Best Credit Cards 2019
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What Is a Credit Card Processing Service?
While consumers are using more and different ways to pay for goods and services, especially via fast-growing mobile payments, stodgy old credit cards remain the most popular payment method in use today across any channel, whether in physical retail operations or in e-commerce settings. But taking a payment from a customer this way requires any business to route the transaction through a credit card processing service, typically a merchant bank. As competition in this sector has grown, these services have become much more complex and fraught with hidden fees and limitations. Small business owners in particular are often the targets of such practices, and the fact that some predatory salespeople take advantage of new business owners' lack of knowledge makes things even harder.
Luckily for merchants, fair-minded processors are emerging that offer transparency, fair fees, and good customer service. This is true especially for online 'e-tailers,' but also for small brick-and-mortar operations. There are Point-of-Sale (POS) systems, such as Square Point of Sale, and subscription services such as Helcim, and even retailers such as Sam's Club that are getting involved.
Whether you need credit card payment processing on the street or online, accepting credit cards and processing those payments is still complicated, though. This is due to the sheer number of moving parts inherent in this aspect of merchant services and mobile payment processing. It's also due to all of the various entities involved. Since rates and contracts vary by customer, it's difficult to make a direct comparison between these providers.
In this review roundup, we cover some of the most popular credit card processors on the market, and consulted with experts in the field at CardFellow and FreedomPay to determine how to choose a provider. We also interviewed the 10 processors featured here—Cayan, CreditCardProcessing.com, Flagship Merchant Services, Intuit QuickBooks Payments, National Bankcard, Payline Data, Payment Depot, Sam's Club Merchant Services, Square Point of Sale, and Editors' Choice Helcim—to get demonstrations and clarify details about their fees and features. Finally, we looked at user reviews and ratings from the Better Business Bureau (BBB) to get a sense of customer service and reliability.
Startup Costs, Fees, and Equipment
In the payments industry, there is a sort of pyramid of providers. At the top are the credit card companies, which charge flat interchange fees to big processors such as First Data, Flagship, Global Payments, and Vantiv. These entities clear the credit card payments and, while some take individual customers, each works with intermediary services, including Independent Sales Organizations (ISOs), which must register with a bank. Most of the services featured in this roundup are ISOs, including Cayan, National Bankcard, Sam's Club Merchant Services, and others.
Square Point of Sale and Intuit Quickbooks Payments are merchant services aggregators. Rather than providing you with a merchant account, these merchant services set you up with a sub-account under its master merchant account.
At the bottom of the pyramid are the business owners, who have to contend with two or three sets of fees: interchange fees from the credit card company and transaction fees from the processor and intermediary. There are a few different pricing structures available, and which one you choose depends on the number of transactions you clear each month, the sum of the credit card payments you receive, and the average amount of each transaction. A merchant who sells 10 pianos per month for $20K a pop has different needs than a coffee shop that accepts hundreds of swipes worth $10 each.
Most credit card processing companies have wide support for popular credit cards such as AmEx, Discover, MasterCard, and Visa, as well as for contactless payments such as Android Pay, Apple Pay, and PayPal. While these represent the most popular digital and mobile payment systems in use today, in the near future you can expect them to be joined by ever-more-sophisticated cryptocurrency payment systems, even at the retail and micro-payment level.
Likewise, most have a variety of equipment options for folks whose business isn't exclusively in the cloud, including point-of-sale (POS) system terminals, tablet and other mobile credit card readers, swipe and dip card readers, and even virtual terminals for e-commerce players.
Best Credit Cards 2019 For Balance Transfers
As we mentioned, interchange fees are fixed by the credit card companies and all processors pay the same amount. However, different types of cards can have higher fees, such as corporate cards and the more exclusive rewards cards. Another unavoidable fee is chargebacks, which vary from processor to processor. When a customer or credit card company reports a potentially fraudulent charge, the processor must manually verify the fraud and arbitrate between the merchant and the credit company.
Processors make a profit by either marking that fee up or charging both a subscription fee and a small transaction cost. Unfortunately, many providers are not upfront about additional charges, which are often purely designed to increase the provider's profit. The experts at Cardfellow, a quote generator and credit card processing review website, told us to beware of bundled pricing, which offers qualified and non-qualified rates. Certain types of transactions can cost more and it's not easily transparent how much or which types of transactions are burdened with these price hikes.
Carefully read your merchant agreement for hidden fees up to and including cancellation fees. It used to be standard for processors to offer 3-year, auto-renewing contracts. Recently, however, the industry is moving away from that. Ask for an amendment or a separate cancellation fee waiver to make sure you don't get hurt by a new trend.
Some providers, such as Payment Depot, offer wholesale rates. This means they're passing on the interchange fee to the merchant without markup but charging a monthly subscription fee, and a small transaction fee, to balance the loss.
Cardfellow recommends factoring in the number of transactions you'll process each month to choose the type of plan you need, as too few or too many will be costly. Consider also the average amount of your transactions. In all cases, be sure to get a complete list of fees, and be sure the agreement doesn't let the processor increase fees or charge new ones without notice.
In most cases, it's a good idea to buy your payment processing equipment (if you need any), and many of the companies featured here sell their own or partner with hardware providers. When taking advantage of these kinds of partnership bundles, basic equipment is usually only a few hundred dollars, though more advanced hardware, such as intelligent POS systems that talk to back-end accounting, supply chain, or cloud apps, can cost more. Don't fall for 'free equipment' offers as this usually means you're about to get stuck in a costly lease agreement.
