Whether you’ve just decided to start taking credit cards or you’ve been doing so for a while and feel like it’s too expensive, you might be wondering: Who is the cheapest credit card processing company?
Unfortunately, with all of the complexities of credit card processing and merchant services, there is no simple answer to this question. With merchant account providers vs. payment service providers to consider, as well as a variety of processing rates, terminal options and additional fees, it may take you time to sort through your options and eventually decide on the processor and solution that’s right for you.
The best way to streamline your search process is to decide ahead of time what you’re looking for in a credit card processor and what specific capabilities or tools you need. Do you need a dedicated merchant account? Will you be accepting payments in-person, online, or both? You can narrow down your choices based on these requirements — and then go about determining which provider, on the whole, will offer the cheapest payment processing for your business.
As you will see by the differences in the five credit card processing companies discussed below, no one provider is going to be the cheapest for all businesses.
Finding the cheapest credit card processing for small businesses
When it comes to credit card processing, there isn’t much that’s simple. There’s not one single type of credit card processing or processing company. There are different provider types, plan structures, fees and rates — plus the difference between online and in-person processing, all of which makes it essentially impossible to point to one provider as the cheapest credit card processing company.
The cheapest credit card processing for a small Etsy store is not going to be the same as that for a multi-location brick-and-mortar operation. Ultimately, the cheapest credit card processing company is going to depend on your specific business, how you operate and what you need.
To determine which provider will offer the cheapest credit card processing for your small business, there are two main factors to consider: the types of credit card processing providers and the cost of credit card processing. For processing providers, there can be a significant difference between merchant account providers and payment service providers. For the cost of credit card processing, fees can vary wildly, especially once you factor in hardware.
As you search for the cheapest credit card processing, one of the first points you’ll want to keep in mind is that there are different types of merchant service providers. Not only will these unique types of providers offer slightly different services, but they’ll also more than likely affect the price of your payment processing. There are two types of providers: merchant account providers and payment service providers.
Merchant account providers are the more traditional merchant service providers — these providers can be banks, independent sales organizations or payment processors, like Dharma Merchant Services, Payment Depot or Chase Merchant Services. Merchant account providers allow you to accept credit cards by providing you with a unique merchant account, a special bank account where credit card payments are deposited before being transferred to your business bank account.
When it comes to merchant account providers, you typically need to apply for an account and be accepted by the provider before you can start taking payments. Credit card processing through a merchant account provider also often includes some kind of payment terminal, as well as possible additional services such as PCI-compliance, payment gateways and more. Comparing merchant account providers to payment service providers, you’ll normally face more fees, as well as complicated (and even hidden) pricing with a merchant account provider.
Payment service providers, on the other hand, are inherently different from merchant account providers because their service does not include a unique merchant account for your business. These providers give you the ability to accept credit and debit card payments by aggregating the funds from all of their clients into one merchant account, and then transfer the payments to the respective business bank accounts. With this system, you’re more likely to see transparent pricing and fees and a quick sign-up process. However, compared to merchant account providers, you’re also more likely to find a higher risk of error and account shut down, as well as slower customer service with payment service providers.
On the whole, merchant account providers will probably be most cost-effective for larger businesses who need to process many transactions, whereas payment service providers will be cheaper for smaller businesses with a smaller transaction volume.
Another essential component to consider when trying to find the cheapest credit card processing for your small businesses is how these services are priced. The type of provider may generally influence the cost and pricing structure, but overall, there are several different pieces involved in the price of accepting credit card payments that are important to be aware of.
Credit card processing fees: These may be the fees you’re most familiar with, as they’re the fees you’re charged per each credit or debit card transaction you accept. Regardless of your processor, you’ll pay processing fees in some shape or form — however, the structure of how these fees are priced may be different. On the whole, these fees fall into one of three pricing structures: tiered, interchange-plus and flat-rate. Generally, interchange-plus is the preferred pricing structure for processing fees.
Flat fees: Depending on the processor, you may have to pay a variety of flat fees for their service. The most common of this type of fee is the monthly subscription fee that you’re charged to work with the processor. You might also be subject to flat fees for services like PCI-compliance, setup, cancellation, funds withdrawal and more. When it comes to merchant account providers, many companies are criticized for their lack of transparency with these types of flat fees, so you’ll want to be sure you’re clear on the terms of your contract.
Hardware or software fees: In order to process credit card payments, whether in-person or online, you’ll need a terminal to actually accept the cards. If you’re accepting payments in-person, this terminal might be a POS system, mobile card reader or even a virtual terminal, while if you’re taking payments online, you’ll need a payment gateway. Although some providers include one or more terminals within their service, it’s important to remember that you may have to pay for the kind of terminal your business needs.
