Processing payments is one of the most essential parts of running a business. If customers can’t pay the way that they want to pay, then chances are they won’t be a regular customer in the future. People want convenience, flexibility, and choice when it comes to paying for their goods and services. While cold hard cash is nice to have in hand, it’s becoming a less common way for people to pay. In fact, only?24% of transactions?in the United States are done on a cash basis. This number is even lower in other countries that have adopted cashless payments even more quickly, which points to the future of how businesses and customers will interact. As such, it’s pretty safe to say that physical cash is slowly on its way out.

This presents an obvious problem for businesses. If customers are carrying less cash and choosing to use cash for fewer purchases, then that means the potential market for businesses that only accept cash is shrinking. Some people no longer even carry their physical debit or credit cards with them, and instead use their?smart phones?to pay with?contactless?payment methods like?Apple?Pay?or Google Pay.

So, how can?small business?owners?stay ahead of the trend, and ensure that they are pointing their valuable customers to the door and missing out on sales?

The answer is to find a trusted and reliable?credit card processing?company. In the past, many business owners were hesitant to adopt?mobile?credit card?processing?capabilities because cash was still king, getting approved for a?merchant account?was a hassle, and?credit card processing?fees?promised to eat away at their profit margin. Times have changed, however. Cash is becoming less and less popular, however, and?credit card processing?has become more convenient and affordable. ?Nor is it?high-risk, as the advent of?chip cards?has made paying with a card safer for both the customer and business, alike.

With so many different payment methods available today, accepting a wide variety of payment options is essential for businesses that want to deliver high quality customer service. In other words,?credit card processing?capabilities are an essential part of the overall customer experience.

This article will break down the finer details of what?credit card processing?is, including your?small business?should?accept?credit card payments?and recommendations of the?best?credit card?processors.

Why do businesses need credit card processing companies?

So, why exactly does your?business need?to use a?credit card processing?company?

Credit cards are not like cash. A customer can’t hand over their credit card and take their purchase with them. Funds must be exchanged somehow, and that’s where a?credit card processing?provider steps in. They do all of the behind the scenes work to ensure that the funds are exchanged and appear in a businesses’ bank account in a timely fashion.

This fast payment remittance is important, especially small and medium businesses that rely on their monthly cash flow to fund operations, stock their shelves, and pay staff. These?credit card processing?providers eliminate the complexities of managing payments, and do all of the heavy lifting. This means that you can focus on what they do best, which is taking care of the actual day-to-day logistics of your business.

At the end of the day, cash transactions are becoming less and less popular, as customers would rather?swipe?their card than carry around a lot of cash. Often, customers have no choice but to pay with their?business credit card?in order to separate business and personal expenses. Cashless transactions already make up a majority of payments in the United States, and that gap is only expected to continue to widen. A business that feels they can get by today with only accepting cash may find that is no longer true in just a few short years. By accepting accept credit cards and other cashless payment options now, businesses will be ready for the future, as opposed to scrambling to find a solution as sales begin to decline.

The growth of?e-commerce?and?online transactions?also adds a new dimension to paying for goods and services. Many businesses are now trying to move into the online space either as the main focus of their business or to complement their brick and mortar operations. Obviously, accepting cash for?online payments?during?checkout?isn’t a realistic solution. Online shopping is dominated by credit cards and, for businesses that want to be present on the Internet, finding a?credit card processing?company?to work with is an essential step in getting up and running.

Ultimately, it all boils down to better customer service and increased sales. If your business is flexible and adaptable with the types of?payment?processing?options?you accept, you’ll have a larger pool of potential customers. If you’re too rigid and refuse to adopt modern?payment solutions, you may find that your sales begin to decline as customers turn to businesses that will serve them in the way they wish to be served.

When do businesses need credit card processing companies?

The need for a?credit card processing?company?could arise at any point in a business’ life cycle. With that said, there are some defining moments when you may need to stop and strongly consider working with a?credit card processing?provider in order to continue growing.

One of the most obvious times when a business will have a need for?credit card processing?is when they are just starting out. These businesses have no existing relationships with?payment processors?and need to get their operation off the ground. The need for a?credit card processing?company?is especially important for new?online businesses?as a vast majority of their payments will come from customers using credit cards. Even brick-and-mortar stores will have a need for?credit card processing.

An established business with an established base of clients may be able to get away with only accepting cash if that’s what their customers have become accustomed to. However, a?new business?doesn’t have the luxury of that dedicated client base and, as such, must try to appeal to all customers, as well as their payment option of choice.

