Best Credit Card Processing Companies of 2021

For most businesses, the ability to accept credit and debit card payments is a necessity, and for that you need a credit card processing company. A credit card processor acts as an intermediary between your business and your customers' credit card companies. Whether your business has a physical location or is entirely online, you need a payment processor to accept credit card payments. However, choosing the right processor for your business can be a headache with so many fees, requirements and options available.

We're here to help. We've analyzed transaction fees, pricing models, customer support, third-party integrations, hardware options and security features to help you narrow down your choices. We've also reviewed data to select the best credit card processing companies of 2021.

Credit card processors and point-of-sale (POS) systems typically work together to accept and process sales. Visit our ranking of the best point-of-sale (POS) systems of 2021 to learn more.

Our ranking of the best credit card processing companies of 2021

  • Fattmerchant Stax
  • Helcim
  • Dharma Merchant Services
  • Payment Depot
  • National Processing
  • Square
  • Intuit Quickbooks
  • PayPal
  • Stripe
  • Flagship Merchant Services
  • Clover

What is a credit card processing company?

Credit card processing companies serve merchants to facilitate credit and debit card payments. While the process happens in seconds on the surface, there is a lot involved in the back end of a transaction. The processor acts as an intermediary between the customer's bank (where the payment comes from) and the merchant's bank (where the payment ends up).

Merchants wishing to accept credit or debit card payments must partner with a credit card processing company. Processing companies may also facilitate other forms of payment, such as Apple Pay, Google Pay, PayPal, ACH and checks.

When choosing a credit card processing service, remember that there is no one-size-fits-all solution. It's important to find one that fits your business needs, budget and goals. Some specialize in online payments, while others focus on in-person transactions and point-of-sale (POS) systems, and still others offer a one-stop solution for all types of sales.

Credit card processing companies may target specific types of businesses or merchants that process a certain level of volume.

For more information, read our What is Payment Processing? Guide.

How does a credit card processing company work?

Credit card processing is a complex system in which card data is sent back and forth behind the scenes while providing customers with a seamless payment experience. The way this all happens involves a lot of moving parts and complex back-end technology. Before breaking down the process, you must first understand all the parties involved:

  • The cardholder: The consumer making the purchase.
  • The merchant: The business owner selling the product or service.
  • The issuing bank: The bank that issues the credit card being used (or the customer's bank).
  • Acquiring bank: The merchant's bank.
  • The payment network: The networks that deal with credit cards, including Visa and Mastercard.
  • The credit card processing company: The processor that routes payment data to the card network and helps facilitate communications during a transaction.

The credit card processing journey begins when a customer decides to make a card payment to a merchant, either in person or online.

  1. Step: The merchant takes the cardholder's payment information, either at a store card terminal or online.
  2. Step: The credit card processor sends the customer's card information to the credit card payment network. This requires an Internet connection.
  3. Step: The payment network sends the transaction data to the issuing bank to request authorization.
  4. Step: Once the bank validates the payment information, it authorizes the transaction amount, and the authorization is returned to the merchant via the payment processor. If there are insufficient funds or if there is suspicion of fraud, the transaction will be denied.
  5. Step: Once the transaction is authorized, the issuing bank holds the amount.
  6. Step: The merchant must then settle its batch of transactions, which is usually done once a day. This function is facilitated by the payment processor and follows the same route as before: from the merchant to the payment network to the issuing bank, and then back again.
  7. Step: The issuing bank releases the funds to the acquiring bank.
  8. Step: The funds are deposited into the merchant's bank account, minus interchange and processor fees.

In general, a transaction takes less than one minute to clear. Once transactions are cleared, it takes an average of two business days for payment to be deposited into the merchant's bank account. Some processors offer same day or next day deposits, while some situations may require a longer payment period.

