There are generally three pricing models that payment processing companies offer: Tiered Fee, Flat Rate and Interchange Plus. Picking the right model can save hundreds to thousands of dollars a month, so it’s important to choose wisely. Price out each offering before making the decision and ask for input from both representatives and fellow merchants alike. If you’re not familiar with the models, check the About Credit Card Processing Tab.
Credit card processors will always offer POS systems and card terminals to merchants starting out. Oftentimes, however, they’re leased or come at a hefty mark-up. It’s best to either negotiate a better deal or look online to buy terminals or systems outright. There are some processors who use their exclusive equipment. It’s best to confirm with your credit card processor that they support the system you’re getting before purchasing from an outside source.
There are many monthly and annual fees associated with payment processing. Beyond the transaction fees, payment processors charge statement fees, PCI compliance and noncompliance fees, virtual gateway fees, and many others. Know every fee charged before choosing a company, and don’t be afraid to negotiate those fees. There’s wiggle room depending on the payment processor and the type of fee being charged. Plus, negotiating fees out saves hundreds of dollars a year, which is valuable for a business of any size.
Credit card processing companies are vital to a thriving business, but they can offer more than just payment processing. The best payment processors provide added value and support to businesses of any size, which is why it’s important to find one to fit your business well. We at iDeal Comparison recommend contacting more than one to understand the care and service they will provide.
There are some companies who offer long-term contracts that we recommend, but generally, we advise going with month-to-month contracts. Hefty termination fees, liquidation costs, and other expensive penalties are charged if a contract is ended early, making monthly plans more cost effective in that respect.
Credit card processing companies offer more than just payment processing. There are ways they support merchants they work with through other programs, benefits, and useful business solutions that can help grow and maintain any size company. Integration with accounting, payroll and inventory systems, business capital, marketing and advertising enhancement, and industry customization are just some of the options offered to merchants. Growth and innovation are important for all businesses, and getting the help to do so can improve customer experience along with day-to-day operations.
Merchant service companies can bring a lot of value to your business, in the following ways:
We at iDeal Comparison rate each merchant services credit card processing company based on these, along with many other features offered to merchants. It’s important for merchants to find the best all-encompassing service so that their business can function without a hitch.
Pricing systems are complex. To begin with, published rates apply only to elite customers, and there are four quadrants of merchant service pricing as well: Swipe vs. Keyed-In by Debit vs. Credit. Sometimes monthly account fees simply add to the overall cost, while in other situations these fees can help you “buy down” your processing fees and improve your total monthly costs even against processors without these fees.
What iDealComparison considers beyond transaction rates:
How can you obtain the lowest possible monthly fee structure? Call the best processors to negotiate.
When comparing the best merchant credit card processors, reputation is important. iDealComparison critically evaluates thousands of business reviews and forum comments, other professional reviews, as well as our own experiences from multiple calls and tests with each company. What matters most is how merchant service companies and the account reps perform over time with consistency. We at iDeal Comparison review the following:
The iDeal Certified Guarantee: At iDeal Comparison we’re so sure about our recommendations that when you purchase a product or service from an iDeal Certified partner though an iDeal Comparison link or phone number, and you aren’t satisfied, just return the product within 30 days, and iDeal Comparison will send you a $50.00 VISA Gift Card to help you pay for your return and trouble. Terms and Conditions Apply. See all details in our Advertising Disclosure
As technology evolves and more pathways to payment become available, it is important to find a credit card processing company that offers products and services to accommodate the varying ways to pay. Additionally, finding a company that can provide value in more ways than just payment processing is vital for both large, established merchants as well as small, new ones. Evaluating each merchant services company involves comparing the available processing services for all modes of payment, the products that will create a more efficient system, and the additional merchant support through other offered business solutions.
The most important feature to investigate when deciding on the right credit card processing company is the processing service provided. More specifically, we at iDeal Comparison look at the various ways a company can process payments with credit cards. The main ways include swiping in person, using a chip in person, E-Commerce processing, mobile app payments and taking cards over the phone. Having multiple processing options to choose from as well as customizability over the varying options can save you time and money while providing straightforward transactions to your customers.
Transactions made in-person require equipment for accepting credit cards. Credit card processing companies offer setup and hardware necessary for these kinds of transactions. Some of the equipment offered include Credit Card Terminals, Mobile Credit Card Readers, and Point-of-Sale (POS) systems. It is important to determine if you need basic barcode swiping, or if chip, mobile app payment and even paper check readers are necessary to incorporate. POS systems and reporting software can provide analytics, inventory and accounting management, and transaction data to improve the daily functions of business.