Payment Card Industry Compliance and Support
Merchants must adhere to the Payment Card Industry Data Security Standard (PCI DSS) and most providers include PCI compliance as a basic feature of their services (if they don't, you'll probably want to look elsewhere). However, it's important to note that this isn't a government regulation. It's actually overseen by a private, self-funded organization. Some of the requirements are onerous for small, inexperienced businesses, and some processors charge a compliance fee (ranging from $20 to several hundreds), even though they don't even help the merchant become compliant. Using an aggregator, such as Square Point of Sale, is helpful, as Square (the company) is responsible for maintaining its merchant account, including compliance overhead.
Firms such as ControlScan and TrustWave can help if you don't have onsite tech support for your provider or payment gateway; however, most of the providers featured here offer 24/7 tech support, though some use call centers. Even if these resources are offered, you should still be sure to ask about getting a dedicated account manager when signing up for the service. Try calling at off hours to see how easy it is to reach a human and how long the wait times are. Stay away from companies that don't have support details on their website or ones that shunt your call into a neverending phone menu.
Have any questions about how credit card processing services work? Join the PCMag@Work discussion group on LinkedIn and you can ask vendors, other professionals like yourself, and PCMag's editors.
Featured Credit Card Processing Reviews:
Helcim Review
MSRP: $12.00Pros: Pricing and fees clearly outlined on the website. No outbound sales team.
Cons: Not an ideal service for micro vendors.
Bottom Line: Helcim provides credit card processing the way small businesses need it: with complete transparency. All of its pricing is clearly spelled out on its website and if anything confuses you, the company provides a host of online tutorials and how-to guides.
Read ReviewIntuit QuickBooks Payments Review
MSRP: $0.00Pros: Solid pricing options. Wealth of integrations. Works across mobile and desktop. Offers point-of-sale (POS) option.
Cons: Competition offers some of the same connections to QuickBooks Online.
Bottom Line: Intuit QuickBooks Payments is a no-brainer if your retail operation is already standardized on QuickBooks for general accounting. If you're not an Intuit customer, then this payment gateway is still a solid choice, though it can get a little pricey for some.
Read ReviewPayline Data Review
MSRP: $0.00Pros: Good choice for high-risk merchants. Transparent, interchange-plus pricing.
Cons: Pricing for equipment is not listed on the website.
Bottom Line: Payline Data delivers secure payment technology to both small business and enterprise customers. It has a good reputation when it comes to customer service, and its tool kit checks all the boxes that most e-commerce merchants require.
Read ReviewCayan Review
MSRP: $0.00Pros: Custom pricing. 24/7 support. Responsive customer service.
Cons: Termination fee after 60 days.
Bottom Line: Cayan does a solid job as a payment processor, delivering a good range of hardware and software combined with an open API. While you'll need to negotiate a fair price, if that hurdle doesn't bother you this service is well worth a look.
Read ReviewPayment Depot Review
MSRP: $29.00Pros: Easy-to-understand pricing plans. Money-back guarantee.
Origin map pack black ops 2. Cons: Not price-feasible for smaller businesses and startups.
Bottom Line: Payment Depot impresses with a wholesale-style pricing structure because that lets customers better predict what they'll wind up paying. But even so, the end price for this service seems a little too high for most small business operators.
Read ReviewSquare Point of Sale Review
MSRP: $0.00Pros: Pricing structure is simple. Offers variety of customer support channels. Excellent hardware options. Supports Android and iOS. Can operate in offline mode.
Cons: Rapidly growing businesses may experience account freezes over what looks like fraudulent activity. Doesn't offer modules for reporting or inventory management. Larger companies could face high fees.
Bottom Line: Square Point of Sale offers a comprehensive solution for businesses requiring a Point of Sale (POS) with flat, predictable pricing. Great features and affordable hardware make it an easy pick for our Editors' Choice award.
Read ReviewCredit Card Processing.com Review
MSRP: $0.00Pros: Offers interchange-plus pricing. No cancellation fees.
Cons: 'Free' equipment offers could be deceptive. Monthly minimums apply.
Bottom Line: CreditCardProcessing.com falls into a trap that several of its competitors have also tripped: it's great when it comes to offering a full range of pricing plans and processing equipment, but is too vague about exactly what everything costs.
Read ReviewFlagship Merchant Services Review
MSRP: $0.00Pros: No cancellation fees. Interchange plus pricing is an option for merchants.
Cons: Tiered pricing is often unpredictable. Equipment pricing not listed.
Bottom Line: Flagship Merchant Services has everything most customers will want from a credit card processing service, but its somewhat unclear on what everything costs.
Read ReviewNational Bankcard Review
MSRP: $0.00Pros: Offers interchange-plus pricing as an option.
Cons: No pricing listed on its website.
Bottom Line: National Bankcard has a good reputation for customer service and also offers several forms of payment processing and pricing as well as a full line of hardware. However, like some of its competitors, the company is overly vague about its pricing.
Read ReviewSam's Club Merchant Services Review
MSRP: $0.00Pros: Transaction pricing listed on the website.
Cons: Equipment pricing not advertised. Pricing for AMEX transactions not advertised.
Bottom Line: Sam's Merchant Services stands apart because it's one of the few credit card processing services that is upfront about its pricing on its website. However, it falls short again by using proprietary hardware equipment and locking you into a multi-year contract.
Read Review