Another important moment where businesses may identify the need for a?credit card processing?company?is if they already have a processing provider but their contract is coming up for renewal. This is a great time to review costs, the needs of the business, the changing habits of consumers, and features available. Reviewing options for?credit card processing?companies?is like reviewing cell phone plans. When the plan is up for renewal, most people look around for better prices and better features to suit their needs.

Businesses expanding their operations into a new space, like online sales for example, may also need to look into?credit card processing?companies. Another example of expanding into a new space would be if a business is launching a mobile operation in addition to their fixed, brick and mortar operation. A food truck is a great example of a type of business where?credit card processing?needs may change. In addition to needing a fixed,?point of sale?terminal, it may also need a mobile terminal, which means using a?credit card processing?provider that can deliver both.

Finally, there are some?credit card processing?companies?that provide services beyond just?mobile processing. Several companies have integrated services that can also manage?online stores, inventory, and customer marketing. ?Others are seamlessly compatible with accounting platforms like?Quickbooks. ?This is ideal for small or medium businesses with limited resources for managing all of this with separate solutions.

Finding a single, unified product can help you simplify overall business operations. If you need help bringing all your payments systems together with all of their business’s operating needs, then finding the right?payment processing?company is incredibly important. ?It’s important to note that not all?credit card processing?companies?can deliver on this, however. Therefore, it’s important to identify all of your business’s needs, and then shop around for the best solution.

What should businesses look for when choosing a credit card processing company?

Not all?credit card processing?companies?are built the same. Some companies may cater to businesses looking for low fees or mobile solutions, while others may emphasize their additional features, like?online store?management. What works best for one business may not be the right solution for another. It’s important to identify the most pressing needs for your business when it comes to processing payments and completing sales, and then shop around for the perfect?credit card?processing?solution?for your specific needs.?

Obviously, the most basic aspect of?credit card processing?is actually processing and remitting payments, as well as maintaining?PCI compliance. This is not a feature that you should overlook when choosing a solution. Some?credit card processing?companies?may provide support for?credit card companies?like?Discover?and?American Express, in addition to the essentials like Visa and?Mastercard. Others may only support Visa and?Mastercard.

How payments are taken is also important. Does a company’s?mobile?card reader?work with?android?as well as?Apple?phones? Can users pay with NFC methods like?Apple?Pay?or Google Pay? Does the company support?EMV?for added security? Are there mobile or online options available? Not all payment types may be necessary for your business, but a final decision can’t be made until the needs of your business and the services provided by the processing company have been considered and compared.

As previously mentioned, some companies provide features beyond just?credit card processing. This is important for you as a business owner to consider. Of course, these features often come at an additional cost, but they can help streamline business operations and potentially even lower the total costs for your business in comparison to using multiple different companies for the same types of services.

For example, if you have an?online business, you may want to choose a?credit card processing?company?that also provides an?e-commerce?store, inventory management, and marketing tools. ?If you own a local restaurant, on the other hand, ?you simply wouldn’t have a need for that same range of services. For?new businesses, these additional features can be a great opportunity to address multiple needs at once. Even established businesses may find that they can reduce costs by bundling services provided by several different companies into one complete solution.

Customer support?is another important feature to look for when choosing a?credit card processing?company. If you experiences issues, you need to know you can get back up and running quickly. Live online chat or 24/7 phone support are important features to consider. After all, if your?credit card processing?service?fails to work, you’ll end up turning away sales. This leads to a poor experience for your customers, and could have long term effects on your business’s reputation. One lost sale due to?payment processing?issues could eventually equal dozens of lost sales over the long term, as your customers begin to choose other options when spending their money.

Of course, the most important feature when it comes to?credit card processing?is the cost. After all, you still need to turn a profit after you’ve collected payment.

What is the pricing for credit card processing?

The cost of processing credit cards may be the deciding factor for many businesses. After all, if a?payment processor?offers a wide range of features but their rates are significantly higher, those fees can eat away at profit margins fast enough to make the additional features worthless.

There are a number of different?pricing models?that?credit card processors?use. At a basic level, all?credit card processors?charge some sort of per-transaction fee. Some processors collect a?flat rate, plus a percentage of the sale, while others will only collect a percentage of the sale. There is no immediate advantage or disadvantage to either option. It largely boils down to the average sale. If you sell big ticket items, for example, you may benefit more by paying a flat fee plus a lower percentage per sale. ?If you sell lower cost items, you may benefit most by just paying a percentage for each transaction, even if that percentage is a little higher.