With all of these fees to consider, it’s clear why merchant services are so complex and why it’s difficult to determine the cheapest credit card processing company for your business. Each provider will have different credit card processing fees, flat fees, and hardware or software fees, and therefore, you’ll need to sort through each of these pieces to figure out what the overall cost of any one service will be compared to others on the market.
Moreover, each provider will offer a unique service plan — some may include multiple terminals, some may require a minimum sales volume per month and some will provide 24/7 customer service — and all of these details can contribute to the cost of any one processor.
Cheapest credit card processing companies: Top 5 options for small businesses
In order to find the cheapest payment processing, consider what your business needs, then explore the variety of providers available to you. There’s no one provider that offers the cheapest credit card processing, but rather, the most affordable solution will be particular to your business — and the cheapest credit card processing for you may not be the cheapest for someone else.
Keeping this in mind, there are payment processing companies, including both merchant account providers and payment service providers, that stand out as some of the best and most affordable options for small businesses. Here are some of the top providers you might consider:
Credit card processing company
Merchant account provider or payment service provider
Payment service provider
Starts at 2.6% plus $0.10 per transaction for in-person payments
N/A, unless using speciality software
Any hardware you require besides the free magstripe reader
Merchant account provider
Starts at $0.08 per transaction plus interchange for in-person payments
$99 or $199 per month
Per terminal pricing, add-on tools available
Merchant account provider
Starts at 0.2% plus $0.10 plus interchange for in-person payments
$10 subscription fee and $25 monthly minimum on transaction fees
Terminals available at additional cost, $25 chargeback fee
Merchant account provider
Starts at $0.15 plus interchange per transaction
Starts at $49 per month for subscription
Terminals may require additional costs
Payment service provider
2.9% plus $0.30 per transaction for online payments
Custom pricing option, extra tools available for additional costs
Square: Cheapest credit card processing for mobile payments and point of sale
With the rapid development of payment service providers and new ways to accept payments, Square has been an industry leader. The ultimate cost of Square will depend on your business and what kind of processing services you need. Still, with clear, flat-rate pricing, free POS software and a free mobile card reader, Square is one of the cheapest credit card processing solutions, especially for smaller businesses.
What Square Can Offer
As a payment service provider, Square offers credit card processing in a variety of different ways. First, if you need to process in-person payments, you can use Square’s free POS software and pair it with one of Square’s multiple hardware options. In addition to the free software, Square offers two paid POS options specifically for restaurants and retail businesses. For hardware, you’ll receive a magstripe reader for free when you sign up for an account.
Additionally, Square gives you the ability to accept credit cards with a virtual terminal, as well as on your website or e-commerce site with its API integrations.
Square Processing Fees
Square operates on a flat-rate pricing structure. Therefore, the per-transaction fees you pay for credit card processing will wholly depend on the way in which you accept the payment and the hardware you use. Square fees break down as such:
Square magstripe reader, contactless and chip reader, and Square Stand: 2.6% plus $0.10 per transaction for tapped, dipped and swiped in-person payments.
Square terminal: 2.6% plus $0.10 per transaction for tapped, dipped and swiped in-person payments.
Square register: 2.6% plus $0.10 per transaction for tapped, dipped and swiped in-person payments.
Square virtual terminal/card not present: 3.5% plus $0.15 per transaction.
Square online payments: 2.9% plus $0.30 per transaction.
It’s important to note that if you use any of the compatible Square hardware terminals to accept payments with the Square for Restaurants or Square for Retail software, you’ll have different processing rates. Any of the hardware paired with Square for Restaurants costs 2.6% plus $0.10 per in-person transaction, whereas Square for Retail costs 2.5% plus $0.10 for every in-person transaction.
Other Square Fees
With the free Square POS software and complementary magstripe reader, you have the opportunity to only pay the processing fees to accept credit cards. This being said, if you want to use any of its other hardware and software, you’ll have to pay the respective costs.
The other Square hardware options range from $49 to $799. In terms of software, Square for Restaurants/Retail will cost $0, $60 or $299+ per month (depending on the plan) for one location and one point of sale. Moreover, Square offers additional products to pair with its POS software, like Square Payroll, Marketing and Loyalty, which each will incur a monthly subscription fee if you choose to use them.
These instances aside, you’ll receive credit card processing from Square without having to pay for:
Statement or reporting fees.
Refund or chargeback fees.
With a flat 2.75% on all of its plug-in card readers and no monthly fee for the Square POS software, Square has some of the cheapest mobile credit card processing rates available.
Fattmerchant: Cheapest credit card processing for high-volume small businesses
As a merchant account provider with an impressive interchange-plus fee structure, Fattmerchant is one of the cheapest payment processing companies for larger small businesses that produce a high volume of sales.
What Fattmerchant Can Offer
With a Fattmerchant subscription, you can accept credit cards and other payments in a variety of ways, including with a physical terminal, online shopping cart, virtual terminal, mobile device or integrated with a third-party solution.
