The Cheapest Credit Card Processors - Ranked and Reviewed

When it comes to credit card processing, cheaper doesn’t always mean better.

Still, there’s something to be said about saving money on your payment processing fees, right?

Fortunately, there’s a way to strike a balance and get decent rates while still getting top-of-the-line products and services from your merchant account provider.

Let’s talk about the cheapest credit card processing companies out there and then we’ll discuss what you need to know before making a decision on one of them.

Our Picks for the Cheapest Credit Card Processing Companies

Easy Pay Direct
Merchants looking for transparent transaction fees
Good for high-risk industries
Very few negative reviews
Single Point of Contact for Multiple Merchant Accounts

summary

5/5

Best for

E-commerce companies, SaaS companies, "high-risk businesses", & established small/medium businesses ($500,000+ in annual sales)

Specializes in

Easy Pay Direct has unique gateway software and banking solutions to optimize payments for eCommerce, SaaS, information products, supplements, and CBD amongst other verticals.

Pricing Summary

Setup Fee:  $99

Monthly Fee: $24.95

Swipe Rate: 1.59% + $0.17

Keyed-in Rate:  2.39% + $0.29

Early Termination Fee: $0 (domestic accounts)

Contract Terms:

1 Year 3 Years
Helcim
Online sellers, merchants in the medical space, and retail merchants
Exclusive interchange-plus processing rates
No long-term contracts or early termination fees
Extensive account fee disclosures
Excellent customer support
Processing costs decrease with business growth
Accepts international payments

summary

4.88/5

Best for

Small businesses

Specializes in

Online, retail, service industries

Pricing Summary

Setup Fee: $0

Monthly Fee: $20

Swipe Rate: Variable

Keyed-in Rate: Variable

Early Termination Fee: $0

Contract Terms:

Month-to-month
Dharma Merchant Services
Non-profit, restaurant, and retail merchants
Companies looking for transparency
Mid-to-large businesses
Interchange-plus pricing offered exclusively
No annual fee or monthly minimum
Month-to-month billing with no early termination fees
Discounted pricing for qualified nonprofit companies
Outstanding sales transparency and highly ethical business practices

summary

4.5/5

Best for

Dharma's website caters its services to small-sized businesses with up to twenty employees, in verticals such as restaurants, non-profits, and e-commerce platforms.

Specializes in

Dharma Merchant Services provides mobile phone processing and tablet-based POS options for merchants courtesy of Clover. Moreover, Dharma offers the Clover Mini station, which includes Clover's PRO software set. The company also resells the Clover POS solution, including a full cash drawer, built-in fingerprint scanner, and printer.

Pricing Summary

Setup Fee: N/A

Monthly Fee: $20

Swipe Rate: N/A

Keyed-in Rate: N/A

Early Termination Fee: None

Contract Terms:

Month-to-month

What is Credit Card Processing?

As a business owner (aka merchant), you accept payments from your customers in exchange for products and services.

You can serve more customers - and get more business - if you’re able to take multiple payment methods. But to take credit cards, you have to have a way to process those payments.

Credit card processing involves moving the customer’s money from their credit card (or bank account, for debit card-paying customers) into your business bank account.

But there’s a lot that happens in between, and that’s what you need a payment processor for.

Here are the basic steps that are taken from start (customer pays) to finish (you get paid):

Step 1: Payment and Authorization

Credit card information is sent to the acquiring bank, which sends it to the issuing bank. The issuing bank either approves or declines the transaction after completing the next step.

Step 2: Payment Authentication

The issuing bank verifies all of the necessary information before approving the payment. They’re looking for AVS, CVV, and other authenticators.

If everything matches, the transaction is approved and a hold is placed on those funds in the cardholder’s account.

Step 3: Batching and Settlement

The merchant will send all approved transactions in a batch to their acquiring bank (merchant account) at the end of the day. The funds are released and any transaction fees are removed.