Beyond providing reliable payment processing, equipment, and software, the additional services offered make a difference in which company to choose for credit card processing. Companies who offer support through capital opportunities, sales and marketing assistance, loyalty program set-up, and payroll systems stand out in the industry. By offering additional business solutions to merchants, they go beyond payment processing to help grow the businesses they partner with, which is valuable for a company of any size.
Credit card processing pricing can be complex and confusing for even the most savvy merchant. It’s important know the difference between the different pricing models and which fits best, because it could save a business hundreds to thousands of dollars in costs. Beyond the pricing models, the additional monthly costs, termination fees, and price of equipment and software are all important to consider when searching for a credit card processing company. Finding a credit card processing company that reduces payment processing costs without sacrificing service is key, and there are a few indicators to look for to find the perfect fit.
The three payment processing pricing models are flat-rate, interchange plus, and tiered fee rates. These rates are charged at each transaction made using a card payment. The differences between these plans are described in-depth under the About Credit Card Processing tab, so it’s important to become familiar with each to decide which is best. A good credit card processing company will likely offer at least two of these pricing models. When discussing fees with a representative, merchants must realize that while some of the fees marked up by the processor are negotiable, others such as the interchange fee will not be. Again, it’s important to be as educated as possible before discussing these fees, because they can make a huge dent in profit.
Beyond the fees-per-swipe, there are additional monthly fees for payment processing that should be considered. PCI compliance fees, monthly minimum fees, virtual gateway fees, and even equipment or software fees are all monthly costs that can rack up for merchants. It’s easy to forget the scheduled fees that will show up on monthly statements when discussing terms with a credit card processing company when processing fees are already complicated. Finding a payment processing company that will provide breaks or negotiate the cost of some of these monthly charges is ideal, because these are costs that can become debilitating for a small or newer merchant.
Knowing the contract length and potential termination fees for any payment processing company is an important detail when searching for a provider. Expensive termination fees often apply for long-term contracts, plus any leasing contract for equipment will need to be paid in full. Depending on the length of the contract and the terms of ending it, going with a month-to-month provider may be a better choice. The majority of the companies recommended by iDeal Comparison offer month-to-month service. For those that require longer contracts, it’s wise to discuss termination requirements and to attempt to reduce or completely eliminate termination fees altogether. These fees are another reason we recommend comparing multiple processing companies before settling on which one to partner with.
Reputation holds the most weight in iDeal Comparison’s rankings of credit card processing companies. When it comes to the company that handles card transactions, it is imperative that its reliability, support and security are second to none. Rather than base the grade on brand name recognition, iDeal Comparison uses many factors to rate credit card processing companies’ reputations. Factors such as 24/7 customer service and dedicated representatives, security and PCI compliance, customer and professional reviews, and flexibility and willingness to negotiate pricing.
Customer feedback and professional reviews are two of the more important factors when determining a company’s reputation. Examining verified customer reviews along with professional rating sites or organizations helps identify ongoing issues, concerns or complaints as well as positive feedback given. Using a company with positive Better Business Bureau ratings and other comparable professional sites alongside positive reviews from other merchants puts any business owner at ease.
Another aspect of reputation to consider is whether the company is fully compliant with PCI regulations. Security and hacking are a real threat when dealing with card transactions, and the safety of customer information is of the utmost importance. Beyond confirming the PCI standards of the company, it’s important to understand the security of the equipment and systems they offer for use, particularly the data security for online purchases. Breaches happen all too often, so using a company that does everything in its power to prevent it is vital.
Customer service is another strongly considered factor in reputation. Companies that offer 24/7 support through either online chats or phone line are going to be rated much higher than the ones who don’t. The best companies also assign an individual representative to continue with a merchant for as long as they’re partnered with the company. Having an individual rep offers merchants the attention they deserve regardless of size or purchase volume. Finally, flexibility in pricing and willingness to negotiate indicates that merchants are put first, reflecting positively on a credit card processing company.
Payment Cards acceptance is expected, and in some cases, demanded by customers for many reasons. A 2014 survey found that 80% of Americans carry under $50. Not accepting payment cards will cause a merchant to lose out on many sales.
A merchant account is a relationship with an Acquiring / Merchant Bank that offers credit card processing.
Perfect credit is not required. The better your credit, the easier & faster the Merchant Account approval process may go. If a merchant is in the midst of a Bankruptcy or has had processing terminated, this can become a reason for the application being declined.
The Credit Card Processor offers extra services which can: help the merchant improve the customer experience, streamline the merchant’s business and reduce costs.
