Choosing the best small business credit card processing isn’t just about finding the lowest rates available. It’s easy to be caught by hidden fees and costly equipment, so researching and choosing the right cheap credit card processing is crucial.
Narrow down your options based on what tools you need, if you need a dedicated merchant account, and if you need to accept payments in person, online, or both. Once you have narrowed down your options, consider the most affordable credit card processing option for your business.
Factors Affecting Credit Card Processing Fees
Credit card payment processing fees are fees that a company has to pay to accept credit card payments. There are payment processing fees, including:
1. Interchange Fees
Interchange fees are payments made to the card issuer for a transaction. Fees will vary based on the card type, transaction amount, and business industry. Credit card processors may charge higher fees for online purchases due to an increased risk of fraud.
2. Payment Processor Fees
The payment processor can also charge a fee for transactions. These fees can include monthly fees, transaction fees, statement fees, and more.
3. Assessment Fees
Assessment fees are fees that are paid to the credit card network so the merchant can process certain card types. This fee is based on monthly sales.
4. Payment Gateway Fees
Payment gateway fees are fees charged by a payment gateway for providing secure transactions.
5. Chargebacks and Fraud
Payment processors may charge fees for chargebacks or fraudulent transactions.
The overall cost for low-cost credit card processing ultimately depends on the payment processor that you choose. Some processors charge a flat monthly fee, and some only charge per transaction.
There are also other factors that can affect payment processing fees, including:
1. Industry Type
Each industry is subjected to different fees and rates depending on factors like business size and risk. The risk of the business type determines the interchange fee. A high-risk business usually experiences a higher interchange fee.
2. Merchant Category Code
Merchant category codes are designed by credit card networks to classify merchants by the services or goods provided. The merchant category code determines the interchange fee and card transaction rules.
3. Type of Cards Used In Transactions
There are more than 1500 credit and debit cards in the United States, let alone worldwide. In general, debit cards pose less risk to a transaction than credit cards, and therefore, they have lower fees. Branded credit cards typically have higher interchange fees.
4. Transaction Method
Having the card present when the transaction occurs typically results in a lower transaction rate. When making purchases online, different verification methods have different rates. Online, telephone, and mail orders also have a higher rate of fraud and therefore have a higher interchange fee.
5. Average Transaction Amount
The fees charged by card issuers and brands have a combination of percentage and fixed per-transaction fees. In general, the lower the average transaction amount will have a higher fee rate. The higher the average transaction amount, the lower the rates.
Understanding Different Pricing Models
Not all of the best credit card processing for small businesses has the same pricing models, which can make comparing fees and finding the most affordable credit card processing difficult. The most common pricing models include:
1. Interchange-Plus Pricing
Interchange plus pricing is a model where the processor charges a markup in addition to the interchange fee. The markup is generally determined as a percentage of the transaction plus a flat fee. This model provides merchants with transparent pricing.
2. Flat Rate Pricing
Flat rate pricing uses a fixed percentage calculated on the amount of every transaction. This model provides simplicity and predictability to merchants to allow them to determine their monthly costs.
3. Tiered Pricing
Tiered pricing has three rate categories for payments, qualified, mid-qualified, and nonqualified. Transactions are assigned to a category based on the criteria of the payment processor.
Qualified transactions have the lowest rate and increase for mid-qualified transactions, with nonqualified transactions having the highest fees.
Your transaction can be downgraded based on how physical cards are processed or if payments are being made without the card being present.
4. Subscription Pricing
In this model, the merchant pays a fixed monthly or yearly fee and a small per-transaction rate, which can create lower costs for a high-volume business.
Choosing the Best Credit Card Processing Provider for Your Needs
To obtain the most affordable credit card processing for your business, it is crucial to compare providers based on various factors, including:
Ensure that the cheap credit card processing that you choose can work with your business. Consider how your business operates both now and in the future. Do you run an e-commerce store? What industry is your business in? Is your business high-risk? All of these factors need to be considered to make sure the processor works with your business.
2. Customer Service
Challenges with payments can lead you to lose revenue and customers, so it is crucial to consider the customer service your processor provides. Ideally, choose a payment processor with 24/7 customer service or extended hours with multiple ways to get in contact, including chat, email, phone, etc.
3. Software or Hardware
Consider what you need to make your business work, such as a virtual terminal or a POS system. Ensure that your payment processor can provide a venue for accepting payment methods that your customers prefer.
Security is a crucial requirement when researching a payment processor. Ensure that you choose a processor that is PCI compliant and uses top-notch security features such as data encryption, customer verification, SSL, tokenization, two-factor authentication, and more.
Research the degree of transparency in a processor’s pricing models and how clearly they communicate when you ask questions about their fees. Research customer reviews of the processor to see if they are experiencing unexpected charges or a change of fees.
Run through your payment processor’s pricing models with your transaction numbers to get a better idea of how the fees will regularly affect your budget. Depending on your business, a flat rate could end up costing you more than another option.
7. Payment Methods Accepted
Traditional credit and debit cards are the most frequently used payment method in the United States. However, contactless payments are becoming more popular. Ensure that the payment processor you choose provides the option for contactless payments, including payments made with mobile phones, smart watches, etc. The more payment methods you accept, the more convenience you can offer your customer.
Ensure that the payment processor you choose can integrate with your existing systems. This can include POS systems, bookkeeping software, accounting software, invoicing systems, e-commerce shopping cart, and alternative payment methods such as Google Pay, Apple Pay, etc.
9. Payout Window
Cash flow can be crucial for a small business, so you will want small business credit card processing that has a short payout window. Some processors can take as long as a week to pay out merchants, while other processors offer same-day or next-day payouts.
10. Processing Volume
Some processors may be a better choice for you based on your monthly processing volume. Whether you have a high volume or low volume of transactions, you will want to ensure that your payment processor can handle your processing volumes.
11. Chargeback or Fraud Fees And Protection
Especially if you are an online merchant or in a high-risk industry, chargeback and fraud fees are a crucial consideration. Research different payment processors and what they charge for chargebacks and fraud, and the protection they offer.
Some cheap credit card processing companies have contracts, while others don’t. If you don’t think your processor is working out for you, you don’t want to be stuck in a multi-year contract. Choose a provider that has a flexible contract or no contract so that you can make any changes if needed.
The Least Expensive Credit Card Processing: Key Takeaways
Customers are using more credit cards, mobile payment options, and other flexible payment methods more often than before. It is crucial that your business accepts major credit cards and other forms of payment.
The best credit card processing for small business can offer you affordable options for you as well as the convenience your customers expect when making payments, as well as security, useful integrations, scalability, and excellent customer service.
Emerchantbroker offers the best affordable credit card processing options. Their processing includes 24/7 customer support, support for high-risk merchants, the ability to stay up to date on credit card processing regulations, an easy-to-use platform, no credit card caps, and more.
Check out Emerchantbroker today for affordable credit card processing.