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Saving on Transactions - The Cheapest Credit Card Processors Reviewed |
When it comes to processing credit cards, less expensive doesn't always mean better.
That being said, there is some value in cutting down on transaction costs, right?
There is, however, a way to get good rates and the best products and services from your merchant account provider at the same time.
Okay, first we'll talk about the cheapest credit card processing companies. Then we'll talk about what you need to know before choosing one.
Easy Pay Direct is a reliable choice for businesses looking for a budget-friendly credit card processing solution without compromising on efficiency.
One of its strongest selling points is its transparent pricing structure, which eliminates unexpected fees and simplifies cost management.
The setup process is notably straightforward, designed to minimize hassle and get you started with minimal delay.
Easy Pay Direct offers a range of payment options, including online, mobile, and in-person processing, making it versatile enough to accommodate various business needs.
Its user interface is intuitive, which helps streamline transaction management and reduces the learning curve for new users. The platform also provides solid customer support, ensuring that you have access to assistance whenever you need it.
However, while Easy Pay Direct excels in affordability and ease of use, it may lack some of the advanced features and customization options found in more premium solutions.
Additionally, although customer service is generally helpful, response times can occasionally be slower than desired.
- Transparent pricing with no hidden fees
- Quick and easy setup process
- Comprehensive support for different payment methods
- Intuitive user interface
- Limited advanced features compared to higher-end processors
- Variable customer service response times
2. Helcim
Helcim is a standout in the realm of cost-effective credit card processing, offering a compelling blend of competitive rates and a comprehensive feature set.
It distinguishes itself with a pricing model that is transparent and straightforward, devoid of hidden fees or long-term commitments. This makes it an attractive option for businesses that value cost predictability and flexibility.
Helcim provides a robust suite of features, including invoicing, recurring billing, and seamless integration with various e-commerce platforms, catering to a wide range of business needs.
Its user interface is designed to be user-friendly, facilitating easy management of transactions and reports.
The customer support team is highly regarded for its responsiveness and effectiveness, contributing to an overall positive user experience. However, businesses looking for specialized hardware for in-person transactions may find Helcim’s offerings somewhat limited.
Additionally, while the core features are strong, more advanced functionalities are typically available only through higher-tier plans.
- Competitive rates with clear pricing structure
- No long-term contracts or hidden fees
- Extensive features including invoicing and recurring billing
- Excellent customer support
- Limited advanced features in lower-tier plans
- Fewer hardware options for in-person transactions
Dharma Merchant Services shines as an ethical and transparent credit card processing solution, making it a great choice for small businesses and nonprofits.
Its pricing model is clear-cut, with no hidden fees, which aligns with its commitment to straightforward and honest business practices.
Dharma offers a range of customizable options and integrates well with various sales channels, providing flexibility that caters to diverse business operations.
The platform is known for its strong customer service, which is an essential factor for many users who appreciate attentive and effective support.
Additionally, Dharma's dedication to ethical practices can be particularly appealing to businesses that prioritize corporate social responsibility.
On the downside, Dharma's feature set may be less comprehensive for larger businesses or those with complex processing needs.
While it excels in ethical considerations and customer support, it may not offer the breadth of advanced features or integrations available with some competitors.
- Transparent pricing with no hidden fees
- Focus on ethical business practices
- Excellent customer service
- Flexible and customizable options
- Limited advanced features for larger businesses
- Fewer integration options compared to some competitors
Each of these processors offers unique advantages, making them strong contenders in the market for budget-conscious businesses.
As a business owner, you accept payments from your customers in exchange for goods and services.
Expanding your payment options can attract more customers and boost your business. To accept credit cards, you'll need a way to process these payments.
Credit card processing involves transferring the customer's funds from their credit card (or bank account, for debit card transactions) into your business bank account.
This process requires a payment processor to handle the various steps involved.
Here’s a breakdown of the key stages from when a customer pays to when you receive the funds:
When a customer makes a purchase and provides their credit card details, these details are sent to the acquiring bank.
The acquiring bank, which facilitates transactions for the merchant, then forwards the information to the issuing bank—the bank that issued the customer's credit card.
The issuing bank performs a verification process, checking for available funds and validating the account's status.
Based on this verification, the issuing bank either approves or declines the transaction, sending a response back through the acquiring bank to the merchant.
Once the transaction information reaches the issuing bank, it undergoes a thorough check to ensure its validity. The issuing bank verifies critical details such as the Address Verification System (AVS) and the Card Verification Value (CVV).
These checks help confirm that the card is being used by the rightful owner and that the transaction is legitimate. If all the information matches and is verified, the issuing bank approves the payment.
At this point, the funds are earmarked or held in the cardholder’s account, awaiting the next steps in the transaction process.
At the end of the business day, the merchant compiles all the approved transactions into a batch and sends this batch to their acquiring bank.
The acquiring bank processes the batch, releasing the funds from the issuing banks and deducting any transaction fees that apply.
This process ensures that the funds are appropriately transferred from the cardholders' accounts to the merchant’s account.
The batching and settlement process consolidates multiple transactions, streamlining the transfer of funds and the deduction of fees.
Once the acquiring bank has processed the batch and settled the transactions, it deposits the funds into the merchant’s business bank account.
This deposit makes the funds available for the merchant to use, completing the payment cycle.