How to Choose the Best Credit Card Processing Company

With the decline in the use of cash in recent years, the ability to accept debit and credit card payments has become increasingly necessary. Choosing one that is too complicated, doesn't offer the features you need or is too expensive will make your life difficult. Here are some questions to ask yourself when looking for the right credit card processor for your business.

What is your monthly sales volume? Some companies offer different processing rates for low and high volume sellers. Look at the rates for your company's sales volume.

Do you need a merchant account or a third-party processor? Sometimes called payment aggregators, third-party processors allow merchants to avoid setting up a merchant account. For smaller businesses with low transaction volume, third-party processors like Square or PayPal can offer the simplicity and affordability they are looking for. Typically, you only pay third-party processing companies when you make a sale. Third parties bear the burden of PCI DSS compliance, as transactions take place outside of their platform and network. Merchant account providers are often better suited for larger or growing companies. They tend to offer more customization options and provide a more stable solution, and the entire transaction takes place within the merchant's network. Stax, Helcim and Dharma Merchant Services are examples of merchant account providers. Costs per transaction are typically lower with this type of processor, and merchants have greater access to in-house customer service. However, there is an underwriting process to get approved for a merchant account, which could be an obstacle for some businesses.

Do you sell primarily online or in-store? While most companies offer both online and in-store sales options, some are geared more toward one or the other. Some payment processors even offer their own e-commerce platforms. In addition, transaction fees for online payments, compared to in-person sales, are often higher.

Do you sell internationally? Not all processors accept non-U.S. currencies. If your company is based in the U.S. and regularly conducts international business, make sure the companies you are considering accept payments in the currencies of the regions in which you do business.
What is your budget? Have a clear budget in mind, including the features and fees you can afford.

What is the company's fee structure? It's critical to work with a company that prioritizes pricing transparency and doesn't tack on unexpected fees. Accessing all pricing options is just the beginning. You also need to figure out which pricing model is right for your company's needs. While all of the companies on our list have transaction fees, they are not all based on the same pricing model. Some companies offer flat rates, while others offer interchange plus rates. In addition, while some companies have a pay-as-you-go subscription model and recurring monthly fees, others do not.
What hardware do you use? If you already have hardware, check to see if your new processor integrates with it. Some companies reprogram existing hardware, while others have their own hardware or work with specific hardware companies. Also, find out if the processor offers options such as a mobile card reader.

What software does it integrate with? Take an inventory of the software you will be using or currently use - does the processor integrate with it or offer an API for easy integration? If you use other vendors for your point-of-sale system, accounting or other business functions, such as customer relationship management (CRM), it is helpful if your processor allows your transaction data to integrate with those platforms.

Do you need a stand-alone point-of-sale system? Several companies on our list, such as Square and Clover, offer their own point-of-sale systems. If a POS system is important to you, find out what POS integrations the processors you're interested in offer. For more information on POS systems, check out our ranking of the best point-of-sale (POS) systems of 2021.

What customer service options does the company offer? Make sure you have access to customer service when you need it. Poor service and technical difficulties can lose you business, so it's important to choose a company that offers extensive support. The more complex your credit card processing needs are, the higher the level of service should be. Find out if the companies on your list have an in-house help desk or if it is outsourced. Is it available 24 hours a day, 7 days a week, or only during established business hours? Some companies may also have online troubleshooting guides or community pages where members can try to help you.

Are you PCI compliant? PCI DSS is a set of security standards that merchants must comply with to ensure the protection of cardholder data. There are different levels of PCI compliance. For any business that accepts, transmits or stores cardholder information, it is important to work with a processing partner that understands and can assist you with PCI compliance. Some processors will automatically ensure your compliance, while others will require you to complete annual questionnaires.

What should I look for in a credit card processing company?

With so many aspects of credit card processing services, it can be difficult to know which features you should be interested in and which you can leave out. For example, free equipment can be tempting, but if it's not equipment you'll use, it's not much use. There is no one-size-fits-all solution for entrepreneurs. It's all about finding the processor that is easy to use and has the features that matter most to you.