Step 4: Merchant Receives Funds

The acquiring bank will deposit funds into the merchant’s business bank account, where they have access to it.

What’s the Difference Between a Merchant Account Provider and a Payment Processor?

In order to process payments, you need a merchant account. This is different from having a business bank account, which you also need.

A merchant account will be held by your acquiring bank, and like we mentioned above, it gives the money people pay you a place to go before it is sent to your business bank account.

There is no way to work around having a merchant account, and the company that offers you one is called a merchant account provider.

Some companies offer both merchant accounts and payment processing services. Others only specialize in one or the other.

Why Would You Want a Cheap Payment Processing Company?

Let’s face it, it’s not cheap to own and operate your own business. There are expenses lurking everywhere.

All the more reason for you to try to save money every chance you get.

There are some payment processing companies that charge insanely high rates, and if you’re not sure what to look for, you could fall prey to their clever marketing schemes.

It’s important to know what pricing plans you should be looking for, and what to avoid.

Types of Pricing Plans

There is no one-size-fits-all when it comes to payment processing. Here are your options for pricing plans.

Flat-Rate Pricing

Flat-rate pricing involves charging you one rate for all transactions, but there can be some fluctuation, depending on how the payment information was entered.

For example, one flat rate may apply to all transactions that are swiped, while another, higher rate might apply to all transactions that are keyed in manually.

This is the difference between card-present (lower risk) and card-not-present (higher risk) transactions.

Flat-rate pricing is simple enough, but it’s not always transparent, and it could end up costing you a lot more in the long term.

Tiered Pricing

Tiered pricing breaks down each transaction into one of three tiers - non-qualified, mid-qualified, and qualified.

In this model, qualified transactions (card-present, debit cards, and non-reward credit cards) get the lowest rates because they’re considered low-risk.

But non-qualified transactions (card-not-present, membership rewards cards, and loyalty cards) get the highest rates.

This method lacks transparency, and if you’re looking for the cheapest credit card processing out there, this model probably isn’t what you want.

Interchange-Plus Pricing

Interchange-plus pricing is often the best option for any business owner because of its transparency.

Interchange fees are set by the major credit card companies twice a year (in April and October). The “plus” refers to the markup that is added by the payment processing company.

An example of interchange-plus might be: 2.2% + $0.15 per transaction.

But keep in mind that the types of cards that are used, or whether the payment is a card-present or card-not-present transaction matters too, and can affect interchange-plus.

Surcharge Pricing and Cash Discounts

Sometimes people think that surcharge pricing and cash discount programs are the same, but there are some slight differences.

Surcharge pricing involves charging credit card-paying customers an additional fee in order to take that type of payment. The fee covers the cost of transaction fees, which means the merchant pays nothing for those sales.

Cash discount programs offer a cash discount to anyone who is paying with cash (or check, or debit card), and it charges an additional amount to customers paying with credit cards.

A lot of business owners really like these models because they pass along the cost of payment processing to their customers.

What’s the Difference Between a Merchant Services Provider and a Payment Aggregator?

At some point, you may be tempted to choose a payment aggregator over a merchant services provider. It can be a lot easier to start processing payments when you’re using a company like Square or Stripe because they offer practically instant account approval.

But they’re not the same at all and could end up costing you some serious money.

Payment aggregators work by offering their services in exchange for transaction fees. When a customer pays for their order, their money is sent to one master merchant account that lots of businesses use. From there, it is sent to you.

Not having your own dedicated merchant account - or even more than one - is what makes working with payment aggregators different, and riskier for you as a business owner. If you end up having too many chargebacks, your funds could be frozen, and you could lose access to them, sometimes for several months.

With a merchant account provider, your merchant account/accounts is/are your own. It’s not uncommon for some providers to set up more than one for each merchant just because that way if there is a problem with the funds, you won’t lose access to all your money.

What to Consider Before Choosing the Cheapest Payment Processing Company

Now that we have the basics down, let’s talk about what you should think about before choosing a cheap merchant services provider.

