The Best Credit Card Processors

The power of plastic, without swiping away all your profits

The 30-Second Review

Credit card processing contracts have long been confusing, fee-ridden mazes. We talked with 30 merchants who've been through the process and found five processors that all have transparent fees and stellar customer service — and won't lock you into long-term contracts.

106
Credit Card Processors
5
Top Picks
Best for Large Transactions

Payment Depot has a number of big-name, national clients under its belt, like Subway and Arco. It backs up its range of pricing plans with solid customer support and transparent pricing, making it a great choice — especially for companies dealing with larger transactions.

Other Top Picks

The quickest way to make you feel completely unqualified to run your own business is to tackle finding the best credit card processor for your needs. It doesn’t matter how savvy you are: The industry is frustratingly opaque and no matter which service you decide to go with, there’s always one more that can promise you a better rate (or so they say). Your business is unique and unfortunately there is no one-size-fits-all solution. All our top picks — Payment Depot, Shopify Lite, Square, PayPal, and Dharma Merchant Services — deliver in different ways.

Our Top Picks

After examining 106 services and interviewing 30 merchants, we found that a transparent pricing structure is paramount in order to compare credit card processors. Finding that is rarer than you would think, something Paul Downs, Founder and President of Paul Downs Custom Conference Tables in Philadelphia, knows well. In 2013, The New York Times published a series on its business blog about his journey through the legal obfuscation and false promises. When we chatted with him for this review, not much had changed: He continues to believe the industry is shadowed by a lack of transparency that makes it difficult for smaller businesses especially to understand or predict their processing costs.

Beyond transparent pricing, we were drawn to companies that were attentive in their customer service and offered equipment to bustling online shops or brand-new brick-and-mortar locations.

Our Picks for the Best Credit Card Processors

Best for Large Transactions

Payment Depot Payment Depot impressed us with its solid selection of membership plans, pricing transparency, and customer support.

Payment Depot is the go-to for some major national retailers: Super 8, Subway, Arco, Dominoes. It has a few different membership plans with monthly and per-transaction fees that vary depending on your volume of transactions: to process up to $20,000 each month, you would pay a monthly fee of $29 and a per-transaction fee of 25 cents + interchange. If you process more payments, you pay a higher monthly fee (as much as $99), but get a lower per-transaction fee (as little as 5 cents + interchange).

If you’ve shopped at one of Payment Depot’s retail clients, you may have come across hardware like this VeriFone VX 820.

All its other costs are referred to as “wholesale,” meaning they’re simply interchange costs set by the credit card companies and banks — no markups here. This type of structure, paying only an additional per-transaction fee, is especially attractive to sellers of higher-priced goods and services.

I’m a huge Payment Depot fan. I think their transparency is outstanding. The only vendors this company would not be great for are those with small transactions, like a coffee shop or breakfast cafe. I have large transactions, and my credit card charges went from 3.5 percent to 1.6 percent by switching to Payment Depot. With my past processor, each month I was paying them almost 2 percent of my profits.

Best for Newcomers

Square Square has managed an admirable level of name recognition among credit card processors, in part thanks to its sleek hardware and startup-friendly services.

Square is the most (and only?) name-recognized processor out there, with a full line of proprietary equipment that looks designed by Apple diehards: sleek and hip. While its services can accommodate more robust businesses, it’s especially attractive to newer, smaller merchants that may not have the credit history and assets to get started with other processors.

For startups, it’s not really about price comparisons; it’s about finding companies that will give them merchant status. It’s way too hard to find that.

Unlike Payment Depot, which charges interchange plus a set amount per swipe, Square builds the interchange into one flat rate and has no swipe fee. For merchants with low-priced goods (think coffee shop or farmer’s market), that 0 cent swipe fee has a huge effect on what percentage of your sale is going to your credit card processor. After all, 25 cents is 10 percent of a $2.50 muffin.