If you only sell items on an occasional basis, you may be interested in a company like Square, which has slightly higher transaction fees, but is easy to use and transparent about costs. On the other hand, if you have a small business with a higher volume of sales, then a subscription-based company with a monthly fee such as Payment Depot might be better because of its lower transaction costs.

Also consider a processor that offers a merchant account, payment gateway and PCI compliance. These features may cost more, but they will make your life easier.

PCI Compliance: PCI-DSS compliance helps authenticate data and ensure cardholder privacy. Compliance with this standard will help you protect your data and your customers' data.

Merchant Account: A merchant account is also required to accept card payments. It acts as a deposit account while the payment is being processed.

Payment gateway: A payment gateway is the vehicle through which your processor, various banks and merchant accounts interact. It also acts to encrypt data and ensure security during the payment process. Payment gateways are necessary to process credit cards online.

Point-of-sale systems: An integrated or packaged point-of-sale system can be a boon to your business, allowing you to track inventory, manage payroll and synchronize vital information across multiple locations.
Third-party integrations: Businesses need a lot of software, including e-commerce platforms, point-of-sale systems, and accounting, scheduling and customer relationship management (CRM) software. It's important to make sure they all work seamlessly.

Hardware: If you only sell online, you may not need much hardware. But if you have an online store and several physical locations, and occasionally sell at fairs, festivals or other markets, your processor should have the hardware to facilitate all those transactions.

Next-day funds: While most processors deposit transaction funds within one or two business days, some offer guaranteed next-day deposits for an additional fee.

How much does credit card processing cost?

Credit card processing fees can vary widely among processors, especially if they use different pricing models. There are big differences between transaction fees and monthly fees. However, there are some common elements that can influence the processing fees that businesses will end up paying.

Interchange fee: This fee is the same regardless of which processing company is used, because it is charged by the card payment networks. When someone swipes a Visa, Mastercard, Discover or American Express card, these networks charge a fee. Interchange fees are typically a percentage of the transaction plus a flat fee and can vary depending on whether the customer uses a debit, credit or corporate card, as well as whether the transaction is keyed or swiped.

When comparing rates among credit card processing companies, you are really assessing rates that are above interchange rates, because interchange rates are not negotiable.

Assessment rate: Like the interchange rate, the assessment rate is not something that can change because it is related to the payment networks. This rate is usually accompanied by the interchange rate, and together they make up the interchange rate.

Surcharge rate: You'll want to look at this rate closely when comparing credit card processing companies. It refers to the amount you'll pay the actual processor for each transaction, in addition to interchange fees. These fees may seem small, but they can add up and reduce the company's profits.

Flat fees: Some credit card processing companies may charge a monthly service fee for using their platform and software. In some cases, a higher monthly fee may be more profitable when combined with lower transaction fees.

Credit card processing may carry other fees in addition to monthly service and transaction costs. These may include:

Chargeback fees - If a customer disputes a chargeback and a refund results, most processors will charge you on a case-by-case basis.

PCI compliance (and non-compliance) fees: If your processor provides PCI-DSS compliance services, there may be an additional fee. Less transparent companies may try to sneak this in as a hidden fee, so be sure to ask when you start working with a processor. If your company is not compliant, some merchant account providers may charge a penalty fee each month.

Minimum monthly fees: Some processors may require you to process a minimum amount per month to avoid a fee being added to your bill.

Equipment Lease Fees: If you do not purchase your terminal equipment upfront, you may sometimes pay to lease or rent it. This can end up being more expensive than buying the hardware outright.

Batch fees: Be aware of this annoying fee that some processors may charge each time you send a batch of payments (usually daily).

Payment gateway fee (if not included in your payment processor's plan): If your payment processor uses a third-party gateway, you may have to pay an additional fee for that service.

