Editor's Note
  • April 25, 2018 - We’ve updated our methodology to clarify how we found our top picks and what we love about them. We continue to recommend Square, Payment Depot, PayPal, Shopify Lite, and Dharma as the best credit card processors.

The Best Credit Card Processor

In an industry known for confusing contracts and surprise fees, the best credit card processors shine for having fair and transparent pricing. The financial advisors and business owners we spoke with also praised processors that are easy to work with and provide excellent customer support. We sifted through over a hundred credit card processing companies and found five that meet all these criteria. Our top picks offer competitive rates, helpful customer resources, and — depending on your business model — some nice perks to boot.

“Small business owners should look at costs and fees when choosing a credit card processor, how much time it will take to set up said processor, which payments can be accepted, and the level of customer service in order to make the best choice.”

Square charges competitive per-swipe rates and has no monthly fees, so it’s the right choice for new businesses that need to keep their overhead low. It’s also great for businesses selling small-ticket items, since Square only charges a small percentage of each transaction and no added “flat fees” (those ten-cent-or-so flat fees will take a bigger toll on your profit margin if you’re mainly charging $4 lattes).

Payment Depot, on the other hand, is a perfect choice for big-ticket items. This membership-based service costs between $30 and $100 per month depending on your subscription. But for each transaction, businesses pay only a flat fee of $0.05 to $0.15— much smaller than any percentage-based fee would be. That means you’ll pay the same $0.15 whether you’re charging a $50 sweatshirt or a $500 road bike.

PayPal should be your go-to for setting up online payments. Adding the PayPal checkout button to your site is free and easy, and customers with existing PayPal accounts will be able to check out in a single click. Along with being convenient for your customers, PayPal is affordable for you: it charges 2.9% + $0.30 for online transactions, which is the best rate among top processing companies.

Shopify offers an end-to-end e-commerce package. Unlike PayPal, it’s not just a card processor: it’s a full e-commerce platform that will help you build and design your online store as well as accept online payments. Shopify’s full suite of services starts at $30 per month, and its online processing rates are on par with PayPal’s (2.9% + $0.30).

Dharma Merchant Services is committed to keeping costs low for non-profits so that more money goes toward supporting your cause (rather than lining the pockets of your credit card processor). Membership with Dharma is only $10 per month, and it offers reduced processing rates for non-profits that rival Payment Depot’s wholesale pricing. To top it off, Dharma itself makes sizeable annual donations to nonprofit organizations.

Since credit card processing is a little convoluted, we took some time to cover the most important terms and concepts in our Credit Card Processing 101 section. This is a good place to start if you’re new to the industry or need a refresher; it’ll help explain why we chose the companies we did. If you’re on the other end of the spectrum — a retail veteran just looking to upgrade systems or save some money — feel free to skip straight to Our Credit Card Processor Reviews.

Our Credit Card Processing Reviews

Best for Startups and Small-Ticket Transactions
Square’s percentage-based pricing is friendly toward sellers of low-cost items. The company also provides comprehensive merchant services, making it ideal for brand-new businesses.

If you know one name in credit card processing, it’s probably Square. The company (formerly known as Squareup) shook the industry by being one of the first card processors to throw tiered pricing out the window. Instead, it charges customers 2.75% “per swipe, dip, or tap,” or 3.5% + 15 cents for a keyed-in transaction — regardless of card type or transaction size. Interchange and markup are already built in to those prices. Beyond that, there’s no bundling, upcharges, or hidden monthly fees — so there won’t be any surprises on your bill.

Square’s pricing model is best suited to startups and sellers of low-priced items. That “no monthly fee” point is huge for businesses just getting off the ground. If your profits are slim, even low monthly fees like Shopify Lite’s $9 per month can bite (and that doesn’t begin to touch Payment Depot’s starting tier at $29 per month). Square allows you to start taking payments immediately, without having to factor a monthly membership into your budget.

The other big selling point? Almost every transaction (excluding keyed-in payments) is charged a percentage without a flat fee added on top. Most flat fees are between $0.05 and $0.15 per swipe. But when you’re selling small-ticket items, like a $2 postcard or a $4 cup of coffee, they start to matter. For example, Square’s percentage means you’ll be sure to only pay $0.05 for that postcard sale. When profit margins are small to begin with, those few extra cents make a much bigger impact.

