Happy New Year friends!! Today I’m kicking things off with a healthy, flavor-packed snack. This homemade garlic hummus is sooo easy whip up- it can be made in minutes! It’s the perfect dip for veggies, pita chips and so much more.
The Cheapest Credit Card Processing Companies For 2019
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Business owners today know that it’s more important than ever to be able to accept credit cards. Customers carry less cash and rely on credit and debit cards for the majority of their purchases. If you’re an eCommerce merchant selling online, taking “plastic” is just about your only option. Unfortunately, you usually can’t accept credit cards unless you have a merchant account, and merchant accounts aren’t free. In fact, they can be very expensive – especially for a small business – if you choose the wrong provider.
The credit card processing industry is bewildering, especially for a first-time business owner. There are dozens of companies providing processing services, and each of them offers different processing rates, fees, and contract terms. A provider that provides a good deal for a very small business might be prohibitively expensive for a larger one, and vice versa. Naturally, merchants want to cut through the confusion and get a quick answer to the question “Which one is the cheapest?”
There’s nothing wrong with wanting to save money, especially for a new business that has to count every penny. However, if you look up “cheap” in the Merriam-Webster Dictionary, you’ll note that while cheap can mean “charging or obtainable at a low price,” it can also mean “of inferior quality or worth.” If you’ve ever been disappointed with a product purchase when you thought you were getting a good deal, you know that these two definitions often go together.
Before we delve into specific processors, there are two important points that you need to understand:
- The company offering the lowest processing rates or fees isn’t necessarily the cheapest. The total percentage of the credit card sales you’ll have to fork over to your merchant account provider isn’t an easy thing to calculate in advance with any precision. Variable processing rates and hidden (or at least unanticipated) fees can easily result in you paying much more than you thought you were going to for processing. Companies offering flat-rate pricing fare much better in this regard, as their simple pricing structure makes it relatively easy to estimate your monthly processing costs.
- The “cheapest” processor isn’t necessarily the best one for your business. While you naturally want to be able to accept credit cards while paying the least amount of money for the privilege, companies offering the lowest rates often cut corners in other aspects of their service to make those low rates possible. Poor customer service, for example, is a common problem among the least-expensive processors. If you want the best overall, you might also check out our top picks for small business credit card processing.
Types Of Providers
With the advent of new, low-cost providers, there are now two broad categories of companies providing credit card processing services. These include traditional (or full-service) merchant account providers and payment services providers, which offer credit card processing but without some of the features of a full-service merchant account. It’s very important that you understand the difference between the two.
Payment Service Providers (PSPs)
Payment service providers can process your credit card transactions, but they don’t provide you with a unique merchant ID number for your business. Instead, your account is aggregated together with accounts from other merchants. This lowers the cost for things like monthly account fees and PCI compliance, but it also means that your account is much more vulnerable to being suddenly frozen or shut down at the slightest hint of fraud. Getting your account working again is complicated by the fact that most PSPs provide little in the way of one-on-one customer service. For a very small business, a PSP may very well be more affordable than a full-service merchant account, especially since you won’t have to pay so many recurring fees just to keep your account open. Be aware, however, that you’ll constantly be running the risk of suddenly losing access to your account and not being able to accept credit cards at all with a PSP. If your business processes a high number of credit card transactions on a daily basis, the loss of business you’ll incur if your account is frozen is quite high. Popular PSPs include PayPal, Square (see our review), and Stripe.
Traditional Merchant Accounts
Traditional merchant accounts include a number of features you won’t find with most PSPs. The primary distinction is that you will be assigned a merchant identification number that is unique to your business. This number automatically identifies you to processors, issuing banks, and credit card associations. While it might not sound like much, having a unique merchant ID number helps to lower the risk of fraud and improves the stability of your account. While you still might have to endure a hold on funds for an unusually large transaction, the chances of your account being completely frozen for no apparent reason are much less than they are with a PSP. Merchant account providers also offer a host of ancillary services, including PCI security scans, customizable payment gateways for online payments, support for ACH (eCheck) payments, and many others. These bells and whistles don’t come cheap, of course. You’ll pay more in monthly fees than you will for an account with a PSP. However, you’ll also pay lower processing rates, especially if your merchant account provider offers interchange-plus pricing. For many medium-sized and larger businesses, a full-service merchant account will actually be less expensive than a PSP.