The time it takes for the funds to be accessible can vary depending on the acquiring bank's policies and the merchant's agreement with the bank, but typically, it is a prompt process.
The merchant can then use these funds for operational expenses, reinvestment, or other business needs.
To process payments, you need a merchant account, which is distinct from a business bank account.
A merchant account is held by your acquiring bank and temporarily holds the funds before transferring them to your business bank account.
The company that provides you with a merchant account is known as a merchant account provider.
Some companies offer both merchant accounts and payment processing services, while others specialize in one or the other.
Running a business involves various expenses, making cost-saving opportunities valuable.
Some payment processing companies charge exorbitant rates, and without proper knowledge, you might fall for their marketing tactics.
Understanding different pricing plans can help you avoid unnecessary costs.
Payment processing isn’t one-size-fits-all. Here are the common pricing plans:
Flat-rate pricing involves a single rate for all transactions, though the rate can vary based on how the payment information is entered.
Swiped transactions usually have a lower rate than manually keyed-in transactions, reflecting the lower risk of card-present transactions.
While straightforward, flat-rate pricing might not always be transparent and could be costly in the long run.
Tiered pricing categorizes transactions into three tiers: non-qualified, mid-qualified, and qualified.
Qualified transactions, such as card-present and debit card transactions, get the lowest rates due to their lower risk.
Non-qualified transactions, like card-not-present and reward card transactions, incur higher rates. This model can lack transparency and might not be the most cost-effective option.
Interchange-plus pricing is often favored for its transparency. Interchange fees, set by major credit card companies, are added to a markup by the payment processor.
For instance, a rate might be 2.2% + $0.15 per transaction. However, factors like card type and transaction method can influence these fees.
Surcharge pricing adds an extra fee for credit card payments to cover transaction costs, meaning the merchant pays nothing for those sales.
Cash discount programs offer a discount to customers paying with cash, check, or debit card while adding a fee for credit card payments.
These models shift payment processing costs to customers, which many business owners find appealing.
You might consider a payment aggregator like Square or Stripe for its convenience and quick account approval.
However, using an aggregator means your funds are sent to a shared master merchant account before reaching you. This lack of a dedicated merchant account poses risks, such as frozen funds due to chargebacks.
In contrast, a merchant services provider offers individual merchant accounts, sometimes setting up multiple accounts to safeguard your access to funds in case of issues. This approach minimizes the risk of losing access to your money.
With the basics covered, let's delve into the key aspects you should evaluate before selecting a budget-friendly merchant services provider.
How will you handle payments? If you plan to use a POS system or credit card terminal, do you already have one, or will you need to buy it?
Pro Tip: Leasing can quickly become costly, so try to avoid it.
For online payments via a gateway or virtual terminal, do you have the necessary setup? Are you integrating with a shopping cart?
Consider these factors to identify which companies can cater to your specific needs.
Knowing your average monthly processing volume and ticket price is crucial.
Be honest about your figures, and if you anticipate business growth, inform potential processors about your expected increase.
Some payment processors don't charge monthly fees, or they keep them minimal. Choosing such providers can help keep your costs low, provided they meet your other criteria.
However, monthly maintenance fees are common, so be prepared for this expense.
Before reaching out to processors, here are essential questions to address before signing any contracts.
Credit card processing involves many unfamiliar terms. Don't hesitate to ask questions like:
- What does interchange-plus mean?
- What is a chargeback?
- What does PCI Compliance entail, and what if I'm not compliant?
Getting clear answers now can prevent confusion later.
If your transaction volume increases, it could affect your fees. Ensure you get a written explanation of what to expect as your business grows.
Payment processing issues are inevitable. Ensure your processor offers reliable customer service to address problems promptly, preventing potential customer loss.
Here are a few more tips to keep in mind:
Watch out for processors that impose monthly minimums, which can incur fees if you don't meet the required volume. This can significantly impact small businesses.
Identify Hidden Fees
Contracts may include hidden fees such as retrieval fees, return fees, and annual fees. Clarify any "other fees" listed in your contract.
ACH payments, which involve bank transfers, usually cost less in transaction fees. Offering this option can reduce your processing costs.
With numerous credit card processors available, it's crucial to research and compare rates and services to find the best match for your needs.
Long-term contracts can be challenging and expensive to cancel. Opt for month-to-month agreements to avoid costly early termination fees.
Navigating the world of merchant accounts can be challenging, especially for businesses with bad credit.
However, several providers stand out by offering flexible and supportive services to help these businesses thrive.
- Easy Pay Direct: Easy Pay Direct is renowned for its robust infrastructure and risk management tools. It offers a seamless application process, making it an excellent choice for businesses seeking a reliable and secure payment processing solution despite credit challenges.
- Helcim: Helcim provides transparent pricing and exceptional customer service. Known for its dedication to helping businesses grow, Helcim's commitment to affordability and ease of use makes it a standout option for merchants with less-than-perfect credit.
- Dharma Merchant Services: Dharma Merchant Services focuses on ethical business practices and social responsibility. Their transparent pricing and commitment to charitable causes set them apart. Dharma is a fantastic option for businesses that value integrity and need support overcoming credit obstacles.
Choosing the right merchant account provider can make a significant difference for businesses facing credit challenges.
Easy Pay Direct, Helcim, and Dharma Merchant Services each offer unique strengths that cater to the needs of bad credit merchants, ensuring they have the tools and support necessary for success.