Unlike Square, however, Fattmerchant requires you to subscribe to one of its two paid monthly plans to use its credit card processing service. Additionally, each Fattmerchant subscription plan only includes one type of terminal — meaning if you want to accept payments using a physical terminal as well as an online shopping cart, you’ll have to pay two separate subscription fees for this capability.
Fattmerchant Processing Fees
Fattmerchant’s processing fees are priced based on an interchange-plus structure, where you pay a per-transaction fee, plus the direct cost of interchange (as determined by the credit card networks). The specific fees you’ll pay will vary based on the type of terminal you choose and which of the two Fattmerchant subscription plans you have.
For the Fattmerchant Starter platform, the processing fees will be:
Physical terminal, integrations: $0.08 plus interchange
Shopping cart, virtual terminal, mobile, API: $0.15 plus interchange
For the Fattmerchant Enterprise platform, the processing fees will be:
Physical terminal, integrations: $0.06 plus interchange
Shopping cart, virtual terminal, mobile, API: $0.12 plus interchange
Other Fattmerchant Fees
Fattmerchant requires you to choose either its Starter or Enterprise platform and pay a monthly subscription fee. Regardless of the terminal you choose, the Starter plan will cost $99 per month and the Enterprise plan will cost $199 per month. Once again, if you want to use more than one terminal type (i.e. mobile and online shopping cart) you’ll have to pay the subscription fee for each type.
Additionally, if you choose to use Fattmerchant with an EMV terminal, you’ll need to purchase the terminal separately, although Fattmerchant gives you the option to reprogram a terminal you already own.
However, other than the overall subscription fee, Fattmerchant does not charge many other fees. Both the Starter and Enterprise plans for each terminal type include:
No cancellation fees.
No statement or batch fees.
24/7 technical support.
Risk and chargeback monitoring.
QuickBooks Online integration.
Although the subscription fee may seem expensive, it is a trade-off for extremely low processing rates. For larger and high-volume businesses, the monthly subscription cost can easily be offset by the funds saved on per-transaction costs. Keep in mind that even though Fattmerchant offers in-person terminal options, its service will probably yield the cheapest credit card processing for online businesses.
Payline Data: Cheapest credit card processing for high-risk merchants and small businesses that need a merchant account
Similar to Fattmerchant, Payline Data is a merchant account provider that offers interchange-plus pricing at very low rates. With two plan offerings, one designed for brick-and-mortar retailers and one designed for e-commerce merchants, Payline Data can provide the cheapest credit card processing for a variety of small businesses.
What Payline Data Can Offer
Like Square and Fattmerchant, Payline Data can provide credit card processing in a number of different ways, including mobile payments, in-store and online payments and integrated payments. With Payline Data you’ll receive a merchant account. Uniquely, Payline Data offers high-risk merchant accounts for businesses involved in industries such as tobacco, online gaming, fantasy sports, self storage and more.
Payline Data requires that you pay for one of its two subscription plans — and the plan you choose will dictate how you can accept payments and the respective processing fees.
Payline Data Processing Fees
For the Payline Start plan, you’ll be able to accept payments using an EMV terminal, as well as key in transactions using a virtual terminal. In this case, you’ll pay interchange plus 0.2% + $0.10 per card-present transaction and interchange plus 0.3% + $0.20 per virtual terminal transaction.
For the Payline Connect plan, on the other hand, you’ll only be able to accept payments online or using the virtual terminal. The processing fees for this plan will be interchange plus 0.3% + $0.20 per transaction.
Other Payline Data Fees
Either of the two Payline Data plans will require a $10 monthly fee. If you choose the Payline Connect plan and want to accept online payments, you’ll also have to pay a $10 monthly fee for your payment gateway.
If you’re going to be accepting in-store payments, you’ll have to pay separately for a mobile, wireless or countertop terminal. Payline Data requires that you meet a monthly minimum of $25 in processing fees. It also charges a $25 chargeback fee and a $19.95 fee if you do not complete a PCI-compliance survey within 90 days of starting your account.
This being said, Payline Data does not have cancellation fees or require a long-term contract, and PCI compliance is included in your plan.
All of this considered, there’s no doubt that Payline Data can offer the cheapest payment processing for many different small businesses. With a low monthly subscription fee, reasonable and transparent processing fees and multiple terminal options, Payline Data provides the flexibility and affordability of a payment service provider with the security and unique merchant account of a merchant account provider. Importantly, with high-risk merchant accounts, Payline Data offers credit card processing for businesses that may have difficulty finding these services elsewhere.
Payment Depot: Cheapest credit card processing for mid-sized businesses
Businesses that fall somewhere between the high-volume producers well-suited for Fattmerchant and those who would benefit from the low monthly fee of Payline Data might find their cheapest credit card processing solution from Payment Depot.