The merchant is charged the Credit Card Network Interchange Fee + A processing fee assessed by their Credit Card Processor. Interchange Fees are set by the Credit Card Network and are not negotiable. The processing fee is negotiated or agreed upon before the contract is signed.
Electronic checks (eChecks) use the customer’s bank account Routing & Account number to deduct the funds from the customer’s checking account while the customer is present. e-Checks eliminate the possibility of “Non-Sufficient Funds” checks being returned.
NO. InterChange / Wholesale rates are fixed and non-negotiable.
How long this takes differs by Credit Card Processor. You will need to ask this question before you sign a contract. Typically, it’s 24-48 hours after Settlement.
It depends on the services you have purchased. You can do Batch Settlement manually or have it automatic. Batch processing is typically done at the end of each day.
When it’s time to settle the batch, authorization codes are sent to your Credit Card Processor. They forward the codes to the Card Issuing Banks through the Credit Card Network. The Issuing Banks release funds to your Merchant / Acquiring Bank.
YES. You must have a way to access the Credit Card Processing System.
True wireless point of sale processing requires a wireless terminal. There are options that don’t require a mobile POS, such as calling a central location where the account number is keyed into a terminal for verification.
EMV stands for Europay, MasterCard & Visa. These 3 companies created the standards for Chipped Payment Cards & Personal ID Numbers. Legislation from October 2015 suggests a merchant may be liable for credit card fraud that originated from a merchant’s business using a Non EMV-Capable terminal.
Yes, using an app provided by your Credit Card Processor, you are prompted to take a photo of the check (in essence the photo serves as a scanned image of the check). The Processor will treat the transaction as an eCheck. The funds will be immediately taken from the customer’s checking account.
NO. You can buy equipment anywhere that sells what you need.
NO, a VOIP system uses digital transmission. Credit Card Terminals require an analog connection.
There are strict rules regarding billing customers, and they differ by State. Also, the merchant will put themselves in a disadvantage with competition that does not add credit card fees to the sale amount.
Yes, with a Virtual Terminal & Payment Gateway integrated with the website.
A Payment Gateway provides the ability to accept payment cards. The Gateway retrieves an Approval Code or Decline. It also stops nearly all fraudulent purchases, as the card is voided the moment the Card Issuing Bank discovers fraud. The Credit Card Networks constantly monitor transactions for fraud.
AVS verifies the address of the cardholder during a credit card transaction. This is typically part of a transaction where the customer and their payment card are not present (such as phone order or internet).
CVV helps to verify the cardholder has the card. The cardholder is asked for the Card Verification Numbers which are on the right side of the signature strip on the back of the card. The CVV number is on the front of American Express Cards.
A Virtual Terminal is integrated into the Merchant’s website to allow on-line customers to pay with a payment card, debit card, or e-check, at the end of their transaction.
YES, If you are set up with this service by your Credit Card Processor.
Stay current and compliant with all payment card industry (PCI) regulations with PCI compliant hardware and software.
PCI is a standardized system ensures consistent data-security is in place. All merchants are required to be PCI Compliant. The minimum effort from a merchant is to fill out a self-assessment questionnaire once per year. If the merchant stores credit card information, they are also required to be an Approved Scanning Vendor once each quarter of the year.
A chargeback occurs when a cardholder is disputing a charge on their Statement. The customer uses a Chargeback in a way to force a refund from the merchant. Chargebacks can cause a merchant to have their Credit Card Processing account terminated.
Chargebacks occur for many reasons. The most common reason is that the cardholder doesn’t recognize or remember the merchant’s name. Other common reasons include: customer charged more than once, the customer is not satisfied with the goods or services, and fraudulent purchases not made by the cardholder.
ABA ROUTING NUMBER: 9-digit number on checks to the left of the account number. It identifies the bank the check originates from. Electronic Funds Transfers (EFT) require both the routing & checking account number.
AUTOMATED CLEARING HOUSE: (ACH) part of an Electronic Funds Transfer (EFT) between banks. EFT can be done with a bank wire or ACH. The person (receiving the funds) initiates the transaction to debit the account (of the person paying) by submitting an ACH file. And ACH file includes Payer’s Bank American Bankers Association® (ABA) number, Account Number(s) to debit, and the transaction dollar amount. EFT files are processed daily (overnight) and pass through the Federal Reserve. ACH debit allows the buyer to pay for the product/service with funds on hand instead of a credit card.