In addition to?transaction fees, there are other costs that you’ll need to consider. Some?credit card processing?companies?charge monthly or annual fees to use their service. In most cases, these fees translate into lower fees per transaction, but you will ultimately have to determine if your volume of sales justifies the fee.
In some cases, business that do less than $5,000 in?card?sales?may be better served by paying higher?transaction fees?instead of a?monthly fee?that comes with lower?transaction fees.?High volume?businesses, on the other hand, may benefit from a higher up-front fee that offers lower?transaction fees. Again, the benefits of different types of pricing will largely boil down to the individual needs and realities of your business.

Another cost you’ll need to consider is whether there are any fees for renting or buying equipment. Some?credit card processing?companies?will provide equipment for free. ?Others will charge a monthly rental fee, while others may charge you up front for payment terminals. In some cases, terminals can cost hundreds of dollars each. ?For businesses that need several terminals, this can become a significant cost to incur before a single payment can even be processed. Additional accessories like receipt printers or?POS systems?may also be available at an additional cost. Every business is different, so ?it’s important to identify your needs before committing to any purchases or rentals of equipment.

Finally, you need to understand the terms and conditions of your agreement with your?payment processor. Some?credit card processing?companies?will require you to sign a contract for their services. If you find that the service does not meet your needs and decide to cancel the agreement, that cancellation fee can be significant, so be aware of these types of?hidden fees, since it could amount to the equivalent of tens of thousands of dollars in?transaction fees. Pay attention to a company’s policy on?interchange rates, as well, since depending on the card a customer uses, you could end up paying more than you bargained for in?interchange fees. Before you sign on the dotted line, do due diligence to ensure that the?credit card processing?service?will meet your needs and, if your needs change, what the costs will be to change things in the future.

Best credit card processing companies

Now that you understand the important features and costs to consider when choosing a?credit card processing?provider, let’s take a look at the best names in the industry so that you make an informed choice for your business.


Flagship Merchant Services

Flagship Merchant Services logo

  • Overall: 3.75
  • Features: 4
  • Price: 3
  • Ease of Use: 4.5
  • Customer Service: 3.5

Flagship Merchant Services is a major player in the?credit card processing?industry. They offer a wide range of features that allow businesses of all sizes, across all industries, to begin accepting credit card and?debit card?payments. The up-front cost of Flagship?Merchant Services?is great with a free?credit?card reader?provided and no set up fee for new users. In addition, they also offer?online?payment?gateways?for?e-commerce?businesses?as well as?mobile payment?options to help businesses address all areas of need for their business. There’s no cancellation penalty for ending service and the?monthly fee?is very reasonable. Where Flagship?Merchant Services?falls behind the competition is their unclear,?tiered pricing?for transactions (although the company does have an?interchange-plus pricing?option) and subpar?customer support?outside normal business hours.


Helcim

Helcim logo

  • Overall: 4.5
  • Features: 4.5
  • Price: 4.5
  • Ease of Use: 4
  • Customer Service: 5

If you’re looking for flexibility and transparency with great rates,?Helcim?may be one of the best?mobile credit card?options on the market. The company does not lock businesses into long term contracts, which also means there is no penalty to cancel the agreement. A low?monthly fee?includes?credit card processing?with clear, low rates,?online?payment?gateways, manual?credit card processing?using their desktop software,?mobile payment?options, and?e-commerce?shopping cart?integration. Non-profits can enjoy reduced fees as well. Of course, with no contract in place, you’ll need to pay for terminals up front, which can run as high as $549 each.?Helcim?also admits that they are not the most cost-effective solution for businesses that do less than $1,500 in monthly sales.


PayPal

PayPal logo

  • Overall: 4.13
  • Features: 4
  • Price: 4
  • Ease of Use: 5
  • Customer Service: 3.5

For online shoppers,?PayPal?is a trusted name that has been around for years. This makes it an obvious option if you’re looking to process?credit card payments?online. Their?transaction fees?are higher than some other processors, but there are plans available with no?monthly fee. ?Plus, getting started with?PayPal?payments is simple. Users can also integrate?PayPal?into compatible?POS systems?for brick and mortar sales, plus?PayPal?Here offers?mobile?payment?processing?as well. The short-term loan service offered by?PayPal?gives businesses simple financing options, in addition to regular?payment solutions, which offers customers an additional way to pay for goods even if they don’t have cash on hand right away. The company also has a fair policy on?chargebacks, reviewing each customer dispute before taking action. However, if you have a?high volume?of sales – more than $10,000 – you may find the?transaction fees?for?PayPal?to be too high and another option may prove to be more cost effective.