As a merchant account provider with an interchange-plus pricing structure, four subscription offerings to choose from and free terminals included in all of its plans, Payment Depot can certainly be one of the cheapest payment processing companies for mid-sized businesses.
What Payment Depot Can Offer
With Payment Depot, you’ll be able to accept credit card payments in the way that works best for your business, whether on your mobile device, using a credit card terminal, using a payment gateway online or with a full POS system. Payment Depot provides all of its clients with a dedicated merchant account, and all of the Payment Depot plans include free programming of any existing equipment you own, a free virtual terminal and a free payment gateway.
Like Fattmerchant and Payline Data, Payment Depot requires that you choose a subscription plan. The fees you will pay are based on the specifics of your plan.
Payment Depot Processing Fees
Payment Depot operates on an interchange-plus pricing structure and charges its transaction fees based on your plan, not based on the terminal you use.
The Payment Depot processing fees are broken down in this way:
Basic plan: Interchange plus $0.15 per transaction.
Most Popular plan: Interchange plus $0.10 per transaction.
Best Value plan: Interchange plus $0.07 per transaction.
Premier plan: Interchange plus $0.05 per transaction.
It’s important to note that for each of its plans, Payment Depot has a monthly processing volume limit. The Basic plan limits you to $25,000 per month, the Most Popular to $75,000 per month and the Best Value to $200,000 per month. The Premier plan does not have a monthly limit.
Other Payment Depot Fees
Each of the five Payment Depot plans requires a monthly subscription fee. The Basic plan will cost $49 per month, the Most Popular will cost $79 per month, the Best Value will cost $99 per month and finally, the Premier will cost $199 per month.
In addition to the subscription fee, you’ll have to pay for the terminals you need if they’re not already included in your plan. Once again, all plans include a free payment gateway and free virtual terminal. The Most Popular plan offers a free mobile reader and free standard terminal, and the Best Value plan includes a free pin pad on top of the other included hardware. The Premier plan provides all of these hardware options and offers a free terminal upgrade every two years.
Other than the cost of terminals, Payment Depot does not charge for cancellation, PCI compliance or account monitoring. In fact, Payment Depot offers a risk-free 90 day trial with its annual memberships.
Therefore, Payment Depot can be one of the cheapest credit card processing companies for mid-sized businesses, especially those who want a more affordable processing rate than Payline offers and lower-priced plans than those provided by Fattmerchant. Plus, with multiple terminals included in its plans, Payment Depot can save you that additional cost.
Stripe: Cheapest credit card processing for online businesses
Just as Square distinguished itself as one of the leaders in payment processing in the POS space, Stripe quickly become one of the biggest players in online payments. With the Stripe payments platform, you can accept the full range of payment methods online, in-person, through your mobile app and through third-party integrations. As a platform designed first and foremost for payments, Stripe offers simple, flat-rate pricing, making it one of the cheapest credit card processing companies for online businesses.
What Stripe Can Offer
Stripe is a payment solution designed exclusively for accepting credit cards and other payments online. Stripe provides an all-inclusive platform that gives you the ability to accept payments in the way that works for your business — whether by using an embeddable checkout, integrating with an e-commerce software or utilizing its UI toolkit to develop a custom payment form for your site.
Stripe is a pay-as-you-go processor and only charges per transaction, with no contract or subscription fee. Overall, the Stripe payments platform also includes tools for security, PCI compliance, reporting and customer support
Stripe Processing Fees
Like Square, Stripe offers flat-rate processing fees. For any online payments, you’ll pay 2.9% plus $0.30 per transaction, and for any in-person payment accepted using a Stripe terminal, you’ll pay 2.7% plus $0.05 per transaction.
Stripe will charge an additional 1% for international credit cards and a 0.8% fee (capped at $5) for ACH payments.
Other Stripe Fees
There are only a few other scenarios in which you’ll incur fees from using Stripe. If you use Stripe for billing, you’ll pay 0.4% on recurring charges after your first $1 million. You’ll also incur a $15 fee from Stripe for chargebacks.
Stripe does offer additional tools for services like fraud protection and business data, which can be purchased at associated costs. Finally, if you want to accept payments in-person with Stripe, you’ll have to pay separately for a credit card terminal. On the other hand, Stripe will not charge you setup, monthly or PCI-compliance fees.
Therefore, with transparent and simple pricing, and no subscription fees, Stripe is one of the easiest and cheapest payment processing solutions for online businesses. Similar to Square with its mobile card credit reader, you can easily use Stripe for your online store and only pay the corresponding processing fees. Although you may find an alternative provider with lower processing fees, it’s difficult to beat the lack of other fees, flexibility and included-payment tools within the Stripe platform.
A version of this article was first published on Fundera, a subsidiary of NerdWallet.