Square POS Terminal

Square makes its own mobile reader (free), chip card reader ($50), and ipad terminal ($170). It also comes with a simple, streamlined POS that is fully customizable to make your transactions easier.

Square was one of the first processors to use cheap and transparent pricing, but it’s no longer the only one. Our other top picks all offer competitive rates, and some even outshine Square in certain areas (we’ll get to that in a minute). However, Square still has a few tricks up its sleeve. Most importantly: it’s still the most full-featured and well-integrated platform we could find. The company has developed a complete commerce package; including card processing, point of sale, and its own line of affordable equipment. Compared to a company like PayPal — which partners with third-party POS and hardware providers — Square makes it extra simple to get up and running by keeping everything in one place.

To simplify things even further, Square has a full line of integrated business software to go with its processing system. It offers payroll solutions, accounting software, inventory management, email marketing, and more. Pretty much any software needed to run a business is either made by Square or can be linked to it, eliminating a lot of manual bookkeeping and administrative work.

Praise for Square is pretty glowing across the board, as it should be. Square offers a uniquely affordable and accessible platform, especially for new businesses. And even when it’s the marginally more expensive option, Square’s standout services may tip the scale in its favor.

"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."

That said, there are a couple of scenarios where Square may not be the best bet. Businesses selling large-ticket items will likely prefer traditional interchange-plus pricing or a subscription-based model like Payment Depot’s. Square doesn’t offer the best rates for online-only retailers either. If you’re in the e-commerce biz, we recommend checking out Shopify or Paypal.

Best for Big-Ticket Transactions
Payment Depot
Payment Depot
With its subscription-based, wholesale pricing model, Payment Depot is great for merchants doing high-volume sales. Companies that can swing the monthly fees may see big savings.

Payment Depot is hands-down the best bet for businesses selling big-ticket items or doing huge volumes of sales. This membership-based service offers staggeringly low, flat transaction fees: interchange plus $0.05 to $0.15 (depending on your subscription). Unlike other processors, Payment Depot doesn’t charge a percentage markup — meaning the company makes the same $0.05 to $0.15 whether your customer is swiping on a $6 or $600 purchase.

Payment Depot makes up for its low transaction fees by charging monthly membership fees, which range from $29 to $99. As we said before, these subscription costs might feel hefty to a new business. But for established merchants, they’ll hardly make a dent — and the more you pay in monthly dues, the less you pay in per-transaction fees. For high-volume businesses, the larger monthly cost is more than made up-for by per-swipe savings. This is why Payment Depot is favored by huge corporations like Sprint, Subway, and Super 8.

Payment Depot Subscription Tiers

Transaction limit per month Monthly membership fee Charge per transaction Free equipment included
“Basic” $25,000 $29 $0.15 Gateway
“Most Popular” $75,000 $49 $0.10 Gateway & Mobile Reader
“Best Value” $200,000 $69 $0.07 Gateway, Mobile Reader, & Terminal
“Premier” Unlimited $99 $0.05 Gateway, Mobile Reader, Terminal, & Free terminal upgrade every two years

The other big difference between Square and Payment Depot is their approach to equipment and software. Whereas Square comes with its own POS, proprietary equipment, and software solutions, Payment Depot relies on third party suppliers for all these features. Most of its packages come with a free mobile card reader (like Square’s), but they don’t come with the same readymade, customizable point of sale system. For a full-featured POS like the one Square offers — with photos, terminal customization, customer database, etc — Payment Depot customers will have to purchase separate Clover brand equipment; which ranges in price from $450 to $1,300.

Payment-Depot VX 820

Payment Depot’s higher-tier packages come with a free terminal, but it’s a basic ‘key in the price and swipe’ affair, without any of the bells and whistles that come with a full POS.

That said, Payment Depot offers another perk here for established businesses: if you already have a terminal or other payment processor, the company will reprogram your existing equipment totally free of charge. Companies looking to save money by switching processors will appreciate that they don’t have to purchase new equipment in order to use Payment Depot.

