processing credit cards. Often called wholesale or base fees, interchange fees generally range from 1% to 2% of the transaction amount. Payment processing companies collect interchange fees during the transaction process. They then transfer these funds to issuing banks as payment for the credit service.

Interchange rates vary greatly and depend on the merchant’s industry, the transaction type and the brand and type of card used. Here are a few examples of factors that impact interchange rates merchants pay to process credit cards.

  • Transaction type: Card-not-present transactions, such as online sales, have higher interchange rates than in-store sales, where cards are physically swiped.
  • Debit vs. credit card: Debit cards have lower interchange rates than credit cards because they are considered a lower credit risk.
  • Card brand: Discover and American Express have higher interchange rates than Visa and Mastercard.
  • Card type: Rewards, corporate and governmental purchasing cards have higher interchange rates than non-rewards cards since these programs cost the issuing banks more to administer.

Assessment Fees

Assessment fees, often called per-transaction fees, are also set by the card brands. These are flat per-transaction fees attached to interchange fees and typically range from 1 to 5 cents, based on the type of card and transaction.

As with interchange fees, assessment fees are collected by card processing companies during the transaction process. However, these fees are paid to the card associations, such as Visa, Mastercard, Discover and American Express, not to the issuing banks.

Processor Markup Fees

Markup fees are what credit card processing companies charge for their processing services. Markup fees vary based on the card company’s processing fee structure, such as a straightforward markup percentage called interchange-plus, complex tiered rates or simple flat-rate fees.

Each fee structure has benefits and drawbacks, which we explore in more detail below. Bottom line, markup costs vary greatly from processor to processor, so it’s essential to shop around for the best deal.

Monthly Fees

In addition to markup fees, many credit card processing companies charge monthly fees for specific services, such as statements, online gateways, PCI compliance and card terminals and other processing hardware. Some roll all of these services under a monthly account or subscription fee.

A few, such as Square, Stripe and PayPal, charge no monthly fees for credit card processing services. However, these providers typically have higher flat-rate processing fees that can cost more compared to processors that combine monthly fees with lower rates.

Other Costs To Consider

Some credit card processing companies have add-on and conditional fees that can affect your overall processing costs. To avoid surprises on your monthly statement, always check the fine print for add-on fees when comparing credit card processing companies.

  • Chargeback fees: Unfortunately, chargebacks are an inevitable part of accepting credit cards and the cost of processing a chargeback varies greatly among processing services.
  • Batch processing fees: Some tiered and traditional merchant services providers charge per-batch fees.
  • Setup or termination fees: Card processing services with negotiated or tiered rate plans often require contracts with setup costs and hefty early termination fees.
  • Monthly minimum fees: Some negotiated and tiered rate plan providers charge a monthly fee if contracted transaction volume minimums aren’t met.
  • Same-day funding fees: Most card processing services deposit funds within one to two business days with no added fees but charge a fee for instant or same-day access to processed funds.



Credit Card Processing Company Pricing Structures

The most common payment processing models for small businesses include flat-rate fees, interchange-plus fees and tiered rates. Understanding the pros and cons of each is key to finding the best service and processing rates for your particular needs.

Flat-Rate Pricing

Flat-rate pricing is the simplest fee structure and typically charges one low rate for all credit card transactions, regardless of the type of card used. Many flat-rate processing services also provide free sales tools such as POS software, free card readers and integrated online gateways for e-commerce sales.

With flat-rate pricing, businesses pay one low rate based on the type of sale, with fees typically ranging from 2.5% plus 10 cents to 3.5% plus 30 cents per transaction. With flat-rate structures, in-person sales where the card is present have lower fees than online sales, but fees don’t vary based on card brands or rewards programs, plus you don’t have add-on fees for PCI compliance or monthly statements.

Flat-rate pricing can be a good option for businesses with low average transaction amounts, especially when considering free perks such as POS systems, online gateways and card readers. However, higher-volume sellers can save on credit card processing costs with interchange-plus or tiered pricing.

Interchange-Plus Pricing

Interchange-plus pricing is growing in popularity, mainly thanks to the small business-friendly plans offered by Helcim, Payment Depot and Stax.

Interchange-plus payment providers add a minimal fee to the base interchange rates set by the card associations.

Some, such as Helcim, mark up the interchange rate with a small percentage and per-transaction fee but have no monthly fees. Markup fees can range from 0.10% plus 5 cents to 0.50% plus 25 cents per transaction, based on the sale type. Others, such as Payment Depot and Stax, don’t mark up the interchange rate. Instead, they pair a monthly subscription fee with a minimal per-transaction fee, ranging from 5 cents to 15 cents per charge.

When comparing providers, remember that markup rates are in addition to the base interchange rates, which vary based on transaction-specific factors. Even so, interchange-plus models are very transparent and often the most economical choice for businesses processing more than $10,000 in monthly card transactions.

Tiered Pricing

Tiered pricing is a standard pricing structure used by traditional merchant services account providers and business banking services. To set tiered plan rates, providers first audit your business model and transaction history, so it takes more work to get this type of plan in place. Most tiered plans also require lengthy contracts and charge early termination fees if you want to change plans or providers.