Stripe

Stripe logo

  • Overall: 4.25
  • Features: 4
  • Price: 4.5
  • Ease of Use: 5
  • Customer Service: 3.5

Stripe is another very well-known name in the?payment processing?industry. If you currently use?e-commerce?services, you may already be familiar with Stripe, since it’s one of the default?payment processing?providers for some of the most popular services available. It’s important to note, however, that Stripe is for more than just?e-commerce?stores and digital payments. Stripe can be integrated with compatible?POS systems?and their?credit card?terminals?are more affordable than other options at just $299 for the most expensive model. Stripe offers?transparent pricing, and?transaction fees?are clear and easy to understand. Advanced features, however, do require some technical know-how to get running.


Square

Square logo

  • Overall: 4.38
  • Features: 5
  • Price: 4.5
  • Ease of Use: 4.5
  • Customer Service: 3.5

Square is arguably the best-known name in?payment processing?today. Their?magstripe?and?chip?readers?that plug into mobile devices are recognizable anywhere, and helped kickstart the?mobile payment?industry.?Square?has evolved to be about more than just?mobile payments, however. Their merchant terminals are professional and sleek with countless advanced options, including custom?POS systems, helps businesses manage inventory and set custom payment prompts for their customers. Plus,?Square?goes beyond just basic card processing with?e-commerce?support including a store building platform, niche products for restaurants or retailers, and invoicing options for customers. With no?monthly fee?for their basic service and a very competitive rate,?Square?is ideal if you’re just starting out and need to keep costs low.


First Data (Clover)

First Data logo

  • Overall: 3.89
  • Features: 4.5
  • Price: 3.5
  • Ease of Use: 4.5
  • Customer Service: 3

First Data isn’t a household name like?Square, but it is one of the most popular?payment processing?providers in the business. This is partially because First Data allows resellers to use their backend services in order to provide service to customers. When signing up for First Data, you will be required to sign a contract and lease the equipment, which can be expensive. In addition,?termination fees?are significant. First Data does provide quality features including payment terminals,?e-commerce?payment gateways, mobile terminals, and even a website builder for new?e-commerce?stores. Their?transaction fees?are competitive with some of the best in the industry as well, but the?tiered pricing?is not always clear like with other providers and depends on volume.


Shopify

Shopify logo

  • Overall: 4.5
  • Features: 5
  • Price: 4
  • Ease of Use: 5
  • Customer Service: 4

Shopify is best known for their world class?e-commerce?store service, which allows businesses to build and manage their own?e-commerce?store. Businesses who have done this also often opt to use?Shopify’s?payment processing?service since it’s native to the platform. It’s important to note that?Shopify?payment processing?can be used by more than just?Shopify?e-commerce?store users, however. Their POS terminals are modern and professional, plus their additional services like inventory management and marketing tools can bring together all aspects of your businesses’ operations, including brick and mortar stores, online selling, as well as?mobile payments. The fees for?Shopify’s?payment processing?are competitive and?high-volume?businesses can enjoy reduced fees if they opt for a higher tier plan, which includes the entire suite of?Shopify?products.


Dharma Merchant Services

Dharma logo

  • Overall: 4.63
  • Features: 4.5
  • Price: 5
  • Ease of Use: 4.5
  • Customer Service: 4.5

Dharma has a full-featured offering, with lower pricing than any other providers on this list. With no annual fees or contracts, Dharma has very friendly pricing if you’re looking for cost certainty. Their pricing is more suited for?high-volume?businesses that process upwards of $10,000 in sales per month. This obviously exceeds the sales of some?small businesses?and/or?new businesses?that are still ramping up to that level. Dharma offers traditional payment terminals, as well as an online gateway for?e-commerce?stores. Their Kabbage financing offers merchants another way to help customers pay for their items by financing the purchase and making monthly payments. This additional option could help increase sales over and above the traditional credit or debit payment options available from other providers. ?24/7 support and clear pricing round out the Dharma’s list of benefits.


Fattmerchant

Fattmerchant logo

  • Overall: 4.75
  • Features: 4.5
  • Price: 5
  • Ease of Use: 4.5
  • Customer Service: 5

If you’re looking for low?transaction fees?and want to avoid?monthly minimums,?virtual terminal?provider FattMerchant fits the bill with their 0% markup. This means that FattMerchant only passes on the actual cost of?credit card processing?to you, instead of marking up the cost. So, how do they keep costs so low? They charge a flat?monthly fee, which starts at $99. While this fee is higher than some competitors with?monthly fees, businesses with enough volume to justify the cost should see significant savings over time. Like other providers, FattMerchant offers countertop terminals, mobile terminals,?e-commerce?gateways, as well as their advanced API for business that want to truly customize the experience. With no annual contract or cancellation fees, FattMerchant offers leading flexibility and cost assurance.