Thanks to its ultra-transparent pricing and unique “wholesale” pricing structure, Payment Depot earns high praise from users. Its site boasts positive testimony from large and small business owners alike, and the entrepreneurs we spoke with were on the same page.

"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."

Who else isn’t Payment Depot for? As we said earlier, Square’s pricing is friendlier toward small-ticket items, and its streamlined equipment and software solutions are ideal for new businesses. Those that rely heavily or exclusively on ecommerce may prefer an online-focused provider like Shopify or Paypal; and Dharma has special perks that make it better for non-profits. For most other businesses, though, we highly recommend Payment Depot.

Best Online Payment Integration
PayPal will have your online store taking payments faster than any other processor. As a bonus, its trusted status means customers won’t think twice before clicking “buy now.”

PayPal is one of the most popular credit card processors — even though most people have never physically swiped their card with it. That’s because PayPal deals almost exclusively in online payments. Likely you’ll associate its name with eBay, which has owned PayPal since 2002; but in 2015, the company broke off as its own entity and now offers its specialized ecommerce services to outside businesses.

PayPal offers retailers fair pricing: 2.9% + $0.30 for any online transaction, and 2.7% for in-person transactions. These prices are equal to Square and Shopify’s online rates — but PayPal offers some ecommerce perks that these other companies don’t. First, it’s incredibly easy to use with your online store. All you need to do to start accepting payments is add the PayPal button to your site. It’s free and doesn’t require any fancy coding or shopping cart redesign. That means you can have your online store up and running within minutes.

After clicking the “Buy It Now” button, customers will be routed to log into their PayPal accounts. From there, the purchase is automatically completed and funds transferred to your bank.

There are other perks, too: PayPal is easily the most recognized name in ecommerce. It’s widely trusted, so customers won’t have any qualms about processing their credit card with your site. In addition, that one-click button offers fast and effortless checkout. Customers that already have a PayPal account won’t even have to enter their card information — a convenience factor which may make them more likely to shop with you.

It’s worth noting that PayPal’s free checkout button directs customers away from your site, to complete the purchase in a PayPal popup window. If you want the entire process to take place on your webpage, you’ll have to pay $30 per month for the PayPal Payments Pro package. That membership fee gets you on-site payments, a fully customizable checkout experience, and a virtual terminal for accepting phone payments.

While we love PayPal for online retailers, it’s not our top pick for in-person credit card processing. Although its card swipe rate is slightly lower than Square’s (2.7% compared to 2.75%), it doesn’t come with the same level of benefits. Square’s mobile reader is free while PayPal’s costs $15; Square’s chip reader costs $50 while PayPal’s costs $80; and most importantly, PayPal doesn’t come with the custom-made POS and software solutions that we loved from Square.

PayPal card reader

PayPal has its own line of equipment for accepting in-store payments, but it isn’t as affordable or full-featured as equipment solutions from Square and Payment Depot.

Also, like Payment Depot, PayPal’s equipment only provides for basic transactions and inventory management. For a more robust set of tools, you’ll have to upgrade to one of the third party POS servers that PayPal partners with. And if your brick-and-mortar store is doing high-volume, high-ticket sales, then Payment Depot will still be more affordable than PayPal’s 2.7% fee. That said, PayPal is hard to beat for online payments. It matches our other top picks for online processing fees, and is uniquely easy to integrate with any website. It also boasts a level of name recognition and customer convenience that other processors can’t yet match.

Best Full E-Commerce Platform
Shopify Lite
Shopify is a card processor and web developer all in one. It will help you build an awesome online experience that takes customers seamlessly from browsing to checkout.

If you don’t yet have an online store set up, then PayPal won’t be much use to you. Its checkout button assumes that you already have a website and shopping cart experience ready to go, and all you need is a payment processor. That won’t always be the case. For online retailers starting from scratch, we recommend Shopify. Unlike PayPal, Shopify is more than just a credit card processor; it’s a full-featured ecommerce platform. Its plans, starting at $30 per month, include web hosting, a URL and blog, an SSL certificate, website templates, marketing tools, and more — all in addition to the credit card processing service it provides.

