Business Credit Cards For People With Bad Credit

 

business card for bad credit

According to most of the traditional indicators, the American economy is doing well, or at least as well as it’s been doing in a while. However, with such necessities as housing and healthcare becoming ever more prohibitively expensive for the average person, is it any wonder that, belying the propagandistic happy talk, articles aimed at people with bad credit are some of our most clicked-on pieces of content?

It’s no secret that having bad credit brings serious complications to your life. This is doubly true if you’re trying to start your own business, when access to credit is of paramount importance. That’s why we’ve compiled a list of business credit cards that specifically cater to entrepreneurs with big dreams but poor credit scores.

Your credit score shouldn’t determine your ability to turn your business dreams into reality. The following credit cards claim to help you sidestep bad credit to live the American dream. Let’s see how well they deliver.

Capital One® Spark® Classic for Business

Here’s a card for the credit-challenged that didn’t leave me wanting to take a Silkwood shower after reading about it: the Capital One® Spark® Classic for Business.

The Spark® Classic for Business is marketed as a business card for people with “average” credit. It carries a high variable APR of 24.49% and a penalty APR of 30.9%. Those are the main drawbacks of the card. On the plus side, you’ll earn an unlimited 1% cash back on every purchase. Now, there are plenty of business credit cards that will see you earning cash back at a higher rate, but the vast majority of those cards are not available to those with more modest credit ratings. The card also carries no annual fee, no foreign transaction fee, and you can get additional employee cards at no extra cost.

As for benefits, you’ll get an auto rental collision damage waiver, travel and emergency assistance services, fraud coverage, and purchase security.

Another benefit of the Spark® Classic for Business is that Capital One will report your card activity to several business credit bureaus. This way, if you make your payments, you can improve your business credit.

Wells Fargo Secured Credit Card

The Wells Fargo Secured credit card, as the name suggests, is a card that requires a security deposit that establishes the amount of your credit line. There are no rewards or cash back to earn, but otherwise, the card is a pretty good deal.

A deposit of at least $300 is required, though you can deposit as much as $10,000. The card is available to U.S. citizens, permanent residents, and nonresident aliens. It’s also another card that reports your card activity to the credit bureaus, thus helping you build your business credit (assuming you make your payments in a timely manner!)

The card’s purchase APR is a variable 20.74% — a notably smaller APR than that of the cards I’ve listed thus far — and there’s no penalty APR. You’ll have to pay an annual fee of $25, which is not as nice as a $0 annual fee, of course, but lower than the annual fees of many cards. There’s a foreign transaction fee of 3% and a late payment fee of up to $38.

A note about interest: if you’re charged interest, the charge will be no less than one dollar. However, by paying off your entire balance by the due date each month, you can avoid paying interest on purchases.

If you make your payments on time, you may eventually become eligible for an upgrade to an unsecured Wells Fargo card, in which case your security deposit will be refunded to you. Another benefit: you’ll get protection for up to $600 on a cell phone against covered damage or theft.

Credit One Bank® Platinum Visa® for Rebuilding Credit

The Credit One Bank® Platinum Visa® for Rebuilding Credit isn’t a business credit card, but it certainly can be used by entrepreneurs with iffy credit as a credit card option. Should they, though? Let’s explore.

The Credit One Bank® Platinum Visa® carries a variable APR of 17.49% to 25.49%, the lower end of which is pretty good for a poor-credit card. What’s unfortunate about the Credit One Bank® Platinum Visa®, however, is the fact that your annual fee can be anywhere from $0 to $75 for the first year depending on your credit. For those whose credit score is bad (isn’t that the target audience here?), there will be an immediate $75 fee, reducing the $300 credit line (the minimum credit line Credit One Bank® will issue) to $225. And for each subsequent year, the annual fee can be as high as $99.

The nicest benefit of the card is undoubtedly the 1% cash back you’ll earn on all eligible purchases. However, consider the fact that only certain accounts will be given a grace period as far as interest goes. Without the grace period, interest will start accruing on your purchases immediately, regardless of whether you pay off your entire balance by the due date. There’s also a $19 charge to add another authorized user, which will come into play if you want to authorize an employee to use your card. Not to mention a 3% foreign transaction fee and a fee of up to $38 for late and returned payments. So while using the Credit One Bank® Platinum Visa® for Rebuilding Credit will see you earning cash back (always a nice bonus for a bad-credit card), it’s not the most consumer-friendly card.