How to Save Money on Credit Card Processing Fees

Working with outside vendors always requires a bit of research and comparison shopping to find the best option for your budget. In the case of credit card processing companies, it's all about understanding the fees and pricing models being used, and what they may look like when applied to transaction totals.

"When you're looking at different processing options, you're looking at processor fees to try to find a discount," says Brennon M. Wilson, a volunteer with SCORE, a resource partner of the Small Business Association. He points out that interchange rates are non-negotiable and standard across the board. It's "abnormal to find a processor charging more than 3% plus 30 cents," says Wilson, who is also the president of SCORE's Canton, Ohio, chapter. "That's a big red flag."

Other key considerations, according to Wilson, are monthly transaction volume and whether there are minimum commissions. Your volume will dictate whether it makes sense to opt for a flat-fee model with higher per-transaction costs or pay for a subscription-based one with lower per-transaction fees.

Depending on the credit card processor, sometimes numbers will have to be crunched. "Simple fees seem more consumable, like a flat fee. However, more complicated fees are actually lower," says Kevin Jones, president and chairman of the Electronic Transactions Association, a payments industry trade association, and CEO of Celero Commerce. That's because there are several tiers of interchange fees, and processors that bundle them together typically create a higher overall fee.

"I recommend that the potential processor do a pricing model," Jones says. Flat rates might be the best deal based on volume. "For small merchants, make sure any flat monthly fees are carefully considered as part of the net rate," he adds.

Regardless of what you end up paying your processor, accepting additional payment methods is likely to have a positive impact on your overall business. "Statistically, people spend more and spend at places that accept these payments because of the convenience, the rewards and the ability to track spending," Jones says. "From a convenience standpoint and to encourage spending, having a good variety of spending options is critical to business growth."

Payment Gateway vs. Credit Card Processing Company

These terms are often confused or used interchangeably, but they are two different things. Credit card processing companies are the facilitators of the transaction. They provide the equipment and platforms to accept payment.

A payment gateway transmits and authorizes online payments (or "card not present"). It is essentially the delivery mechanism that helps approve or deny an e-commerce transaction.

Put another way, a payment gateway authenticates a customer's digital payment information. In-person transactions do not need to use a payment gateway because the physical card is swiped or dipped at a point-of-sale terminal.

Some credit card processing companies offer their own payment gateway as part of their bundled services. Dealing with a single provider means that if you have any technical problems, you know exactly where to turn. There are also reliable third-party payment gateways that offer exceptional service; so as long as your payment processor uses a reliable partner, you should be covered. In some cases, using a third-party payment gateway may incur additional costs.

What equipment do I need to accept credit cards?

The equipment needed for your business to process credit card transactions will depend on how you sell your products and services. The needs of online merchants are often different from those who have stores. If you conduct business over the phone, you may not need any equipment.

If most of your sales are in person, you will likely need equipment to process transactions. Brick-and-mortar businesses will probably benefit from a point-of-sale (POS) system. Terminals, cash registers and tablets can provide a fully customizable POS system for your business. They function similarly to classic cash registers, but POS software and integrations can extend their functionality to include inventory tracking, time and attendance, and customer relationship management (CRM). For companies that don't have a storefront or that do a mix of in-person and online sales, a credit card reader may be all you need. Credit card readers are ideal for businesses on the go that need a mobile payment processing solution. Card readers can connect to your iPad or cell phone, giving you the flexibility to make sales at trade shows, craft fairs and farmers markets. Some credit card processing companies, such as Stripe, Square and National Processing, offer free card readers to new customers. You can also get card readers that accept chip and contactless payments.

If you primarily sell your products online or over the phone, you probably don't need any equipment. Payment processors often integrate with your e-commerce site and many processors will even host an online store for you, sometimes for an additional fee. If most of your sales are made over the phone, you may not need any equipment either. Transactions can be entered into a virtual terminal or some mobile apps. However, it is important to note that entered transactions usually have higher processing fees.


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