That flat rate is higher than interchange plus can be, particularly for merchants with a high average ticket price. But, merchant status availability often outweighs Square’s higher per-transaction fee (2.75 percent per swipe or the not-so-pretty rate of 3.5 percent + 15 cents per manually entered transaction). It also boasts a no-hassle, fee-free model for the rest of its services. That includes $250 in monthly chargeback protection — if a customer disputes a charge, as long as you followed Square’s best practices, it’ll cover the first $250 no matter the outcome. (With Shopify, you’ll be paying a $9 monthly fee, and it not only doesn’t cover your for chargebacks, but also actually takes a $15 fee for each one.)

Square’s retail hardware is easy to spot thanks to its sleek, minimalist design.

Square’s services were what stood out with several of the merchants we spoke with. Aside from having a clean, informative website with plenty of customer support, the Square smartphone app enables point-of-sale and inventory-management features, as well as payroll functions. “It’s extremely important to be able to integrate with software,” says Danita Harris, principal at Rated M Wine Infused Foods. “I keep inventory on Square, and can bill direct from Square or QuickBooks (converted from Xero). It makes my life much easier and more efficient.”

There are no monthly fees or equipment leasing fees — you just pay as you get paid. The little square card reader is free for the swipe version; the chip reader is just $49. And while we love Square for the little guys, if you’re a big merchant — say, with more than $250,000 in sales a year — it might still be your best bet. With that much in sales, Square is willing to negotiate with you on the swipe fee.

Best Online/Offline Integration

Shopify Lite Shopify earned a spot on our list thanks to its outstanding mix of services for both online and offline transactions, but issues with debit card acceptance may be cause for concern.

We were shocked by how well Shopify provided for in-person credit card processing considering its primary business is helping merchants launch online stores. On the Lite plan, which runs $9 a month, in-person transaction costs are a competitive 2.7 percent flat rate — compared to Square’s 2.75 percent. If you’re charging more than $180 in transactions a month, you’ll make that $9 back and more.

The plan allows you to accept in-person credit cards of all types, or embed an online buy button and shopping cart onto your website or Facebook page. (Online charges ring up at 2.9 percent + 30 cents per transaction.) That’s for an unlimited number of products, with unlimited file storage, 24/7 support, and QuickBooks integration.

It even has a $19 card swiper and, like Square, offers the first one for free. If you want to take chip cards, that’ll set you back $129 or so for the reader. The biggest downside: Shopify doesn’t work with debit cards (though some debit cards can be processed just fine as credit cards). To officially accept debit cards, you’ll need to add an external terminal, and if you’re in an industry that can expect chargebacks, you should definitely go with Square.

Shopify gave me the instant ability to process credit cards, had very competitive rates, and all my store operations data (including credit card processing) could be handled from one interface. That sort of functionality is incredibly helpful. However, industries that have high risk of chargebacks need to be aware that they’ll lose practically every chargeback since Shopify just doesn’t have the tools to help you win.

Best for Ecommerce

PayPal An old name in the relatively new field of ecommerce, PayPal's convenience and customer support make it a solid choice for online businesses.

When it comes to the digital universe, PayPal has some distinct advantages — and not only because it’s been around the longest. Its convenience factor alone carries a lot of weight: “I use PayPal as my payment portal because it integrates easily with my website,” explains Shilonda Downing, founder of Virtual Work Team. “The benefits of PayPal are two fold: our clients who want to use their PayPal balance to pay us can do so with ease, and the funds in my PayPal account can be easily transferred to other business accounts.” Tim Thoelecke Jr., president of InOut Labs, a wellness testing firm that operates in both retail and commercial markets, had similar thoughts: “PayPal integrates with both my accounting software, Xero, and our e-commerce business. Workflow and avoiding double entry are important to me.”

In addition to its online services, PayPal also offers a card reader that plugs into a smartphone’s headphone jack.