Green Dot primor® Visa® Gold Secured Credit Card

The Green Dot primor® Visa® Gold Secured Credit Card is a secured consumer credit card that can be used for business. The minimum deposit is just $200 while the maximum deposit is $5,000. The issuing company specifically states that there are no credit score requirements to apply for this card.

As it is a secured card, the APR is a low 9.99% (the cash advance APR is 18.99%), and the card carries a grace period of 25 days until interest on purchases will start to accrue, so if you pay off your card in full before the payment due date each month, you’ll avoid interest charges. Unfortunately, there’s an annual fee of $49, a foreign transaction fee of 3%, and there are no rewards or cash back to earn. The card does come with auto rental insurance and zero fraud liability, though.

OpenSky® Secured Visa® Credit Card

Here’s another card that doesn’t even check your credit when you apply. The OpenSky® Secured Visa® credit card is a personal credit card you can use to make business purchases. You don’t even need a checking account to get this card. It reports to all three credit bureaus, thus helping you build up your credit.

Though OpenSky deserves kudos for offering a credit card with no regard to the applicant’s credit score, the APR is a variable 18.64%, which is higher than that of some comparable secured cards. The minimum security deposit is $200, there’s a $35 annual fee, a 3% foreign transaction fee, and there’s a 25 day grace period at the start of each billing period in which you can avoid interest on purchases if you pay off your card in full. Not a bad deal for a card that has no credit score requirements whatsoever.

Applied Bank® VISA® Business

One card that comes up a lot in discussions about business credit cards for those with poor credit is the Applied Bank® VISA® Business, which comes in both secured and unsecured versions. On the face of it, the card seems unsexy but reasonable — get the chance to build up your bad credit, and in exchange, you deal with a low maximum credit limit and zero rewards. However, the closer you examine the Applied Bank® VISA® Business, the worse it looks.

The unsecured version of this card comes with a steep APR of 23.99%, while the unsecured version, which requires an initial deposit of between $200 and $1,000 (your credit limit will be equal to the amount of your secured deposit, and the deposit is refundable upon closing the account), comes with an APR of 9.99%. However, if you get the unsecured card, you’ll have to pay an origination fee of $125 just to get the card, along with a $9.95 monthly maintenance fee (that’s $119.40 per year!). There’s also no grace period for the interest, meaning interest will start accruing as soon as you make your first purchase. Oh, and there’s also a late payer APR of 29.99%. The unsecured Applied Bank® VISA® Business seems to be a cynical attempt to gouge vulnerable people with onerous terms and fees.

The secured card doesn’t come with an origination fee, but it does carry a $48 annual fee which comes due on your first billing statement and will reduce your initial credit availability. And while it drops the monthly maintenance fee and the 29.99% late payer APR, the secured card retains the lack of an interest grace period. For both cards, there’s a $30 per card charge to get additional cards for your employees, a minimum interest charge of $0.50 per transaction, a $38 late payment fee (they can do this because business credit cards are exempt from the requirements of the CARD Act, which limits such fees for personal credit cards), and a 3% foreign transaction fee.

There are better options out there if you want a bad-credit business card. In particular, the unsecured Applied Bank® VISA® Business card ought to be illegal.

Final Thoughts

Statistically, it’s harder to start from a position of disadvantage in America than just about anywhere else. Thankfully, there are credit cards out there designed to cater to those whose circumstances have taken a toll on their credit rating. Of course, some of these cards are just attempts to take advantage of the vulnerable, but if you pay attention to the terms and fees, you can avoid the potential pitfalls and start climbing your way out of your credit hole.

The post Business Credit Cards For People With Bad Credit appeared first on Merchant Maverick.

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The Cheapest Credit Card Processing Companies

Business owners today know that it’s more important than ever to be able to accept credit cards. Customers carry less cash, and rely on credit and debit cards for the majority of their purchases. If you’re an eCommerce merchant selling online, taking “plastic” is just about your only option. Unfortunately, you can’t accept credit cards unless you have a merchant account, and merchant accounts aren’t free. In fact, they can be very expensive – especially for a small business – if you choose the wrong provider.

