The Best Credit Card Processors

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.

“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.”

The 5 Best Credit Card Processors

Best for
Startups and Small-Ticket Transactions
Square
Seller-friendly pricing with comprehensive merchant services.
Pros
Ideal for startups
Usually no flat fee added
Well-integrated platform
Business software
Cons
Falls short with large-ticket sales

Why we chose it

Ideal for startups

Square’s pricing model is best suited to startups and sellers of low-priced items. The “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 $49 per month). Square allows you to start taking payments immediately, without having to factor a monthly membership into your budget.

Usually no flat fee added

Most transactions are charged 2.75% “per swipe, dip, or tap” without a flat fee added on top (keyed-in transactions are 3.5% + a $0.15 flat fee). When you’re selling small-ticket items, like a $2 postcard or a $4 cup of coffee, even small flat fees per swipe really matter. When profit margins are small to begin with, those few extra cents make a much bigger impact.

"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."

Well-integrated platform

Square 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.

Business software

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.

Points to consider

Falls short with large-ticket sales

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
A subscription-based solution that can help merchants doing high-volume sales save.
Pros
Ideal for huge volume sales
Savings on per-transaction fees
Integrates with existing sales hardware
Cons
Not for smaller business endeavors

Why we chose it

Ideal for huge volume sales

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 + $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.

Savings on per-transaction fees

Payment Depot makes up for its low transaction fees by charging monthly membership fees, which range from $49 to $199. 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.

Payment Depot Subscription Tiers

Transaction limit per month Monthly membership fee Charge per transaction Free equipment included
“Basic” $25,000 $49 $0.15 Gateway
“Most Popular” $75,000 $75 $0.10 Gateway & Mobile Reader and Terminal
“Best Value” $200,000 $99 $0.07 Gateway, Mobile Reader, & Terminal and Pin Pad
“Premier” Unlimited $199 $0.05 Gateway, Mobile Reader, Terminal, Pin Pad and Free terminal upgrade every two years

Integrates with existing sales hardware

If you already have a terminal or other payment processor, the company will reprogram your existing equipment totally free of charge. If you’re looking to save money by switching processors, you’ll probably appreciate not having to purchase new equipment in order to use Payment Depot.

"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."

Points to consider

Not for small or online businesses

Those that rely heavily or exclusively on e-commerce may prefer an online-focused provider like Shopify or Paypal; and Dharma has special perks that make it better for non-profits. Additionally, if your business tends to revolve around the sale of small-ticket items, you might not get the most out of the monthly subscription setup that Payment Depot offers.

Best
Online Payment Integration
PayPal
Trusted name for online businesses and customers.
Pros
Easy for online stores to use
Convenient for customers
Trusted brand
Cons
Limited in-person processing support

Why we chose it

Easy for online stores to use

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 payments up and running within minutes.

Convenient for customers

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.

Trusted brand

PayPal is easily the most recognized name in e-commerce. It’s widely trusted, so customers won’t have any qualms about processing their credit card with your site. They are also trusted by online sellers for offering protections from claims, chargebacks, and reversals.

Points to consider

Limited in-person processing support

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 and most importantly, PayPal doesn’t come with the custom-made POS and software solutions that we loved from Square. For a more robust set of tools, you’ll have to upgrade to one of the third party POS servers that PayPal partners with.

Best
Full E-Commerce Platform
Shopify Lite
A card processor and web developer all in one.
Pros
Full-featured e-commerce platform
Standard rates and greater value
Website-building tools
Cons
Not the best for online processing alone

Why we chose it

Full-featured e-commerce platform

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 e-commerce 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.”

Standard rates and greater value

Shopify’s 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.

Website-building tools

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, “E-commerce University,” to help business owners along the way.

Points to consider

Not the best for online processing alone

If you already have a website up and running, and all you need is payment processing, Shopify does offer a “Lite” option at a very affordable $9 per month. 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. The problem, however, is the checkout process. 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
Keeps its prices low so more money can go to the causes you care about.
Pros
Sterling reputation
Values align with non-profit clients
Transparency
Cons
Rates aren’t all that low

Why we chose it

Sterling reputation

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.

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.

Values align with non-profit clients

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.”

Transparency

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.”

Points to consider

Rates aren’t all that low

Dharma’s in-store transaction rates are comparable to many for-profit companies at 0.25% + $0.10. However, in 2018, their virtual rates climbed from 0.3% + $0.10 to 0.35% + $0.15. For some, 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.

Guide to Credit Card Processors

How to find the right credit card processor for you

Focus on chip readers

In October 2015, MasterCard and Visa both underwent a “liability shift.” Now, 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.

Look at your business

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.

Avoid tiered/bucket pricing

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.

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 $0.10 (which goes 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.

Credit Card Processors FAQ

Are credit card processing fees tax deductible?

For the most part, yes. For every swipe, your processing company imposes a fee, but the IRS lets you deduct those fees from your business taxes.

What are interchange rates?

Interchange Fees 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 from Wells Fargo, this is Wells Fargo’s cut of the transaction). Interchange fees are set by the credit card companies (Visa, MasterCard, American Express, etc.), 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.

What are card assessment fees?

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%).

The Best Credit Card Processors: Summed Up

Square
Payment Depot
PayPal
Shopify
Dharma Merchant Services
Best for Startups and Small-Ticket Transactions
Best for Big-Ticket Transactions
Best Online Payment Integration
Best Full E-Commerce Platform
Best for Non-Profits
Monthly Fee
$0
$49-$199
$0-$30
$9-$299
$10
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