ACQUIRING BANK / MERCHANT’S BANK: The Merchant’s Acquiring Bank has a relationship with MasterCard®, Visa®, Discover®, and American Express®. The acquiring bank processes transactions charged to a credit card. Once the transaction is processed, a deposit into the merchant’s Bank occurs. Once the Merchant settles the day’s credit card transactions, the Acquiring / Merchant’s bank deposits the funds (less the Bank’s fees) into the merchant’ account.
CREDIT CARD NETWORK & CREDIT CARD BRANDS: These terms refer to all: Visa®, MasterCard®, American Express® & Discover® cards. These are the major credit cards brands and represent the majority of U.S. Credit / Debit card accounts.
ATM / DEBIT CARD: An ATM / Debit Card provides the card holder access to the funds in their checking account with the convenience of using a Credit Card. Any transaction creates an immediate debit to their checking account. If funds to cover the transaction are not in the account, the transaction is declined.
AUTHORIZATION: A verification funds exist in a checking account or within a credit card’s line of credit. An authorization is approved or declined by the issuing bank. An approved transaction immediately withdraws funds from the customer’s account and deposits them into the merchant’s account.
AUTHORIZATION CODE: An Authorization Code is issued at the time the transaction is approved, along with the Address Verification Service (AVS) response. If a debit card is declined, there are not funds in the card holder’s account to pay the transaction. With a credit card, there are not available funds within the credit card’s limit. A decline may be issued by the credit card issuer from a security-hold. This means the Card Issuing Bank has concerns of fraud on the account. The cardholder must call and verify the transactions before the Security-Hold is release.
AUTHORIZATION FEE: This fee charged to the merchant when an approved transaction occurs. This fee occurs anytime an EFT occurs. It applies to sales, refunds, & chargebacks.
AUTHORIZATION ONLY: Reserves the dollar amount of the transaction against the Card Holder’s Credit Line for a to occur later. Authorization only is done by businesses that don’t know the amount of the transaction when the card is presented (such as hotels). The transaction becomes a charge once the purchase is completed.
AUTHORIZATION RESPONSE: The Card-Issuing Bank replies to an authorization request with:
AVERAGE TICKET SIZE: The average dollar amount of the Merchant’s purchases. The average ticket size will be requested when a Merchant established a new account.
ADDRESS VERIFICATION SERVICE / AVS: AVS is used to minimize fraud. The Card Holder’s address is verified when the card is not available. For AVS, the merchant typically enters the card holder’s ZIP code. During authorization, the ZIP code is matched to the card holder’s billing address. An AVS response is provided by the issuing bank. Merchants are advised to use AVS whenever the card is not present.
BASIS POINTS: Basis points represent the percentage of the transaction the merchant will be charged for a credit/debit card transaction. 1 basis point = 1/100th of 1%. Example: 233 basis points = 2.33%.
BATCH: A batch is typically one day’s credit/debit cards transactions. When the Merchant settles for the day, all transactions are within one batch. Manual Batch Close: The merchant must batch out at the end of each day, sending an order to the processor to settle all that day’s transactions. A printed report recaps all transactions.Changes can be to transactions before Settlement of the batch for the day. This is done with companies that have an amount added to the total, such as restaurant adding the tip to the transaction’s total.
Automated Batch Close: The POS terminal or Application software automatically closes the batch at a specific time of the day.
(DATA) BREACH COVERAGE: Coverage up to $100,000 to pay the costs of actual or suspected data breaches.
BUSINESS TYPE: Merchants fall into these categories: Retail, Restaurant, Lodging / Hotels & Motels, Internet/ Phone / Mail Order. Below is a description of each:
CAPTURE: Acquiring account information required to process the payment. This may be: inserting or swiping a credit/debit card, or manually entering account information.
CARD NOT PRESES (CNP): A payment card transaction where the cardholder/card are not present.
CARD PRESENT: The cardholder & card are present in a face-to-face transaction.
CHARGEBACK: When a cardholder disputes a transaction with their card-issuing Bank. The card issuer initiates a retrieval request from the merchant. The disputed dollar amount is withdrawn from the merchant’s bank account until the problem is resolved. The merchant must dispute the chargeback within 10 days.
CREDIT CARD: A card issued by a bank to an individual to purchase goods & services on credit.
CREDIT CARD PROCESSING: An Electronic Fund Transaction that initiates by verifying if the card can be used as payment. Once authorized, and EFT occurs through an Automated Clearing House Card’s Issuing Bank to the credit card processor. The processor deposits the dollar amount (less fees) into the merchant’s bank. At settlement, the funds are deposited into the Merchant’s account (less fees).
CREDIT CARD PROCESSOR: An company who processes credit/debit card transactions.
