The owner of a small business home goods store hands a credit card back to a female customer. Both the owner and the customer are standing at the shop's counter.
Choosing a credit card processor can be one of the most important decisions you make for your small business. It has wide-ranging effects on your bottom line and your customers. — Getty Images/Maskot

For many small businesses, accepting debit and credit cards is a necessity. In 2022, 44% of Americans used cash for some purchases, but 41% went cashless during a typical week, according to Pew Research. However, choosing a credit card processing provider is a big decision. It affects customer experiences, your finances, and more.

The right processor supports your sales channels and offers pricing transparency. With reliable customer service and a user-friendly platform, your merchant services provider becomes a partner. Learn how to choose a credit card processing provider with this step-by-step guide.

Evaluate your business model and sales data

As with other business systems, you should look for a payment processor built for your specific needs. Some companies have plans for restaurants, while others cater to high-risk industries. So, go through the facts of your sales and requirements before comparing your options.

Consider the following factors:

  • Industry: Certain companies have a higher risk of chargebacks or fraud. Not all credit card processors work with high-risk businesses. These industries may include debt collection, dropshipping, cryptocurrency, or adult products.
  • Payment methods: Think about how your customers want to pay. Most providers support American Express, Visa, Discover, and Mastercard. You may also want to accept digital wallets like Apple Pay, Google Pay, and Samsung Pay.
  • Sales and processing volume: Estimate your monthly sales, then break down the figures by payment method and location (card-present and card-not-present transactions).
  • Payment locations: Decide where you will accept payments. It may be by phone, on your website or e-commerce store, in a brick-and-mortar location, or using your mobile phone. Also, consider if you will take international or in-app payments. Do you need to accept invoices, subscriptions, or membership fees?
  • Integrations: Determine what platforms your credit card processing system should sync with. These integrations may include your accounting software like QuickBooks or Xero, the point-of-sale (POS) system, and an e-commerce service.
  • Hardware: Consider your equipment options. Do you need an integrated POS system, credit card terminals, or iOS and Android card readers?
  • Customer surcharge fees: Some credit card processors have programs allowing merchants to charge a surcharge to cover transaction costs. If this is something you’re interested in, put it on your checklist of considerations.

[Read more: A Guide to Understanding Credit Card Processing]

Credit card processing, chargeback fees, and other hidden costs can affect your bottom line.

Use a checklist to compare credit card processing providers

Now that you understand your business needs, it’s time to learn how to choose a credit card processing provider. Aside from comparing each vendor based on certain criteria, developing scenarios to see the total costs is critical.

This step can help you understand which fee structure (flat rate versus interchange plus) is best for your company. Some merchant account providers, like Payment Depot, have calculators so you can estimate your costs.

Compare credit card processing companies by looking at the following:

  • Fees: Besides transaction fees, credit card processors may charge for implementation, Payment Card Industry Data Security Standard (PCI DSS) compliance, and early contract termination. Credit card processing, chargeback fees, and other hidden costs can affect your bottom line.
  • Customer service: See what channels (email, phone, and live chat) each merchant service provider offers. Also, check their availability. Some have 24/7 support, whereas others only provide service during weekdays.
  • User reviews: Check customer feedback on review sites and the Better Business Bureau (BBB). Look for red flags, like issues with customer satisfaction or unexpected fees.
  • Provider transparency: While many vendors display fees and information on their websites, others provide limited information. Pay attention to your interactions with processor representatives and ensure they thoroughly answer your questions.
  • Reports and analytics: Review the digital applications and user interface. It should be easy to access accounts and monitor transactions. Look at the types of statements and downloadable formats that are available.
  • Software and hardware compatibility: Write down what type of equipment each processor supports or sells and any associated costs. Also, look at their websites to see what integrations they support and review iOS and Android app ratings.
  • Supported payment methods: Verify if the providers accept mobile wallet payments and how the costs differ for Automated Clearing House versus Google Pay or Visa payments.
  • Online capabilities: See if the vendor supplies an online PCI-compliant payment gateway or integrates with your existing e-commerce store.
  • Fraud detection and prevention tools: Go through the security information to learn if the processing companies provide support for protecting your business.
  • Dispute management: Look at how the processor handles chargebacks. What is the process, and what actions do they take on your behalf?

Develop a shortlist and request quotes

After narrowing down your processing solutions, contact providers to request quotes. Follow up with them to ask additional questions and test their customer support services. Track their response times and document the information in your spreadsheet.

Ask questions like:

  • Do you charge additional fees for integration with a payment gateway?
  • Will you handle PCI compliance? Are there fees for this?
  • Can I view an example contract, and do you require a long-term commitment?
  • Do you offer free hardware or installation assistance?
  • How long does it take to transfer funds to my account?
  • Can I access a demo account of your online portal?

[Read more: E-Commerce Credit Card Processing: An Ultimate Guide to Accepting Payments]

Examples of merchant service providers

If you’re unsure where to start your search, head to the websites of providers who’ve been around for years. View rates and features to get an idea of what each processor offers. Then consider requesting more information from companies that fit your requirements.

Start your search by checking out these credit card processing providers:

  • ProMerchant: With interchange plus and zero-cost processing options, ProMerchant is a flexible solution for high-risk, retail, restaurant, and mobile merchants.
  • Stax (formerly Fattmerchant): This all-in-one platform charges a flat-rate subscription plus direct-cost interchange fees. Stax provides 24/7 support and has several add-ons.
  • Payment Depot: With membership pricing and support for digital wallets, Payment Depot works with companies in several industries and offers many hardware options.
  • Clover: Brick-and-mortar businesses wanting an integrated POS and payment solution should consider Clover. Along with hardware, Clover provides a virtual terminal too.
  • Merchant One: Get card readers for mobile phones, or sell online with a free shopping cart through Merchant One.
  • Helcim: With free invoicing software and payment hardware options, Helcim doesn’t charge a monthly fee or require a long-term contract.
  • Square: This fully integrated system of services, hardware, and software supports online, mobile, and in-person payments. Square charges a flat rate fee.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

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