PayPal has a 2.9 percent + 30 cent online transaction fee, which is consistent with every other processor’s online rates. Plus, it has robust customer service and DIY help features on its website. Equipment is limited to either a chip card reader or mobile card reader — your first mobile card reader is free — making PayPal a tough sell for high-volume brick-and-mortar merchants looking for a full-on POS system or cash register, but online transactions remain PayPal’s bread and butter.

Best for Established Nonprofits

Dharma Merchant Services Dharma Merchant Services could be a good fit for retail and commercial businesses, but nonprofits especially should take a look at its discounted rates.

While Dharma Merchant Services does the bulk of its work in the retail and commercial sector, it has a strong niche in nonprofit transactions — which are booming especially via online donations. Dharma, a B Corporation with subscriptions for $15 a month, offers reduced nonprofit rates. Like Payment Depot, Dharma doesn’t offer one lump rate for all transactions, so your ultimate costs would depend on each credit card’s interchange rate, which can vary upward of 2 percentage points depending on the card. For nonprofits, Dharma charges 0.20 percent + 10 cents + interchange for storefront operations; online it’s 0.30 percent + 15 cents + interchange. PayPal, by contrast, has a flat nonprofit fee of 2.2 percent + 30 cents that’s constant despite interchange fees.

Dharma scores well for having a clean, easily navigated website. It also provides excellent educational information on how interchange rates work (including links to the current official Visa and MasterCard rates), and it walks the merchant and nonprofit through transactional cost scenarios. “We took pricing questions off the table by transparently posting our pricing model on the website,” says Jeff Marcous, chief evolutionary officer and co-founder of Dharma.

Most notably, Dharma openly discourages new customers that transact less than $10,000 per month, or don’t have a long credit history. Marcous explains that for companies that fall below the $10K threshold, it’s in their best interests to go with an aggregator like Square or PayPal, adding that the barrier to entry allows Dharma to offer a high level of customer service. “One of the primary goals of Dharma is to build a strong community,” he says, “and by setting the intention of being truly ‘present’ for our merchants, our loyalty and retention rate is quite high.”

We've been with Dharma Merchant Services for probably about seven years now. I liked all of the information they provided upfront and the fact that they had been in the business for a long time. I've gotten great customer care and support from them over the years. The fees are very reasonable. If a client doesn't already have a merchant account provider chosen or is not using their bank, we will recommend Dharma.

Other Credit Card Processors to Consider

These credit card processors (featured below alongside our top picks) scored well across our primary considerations: pricing transparency, customer service, equipment features, and policies. They’re great; just not our top picks.

Processor
Interchange Plus Pricing
Monthly Fees

Payment Depot

Interchange + $0.05 to $0.25
Up to $99

Dharma Merchant Services

Interchange + 0.2% + $0.10 to 0.35% + $0.15
N/A

Charge

Interchange + 0.25% + $0.15 and up
N/A

Fattmerchant

Interchange + $0.08 to $0.25
Up to $99

Helcim

Interchange + 0.15% + $0.08 to 0.36% + $0.25
Up to $30

Payline Data

Interchange + 0.2% + $0.10 to 0.65% + $0.15
Up to $15

Transparent Merchant Services

Interchange + $0.09 to $0.19
Up to $100

*Price ranges include discount rates for nonprofits (if applicable).

Processor
Flat-Rate Pricing
Monthly Fees

Square

2.75% + $0 to 3.5% + $0.15
N/A

Shopify

2.2% + $0 to 2.9% + $0.30
Up to $179

Authorize.net

2.9% + $0.30 + $49 setup fee
Up to $25

CDG Commerce

1.70% + $0.25 to 1.95% + $0.30 (2.9% to 2.95% + $0.30 for non-qualified transactions)
Up to $10

PayPal

2.2% + $0.30 to 3.5% + $0.15
N/A

QuickBooks Payments

1.6% + $0.25 to 3.4 % + $0.25
Up to $20

TransFirst

1.69% + $0.19 to 2.99% + $0.24
Up to $10

*Price ranges include discount rates for nonprofits (if applicable).