CREDIT CARD READER: A device that read reads the magnetic stripe on a credit card if the card is swiped, or the Credit Card’s Chip when inserted The magnetic stripe has the: cardholder’s name, account number, card expiration date, and the Card’s Security Code (CSC). This is also known as the Card Verification Value (CVV).
DISCOUNT FEE: The fee charged to the merchant for credit card transactions. Additional fees include InterChange fees, Credit Card Brand Fee & fees charged by Card-Issuing Bank.
EBT: Electronic Benefits Transfer. A debit card issued by the state to provide financial benefits such as food purchase benefits (previously known as Food Stamps).
ELECTRONIC FUNDS TRANSFER (EFT): An automated, electronic transfer of funds.
ELECTRONIC WALLET: Allows the account holder to make charge purchases using their mobile device. The Card Holder’s mobile device is “read” by the merchant’s reader.
ENCRYPTION: Converting data into a proprietary code (encoding) — to ensure secure electronic data transmission. Encryption provides a way to ensure data security. Also known as End-To-End Encryption (E2EE)
INTERCHANGE FEE: A fee Credit Card Brands pay to Issuing Banks. Interchange is charged to the credit card processors. They add this fee to their processing fee. Interchange fees represent the majority of credi card transaction fees.
(CARD) ISSUING BANK: A Financial Institution member of a credit card network. The Issuing-Bank provides cardholders with a line of credit for purchases or cash advances. The issuing bank is responsible for paying merchants.
MERCHANT ACCOUNT: The business agreement between the merchant and their credit card processor.
MERCHANT ACCOUNT PROVIDER: The merchant’s provider of credit card processing equipment and services. The Merchant Provider acts as an intermediary between the: merchant, credit card Issuing Banks & networks. This entity is responsible for depositing transaction proceeds into the merchant’s bank account.
MERCHANT PROCESSING AGREEMENT (MPA): The contract between the merchant and their Credit Card Processor. It outlines the responsibilities & warranties for all parties.
MOBILE CREDIT CARD PROCESSING: Credit/debit card transactions initiated with a mobile device.
MONTHLY MINIMUM PROCESSING CHARGE: The minimum charge by Credit Card Processor if the merchant’s transaction fees were less than the minimum charge.
MONTHLY PROCESSING LIMIT: The maximum dollar amount the Processor allows the merchant to process each month. Additional fees are assessed if this limit is exceeded.
MONTHLY PROCESSING VOLUME: The credit/debit card transaction a merchant processes each month. This amount is part of the merchant’s credit card processing agreement (MPA). The dollar amount is used in part to determine processing fees.
MOTO: Abbreviation for mail order or telephone order.
OVER-LIMIT FEE: A fee charged by the merchant’s Credit Card Processor if the merchant exceeds the Monthly Processing Volume.
PAYMENT CARDS: Credit, debit, prepaid and EBT cards.
PAYMENT GATEWAY: The Application Software that manages electronic transmissions between the merchant and their Credit Card Processor.
PCI-DSS: Payment Card Industry’s Data Security Standards. These are standards established by credit card networks. They are in place to protect cardholder information and reduce data breach risk. The standards apply to Merchants, Credit Card Processors, Credit Card Issuing-Banks & Networks. When these requirements are met, the entity is PCI compliant.
PCI NON-COMPLIANCE FEE: A fee charged to the merchant if they don’t return a PCI Compliance Validation Certificate. This Certificate is issued once the merchant completes & passing an annual Self-Assessment Questionnaire (SAQ). If the merchant electronically stores cardholder information and/or is connected to the internet, a Quarterly Network Scan is required.
PIN: The cardholder’s Personal Identification Number.
PIN Pad: The device where a cardholder enters their PIN.
POS: Point-of-Sale Device used when a customer makes payment.
POS Terminal: A device that captures, transmits, & receives information during payment card transactions.
RECURRING BILLING: A monthly bill charged to a cardholder’s account for recurring charges (like phone bills).
REAL-TIME PROCESSING: The ability to approve or decline a payment card transaction within seconds.
RETRIEVAL: As the first part of the chargeback process, the Card Issuing-Bank requests a copy of the sales ticket.
SSL: A system that encrypts payment card data sent over the internet.
TERMINATED MERCHANTS FILE: A database (maintained by a third-party) for Credit Card Processors, & Financial Institutions. It is a list of merchants who can no longer process payment cards electronic transactions. The termination is typically for violation of a Merchant Processing Agreement (MPA).
VIRTUAL SHOPPING CART: A tally of products & services a customer plans to purchase.
VOICE AUTHORIZATION: Voice Authorization requires the merchant to call an authorization center to receive authorization.