"Shopify gave me the instant ability to process credit cards, had very competitive rates, and all my store operations (including credit card processing) could be handled from one interface. That sort of functionality is incredibly helpful.”

Although card processing isn’t its bread-and-butter, we’re impressed with Shopify’s offerings. Its rates are on par with our other top picks: 2.9% + $0.30 for an online transaction, and a flat rate of 2.7% for in-person transactions. The $30 to $300 monthly fee for full web hosting is more expensive than Payment Depot’s membership fee or PayPal’s “Pro” plan — but that's understandable, considering the wealth of extra features you’re paying for.

In terms of website-building, Shopify pulls out all the stops. It has an awesome selection of free templates and customizable features that make site design easy, even if it’s your first time creating a webpage. It offers marketing tools and a customer database to help you connect with shoppers and boost sales. It even has a useful knowledge base, “Ecommerce University,” to help business owners along the way.

While these features don’t have a direct bearing on Shopify’s card processing, they’re essential to ecommerce success as a whole. A poor website begets a poor shopping experience — which means customers won’t be tempted to buy in the first place. We appreciate Shopify’s end-to-end approach. By combining affordable card processing with a great website experience, it ensures a successful transaction for business owners and customers alike.

If all you need is payment processing (without the website building features), Shopify does offer a “Lite” option at a very affordable $9 per month. For those that already have a website up and running, adding Shopify Lite is simple. It has a ‘copy-and-paste’ checkout button similar to PayPal’s that you can drop in anywhere on the page. That said, the Lite checkout process isn’t as convenient as PayPal’s. Customers won’t have an existing account (like they might with PayPal), so you’re less likely to get those impulsive “single-click” purchases. For businesses that don’t need Shopify’s store-building tools, we still recommend PayPal for online processing.

Best for Non-Profits
Dharma Merchant Services
Dharma Merchant Services
Dharma is a dedicated partner to non-profits, keeping its prices low so that more money goes to the causes you care about.

Dharma Merchant Services offers reduced rates for non-profits: 0.20% + $0.10 for an in-store transaction (compared to 0.25% + $0.10 for for-profit companies), and 0.30% + $0.10 for online (instead of 0.35% + $0.10). Combined with interchange rates, you’re looking at charges between about 1% and 2.5% total, depending on card type. Dharma is committed to keeping its services affordable for non-profits. Its goal is to make sure the majority of revenue from donations and purchases goes towards your organization’s cause — rather than going into the pockets of your processing company.

In addition to keeping rates low for non-profits, Dharma has a sterling reputation for building strong relationships with its partners. Businesses that work with Dharma praise the company for its honest, helpful, and personalized customer service. Sherry Holub, Creative Director at JV Media Design, says, “We’ve been with Dharma Merchant Services for probably about seven years now. I liked all the information they provided upfront and the fact that they have been in the business for a long time. I’ve gotten great customer care and support from them over the years.”

Dharma is also committed to giving back. In 2017, the company donated over $100,000 to organizations supporting social justice, education, the environment, health, and welfare. For owners of many non-profits, it’s important to work with a company whose values align so closely with their own. Dharma delivers on that promise.

“As a national non-profit, it was important for us to not only partner with a MSP that could meet our needs, but one who also shared our commitment to giving back to the communities it serves. After looking at a number of competing providers, we selected Dharma Merchant Services and strongly recommend you do the same… Our experience has been nothing short of exemplary.”

In keeping with its reputation for transparency, Dharma is very honest about its target customer base. The company actively discourages new customers that transact less than $10,000 per month or have minimal credit history. Jeff Marcous, Chief Evolutionary Officer and co-founder of Dharma, explains that the high barrier of entry allows the company to focus its services and provide a higher 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.”

It’ also worth noting that, depending on the size of transactions you’re processing, Payment Depot’s services may be marginally cheaper. Remember that Payment depot only charges a $0.05 to $0.15 flat fee on top of interchange, whereas Dharma tacks on the extra 0.2 - 0.3%. What’s important is to decide which company strikes the right balance for your non-profit — Payment Depot may be slightly more affordable, while Dharma boasts a bigger commitment to building relationships with non-profits and giving back to the community.