Tiered plans break card processing rates into three groups, which are called qualified, mid-qualified and non-qualified tiers. Each tier’s rates are based on a merchant’s overall processing volume, industry and typical transaction types, such as online or in-person sales.
Each sale’s tier is determined based on the transaction type, credit card used and whether or not the cardholder’s billing address is verified. In most cases, qualified transactions have the lowest rates, while non-qualified transactions have the highest rates.

Tiered rates can be tricky to understand and the monthly statements can be very detailed. For most small businesses, flat-rate or interchange-plus plans are more economical and easier to manage. However, higher-volume businesses in certain industries, such as wholesalers and multi-store retail outlets, can save with a tiered card processing model.



How To Reduce Your Credit Card Processing Costs

Credit card processing fees are unavoidable, but there are several ways to minimize their impact on your bottom line.

Know Your Effective Rate

Figuring out your average card processing rate, called the “effective rate,” is a quick way to see if you’re spending too much on card processing. It’s a simple formula that divides total card processing fees by total card sales for a given period of time.

For example, if your monthly processing fees are $98.25 for $3,275 in total card sales, your effective rate is 3% (98.25 / 3275 = 0.0299 = 3%).

However, it’s essential to include monthly fees, statement fees and add-on costs that your provider charges in your total processing cost. If your processing service charges $39 per month, your total processing cost is $137.25 ($98.25 + $39).

After plugging the total monthly cost into the formula, the effective rate is a whopping 4.2%.

In this case, a flat-rate processing service with no monthly fees such as Square, which charges 2.6% plus 10 cents to 3.5% plus 15 cents per transaction, might be the better deal.

Negotiate Card Processing Rates

Don’t be afraid to audit and negotiate your rates with your processor every year or so, especially if you have a tiered plan. If your processing volume is higher than before, or if you’ve expanded into more in-person sales channels, you’re ready to negotiate lower rates.

Review Your Statement

Review every line item on your monthly statement and ask your processing service for answers or clarification if something is unclear. Interchange-plus and tiered statements can be complex. Take the time to review the processing charges and added fees, and use the effective rate formula to know the average rate you pay each month and for each sale type or processing tier.

Reduce Fraudulent Charges

Higher security risks equal higher processing fees. You can reduce fraudulent charges and chargebacks by upping your security with address verification for online sales and ID checks and signature-required receipts for in-person sales.

Consider Zero-Fee Processors

A few card processing companies add the processing fee to the sale total, so the customer pays the processing fee, not the merchant. This upcharge is generally called a “convenience fee,” and this processing model does away with your processing costs. Statistics show this works well in retail settings, especially when paired with a cash discount option.



Credit Card Processing Equipment and Systems

Terminals, POS apps, store registers, online gateways and virtual terminals are a few of the many types of hardware and systems that enable card processing. Some credit card processing companies provide their own branded equipment. Others integrate with popular e-commerce platforms, payment gateways, card terminals and retail registers.

The right setup for your business depends on how and where you complete sales and collect payments—in-store, online, via mobile in-person sales or a combination of these.

Physical Card Processing Equipment

In-store and in-person sales settings use terminals and other processing hardware to physically swipe, dip or tap cards at checkout. Since the card is present, these types of sales are considered low-risk and carry the lowest processing fees.

  • Point-of-sale (POS) store registers: These systems pair inventory, customer and sales management software with card readers, store registers and touchscreen terminals to complete a sale.
  • Smart terminals: Compact all-in-one card processing terminals can be used in-store and in mobile settings via Wi-Fi and cellular connections.
  • Basic registers and terminals: No-frills cash registers with card processing terminals work well for basic in-store retail and countertop services.
  • Self-serve kiosk checkouts: Customer-facing touchscreen checkouts with built-in card readers are ideal for quick-serve cafes and other self-serve settings.
  • Mobile card readers: Paired with a mobile app on a tablet or cell phone, mobile card readers physically process cards for all types of in-person mobile settings, such as fairs and markets, food trucks and mobile service calls.

Virtual and Online Credit Card Processing Systems

Online payments and virtual credit card sales require cloud-based systems called online portals or payment gateways to securely collect and transmit customers’ payment information. Since the card isn’t physically present and staff can’t verify identification, these types of sales are considered higher-risk and carry the highest card processing fees.

  • E-commerce payment gateways: Payment gateways are secure online checkout systems that connect your online store to your card processing service to verify and complete online transactions.
  • Online payment portals: Some processors have secure online portals that enable a range of modern online payment options including online invoice payments, automated recurring and subscription payments, QR code payments and payment links sent via text or email.
  • Virtual terminals: Nearly all card processing services support keyed-in payments through a cloud-based online dashboard, typically called a virtual terminal.
  • Mobile terminal or POS app: Many card processing services provide a mobile payment app that enables virtual keyed-in payments using tablets and smartphones. Some providers include this in a POS app that supports both keyed-in and card reader payments.