Did You Know?

Check the Interchange Want to dig into the math? Start by reviewing the interchange rates for both Visa and MasterCard.

Interchange rates are transparent, but they’re still unpredictable.

It’s obvious but bears repeating: If the processor you choose uses interchange rates as well as its own rates, your costs will not be as predictable as a processor with one flat fee. That’s because each credit card and credit card type has a unique rate: A Visa debit card might have a 0.05 percent + 22 cent rate while a Visa Rewards card could have a 1.65 percent + 10 cent rate. (This is why many smaller businesses stereotypically do not accept American Express, which used to have much higher rates.) If you want to know what you’ll always be paying — no fluctuations based on card types — go for a transparent, flat-rate processor like Square, Shopify, or PayPal. If you’re after a potentially lower rate, go for interchange-plus models like Merchant Depot or Dharma Merchant Services.

If you don’t use an EMV chip card reader, you’re liable for fraudulent charges.

In October of 2015, MasterCard and Visa both underwent a “liability shift.” According to that shift, if you’re a merchant and someone uses a chip card to make a fraudulent charge — but you didn’t use a chip reader — you’re on the hook for it. That shift also means if the fraud was caused by a simple swipe card, and you had a chip terminal, the bank would be on the hook for not issuing the right card.

If you’re buying your first terminal in 2016, it’s a good idea to spring for the chip reader. It might be an extra few hundred dollars, but it means you’re not going to have to pony up potentially a lot more in fraudulent charges.

Digital wallets are on the way.

There is a lot of anticipation for smartphone payment systems, including Apple Pay, Android Pay, and PayPal, as well as branded payment systems at Starbucks, Target, and Walmart. According to market research publisher Packaged Facts, mobile payments made at retailers’ point of sale will grow 54 percent in 2016, bringing total annual sales via smartphone apps to $65 billion.

Apple Pay is by far the leader of the pack. A survey of retailers by the consulting firm Piper Jaffray says of the 44 percent of merchants who are using or want to use mobile wallet solutions, 67 percent of US retailers lean toward Apple Pay readers, with only 18 percent preferring Android Pay/Google Wallet, and a mere 8 percent preferring PayPal. To adopt Apple Pay, you’ll need to buy an updated terminal. Is now the right time? That’s really your call.

The Bottom Line

Finding the right credit card processor is a matter of the size, shape, and scale of your business. One thing is universal: Any processor you choose should tell you how much it’s charging right up front.

Take Action

Best Overall

Payment Depot Payment Depot won us over with their pricing transparency and impressive support.

Take stock of your transactions. The first step in getting the right rate for your business is knowing how much your transactions are and how many of them you have in a month. Take a look at your average cost per transaction, but also look at the types of transaction. Then, find the break-even points for each of the rates you’re considering. Is tracking your transaction types making you feel crazy? You’re not alone. “It’s pretty much impossible to figure out the cost for any given credit card transaction,” says Steven Silberberg, owner of Fitpacking, a weight-loss backpacking business. “If I do a card-not-present transaction, the fee is greater than a card-present transaction. If I don’t provide the CVV, the fees increase yet again. Foreign transactions also have a different rate, and Visa is different than MasterCard is different than Discover. A lot of times you just have to rely on the average rate over a billing period.”

Read the fine print. Any credit card processor worth working with will tell you its rates clearly, simply, and up front. There’s no reason to pay hidden fees, so don’t do it. Watch out for leased equipment (it’s usually not worth it) and multiyear contracts too. Many processors have no monthly fees and no commitments, so there’s no reason to sign up for something you’re not sure you really want or need.

Track your costs every six months. Don’t pay more when you could be paying less. Calculate the percent of sales you’re paying to your processors, then check the competition’s rates. If your sales are high, you might even be able to negotiate your rates with your current processor.