The Cost of Hardware and/or Software

How will you be processing payments?

If you plan to use a POS system or credit card terminal, do you have them, or do you need to purchase them?

Pro Tip: Try to avoid leasing because that can get expensive really fast.

If you plan to process online through a payment gateway or virtual terminal, do you have what you need to do that?

Are you integrating with a shopping cart?

These are all things you should consider so you’ll know which companies to approach to meet your needs.

Your Processing Volume

It’s important to know how what your processing volume is for the month, on average. You should also know your average ticket price.

Don’t provide a figure that’s lower or higher than the actual amount. Be honest, and if your business is set to grow in the next year, make sure every processor you talk to knows that too.

Monthly Maintenance Fees

There are some payment processors who don’t charge monthly fees, or those fees are minimal. You’ll keep your costs down if you choose one of them, as long as they meet the other criteria you set for them.

By and large, monthly maintenance fees are typical, and this is a charge you should expect to see.

Questions to Ask Before Making a Commitment

But hold on.

Before you get started on contacting the processors on our list, there are some questions you’ll want to ask before you sign any contracts with them.

What Does (Insert Payment Processing Term Here) Mean?

Once you get started with learning about credit card processing, you’ll find that there are a lot of terms you don’t understand. Don’t be afraid to ask questions, like:

  • What does interchange-plus mean?
  • What is a chargeback?
  • What does it mean to remain PCI Compliant, and what if I’m not?

Getting these answers now can clear up a lot of confusion later.

What Happens When My Business Grows?

Last year your business had a million dollars in transactions processed. But this year, you’re poised to double that.

What happens if that occurs?

Changes in your transaction volume can immediately impact your fees, so make sure you get something in writing about what you can expect when your business grows.

What is Your Customer Service Like?

Just like anything else in life, once you’re processing payments, you’re probably going to run into problems.

This can be anything from your payment gateway not always being online to rejected transactions that shouldn’t be rejected.

Regardless, you’ll want to know your processor has adequate customer service to meet your needs. If not, you could end up losing a lot of customers because they can find what they need elsewhere without issue.

Additional Tips

Here are a few more tips to keep in mind...

Try to Avoid Monthly Minimums

Keep an eye out for credit card processors that require monthly minimums.

That means that you have to do a certain amount of volume each month, and if you don’t, you’re charged a fee.

If you’re a small business owner, having to pay additional fees can eat away at your bottom line, even if the fee seems low (for example: $25 a month).

Seek Out “Hidden” Fees

There can be a lot of hidden fees that are never really mentioned in your contract. Some of them include:

  • Retrieval fees
  • Return fees
  • Annual fees

If you see something in your contract about “other fees,” find out what those other fees are. Don’t be afraid to ask questions if it’s something you don’t understand or agree with.

Add ACH as a Payment Option

ACH is a way for customers to pay through a bank funds transfer. This method typically costs less for merchants because the transaction fees are less.

If you have this option available to you, you could save a lot of money on fees, making your payment processing services much cheaper.

Shop Around to Find the Best Deals

There are so many credit card processors on the market, and a lot of them promise to offer the cheapest rates and lowest transaction fees.

Do your due diligence and research. Don’t just go with the first one you talk to; shop around and really find out who has the best rates and services to meet your needs.

Don’t Agree to Long-Term Contracts

When you start working with a payment processor, you’ll sign a contract, which will be in effect for a pre-determined timeframe.

There are contracts that last five years, and contracts that are set up on a month-to-month basis.

A long-term contract will be extremely difficult to cancel, and probably pretty expensive to cancel too. In fact, if you end up having to cancel a five-year contract after your first year, you could end up being on the hook for a lot of money in early termination fees and charges.

Month-to-month is the way to go. It will ensure that you don’t end up with a hard-to-cancel contract that costs you a significant amount of money to get out of.

The Best Cheap Credit Card Processors

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