Credit Card Processing 101

What you need to know about rates and fees

The reason processing fees are so complicated is that there are multiple players involved. It’s not just you paying your processor — the credit card companies (like Visa and Mastercard) and the banks that issue credit cards get a cut of the profits, too. Each processor breaks down payments between these parties in a slightly different way.

In order to understand those different pricing models — the good, the bad, and which companies use which type — there are a few concepts that it helps to be familiar with.

Interchange Rates make up most of the cost of credit card processing. These are paid to the “issuing” bank (e.g. if you got your Visa debit card form Wells Fargo, this is Wells Fargo’s cut of the transaction). Interchange fees are set by the credit card companies (Visa, MasterCard, Discover Card), and are equal across all processing companies. That means a PayPal account is subject to the exact same interchange fees as a Square account, for example.

Card Assessment Fees go to the card companies themselves, so this is the cut for Visa or MasterCard. Like interchange fees, these are set by the card companies and will stay the same no matter which processor you choose. Card assessment fees are a small portion of the overall processing fee; generally around 0.13% (whereas interchange is usually 1-2%).

Markups are the fees added by your processor on top of interchange and assessment fees. This is how credit card processing companies make money. Markups vary widely by processor; some might have a low markup and a large monthly fee, or vice-versa. In any case, these fees should be clearly stated and easy to find. All of our top picks are upfront with pricing information, so you’ll always know how much they’re profiting from each swipe.

Pricing models explained

Pricing models to avoid:

Tiered/Bucket pricing is the outdated pricing structure that gave credit card processing its poor reputation. Tiered pricing allows processors to group payments into different levels, and charge a set fee at each level. Processors aren’t required to state the markup at each level, or how payments are sorted, so business owners have no way of knowing how much profit the processor is making for each swipe.

Pricing models to look for:

Interchange-Plus pricing is one of the more transparent pricing models that processors have adopted in recent years. Unlike tiered pricing, this model clearly breaks down fees per swipe. Customers are charged interchange “plus” the processor’s markup. For example, an interchange-plus rate might look like this: [Interchange] + 0.25% + $0.10

Meaning that for each swipe your business pays interchange (which goes to the issuing bank), plus 0.25% of the total charge and a flat fee of 10 cents (which go to the processor). Some companies use variations on this model. Payment Depot, for example, charges interchange plus a flat fee of $0.05 to $0.15, but does not take a percentage of each swipe.

Flat-Rate pricing takes a slightly different approach than interchange-plus. A flat-rate model charges one set fee that includes interchange, assessment fees, and the processors markup. Unlike the tiered model, flat-rate charges the exact same fee for every transaction, which means you always know how much you’ll be paying.

Interchange-Plus versus Flat-Rate pricing

Keep in mind that, although interchange rates are the same for every processor, they vary by card company and card type. For example, a Visa debit card might have a 0.05% + $0.22 rate while a Visa Rewards card could have a 1.65% + $0.10 rate. If you choose an interchange-plus model (like Dharma or Payment Depot), that means your costs will still fluctuate depending on the card types your customers swipe. For more predictable costs, try a flat-rate processor like Square or Shopify.

Why you need a chip card reader

In October of 2015, MasterCard and Visa both underwent a “liability shift.” According to that shift, if someone uses a chip card to make a fraudulent charge at your store and you didn’t use a chip reader, then you’re on the hook for it. On the flip side, if the fraud was caused by a 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 2018, it’s a good idea to spring for the chip reader. They usually cost a little extra — Square’s is $50, PayPal’s is $80, and Payment Depot’s is a hefty $300 — but having the right equipment means you won’t risk paying a lot more for fraudulent charges.

Before signing, take stock of your transactions

The right card processor for you depends on your business. Before signing on with any of our top picks, we recommend evaluating your transaction history to see which pricing model will benefit you the most. Take a look at your average charge per swipe, the types of cards you take most frequently, and your volume of sales online versus in-person. This information will be essential in helping you choose the right credit card processing company for your needs.

Our Credit Card Processor Review: Summed-Up

Credit Card Processor
Best for...
Startups & Small-Ticket Transactions
Payment Depot
Big-Ticket Transactions
Online Payment Integration
Full E-Commerce Platform
Dharma Merchant Services