The credit card processing industry can be very bewildering, especially for a first-time business owner. There are dozens of companies providing processing services, and each of them offers different processing rates, fees, and contract terms. A provider that’s a good deal for a very small business might be prohibitively expensive for a larger one, and vice versa. Naturally, merchants want to cut through the confusion and get a quick answer to the question “Which one is the cheapest?” There’s nothing wrong with wanting to save money, especially for a new business that has to count every penny. However, if you look up “cheap” in the Merriam-Webster Dictionary, you’ll note that while cheap can mean “charging or obtainable at a low price,” it can also mean “of inferior quality or worth.” If you’ve ever been disappointed with a product purchase when you thought you were getting a good deal, you know that these two definitions often go together.

Here’s a quick look at some of our favorite low-cost credit card processors. Some are free to use. You just pay for the transaction you process. We don’t cover all of these in-depth in this post, but you can check out our complete reviews for all the details. 

The Overall Cheapest Credit Card Processing Companies for 2018

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Best Choice For Small-ticket, Canada, Mobile, eCommerce  All businesses, Mobile, Retail eCommerce, Mobile Canada, Restaurants Large-ticket, All-in-one, Recurring billing
POS and Other Features Included Yes Yes Yes No Yes
Rate Matching/ Negotiable No Yes No Yes Yes
Pricing Structure Flat Rate Interchange-Plus Flat Rate Interchange-Plus Subscription
Retail Rates 2.75% 0.30% + $0.10 2.70% 0.20% + $0.10 0.00% + $0.08
Basic Monthly Fee $0 $0 $9 $9.95 $99

Before we delve into specific processors, there are two important points that you need to understand:

  1. The company offering the lowest processing rates or fees isn’t necessarily the cheapest. The total percentage of your credit card sales that you’ll have to fork over to your merchant account provider isn’t an easy thing to calculate in advance with any precision. Variable processing rates and hidden (or at least unanticipated) fees can easily result in you paying much more than you thought you were going to for processing. Companies offering flat-rate pricing fare much better in this regard, as their simple pricing structure makes it relatively easy to estimate your monthly processing costs.
  2. The “cheapest” processor isn’t necessarily the best one for your business. While you naturally want to be able to accept credit cards while paying the least amount of money for the privilege, companies offering the lowest rates often cut corners in other aspects of their service to make those low rates possible. Poor customer service, for example, is a common problem among the least-expensive processors. If you want the best overall, you might also check out our top picks for small business credit card processing.

Types Of Providers

With the advent of new, low-cost providers, there are now two broad categories of companies providing credit card processing services. These include traditional (or full-service) merchant account providers, and payment services providers, who offer credit card processing, but without some of the features of a full-service merchant account. It’s very important that you understand the difference between the two.

Payment service providers (PSPs) can process your credit card transactions, but they don’t provide you with a unique merchant ID number for your business. Instead, your account is aggregated together with other merchants. This lowers the cost of things like monthly account fees and PCI compliance, but it also means that your account is much more vulnerable to being suddenly frozen or shut down for the slightest hint of fraud. Getting your account working again is complicated by the fact that most PSPs provide little in the way of one-on-one customer service. For a very small business, a PSP may very well be more affordable than a full-service merchant account, especially since you won’t have to pay so many recurring fees just to keep your account open. Be aware, however, that you’ll constantly be running the risk of suddenly losing access to your account and not being able to accept credit cards at all with a PSP. If your business processes a high number of credit card transactions on a daily basis, the loss of business you’ll incur if your account is frozen is quite high. Popular PSPs include PayPal, Square, and Stripe.

Traditional merchant accounts include a number of features you won’t find with most PSPs. The primary distinction is that you will be assigned a merchant identification number that is unique to your business. This number automatically identifies you to processors, issuing banks, and credit card associations. While it might not sound like much, having a unique merchant ID number helps to lower the risk of fraud and improves the stability of your account. While you still might have to endure a hold on funds for an unusually large transaction, the chances of your account being completely frozen for no apparent reason are much less than they are with a PSP. Merchant account providers also offer a host of ancillary services, including PCI security scans, customizable payment gateways for online payments, support for ACH (eCheck) payments, and many others. These bells and whistles don’t come cheap, of course. You’ll pay more in monthly fees than you will for an account with a PSP. However, you’ll also pay lower processing rates, especially if your merchant account provider offers interchange-plus pricing. For many medium-sized and larger businesses, a full-service merchant account will actually be less expensive than a PSP.

How We Chose

We used a number of criteria to determine which processors offered the lowest overall costs and the best service in most situations, including the following:

  • Pricing: Since we’re profiling the cheapest processors in the industry, it should come as no surprise that pricing would be our top criterion. It isn’t that simple, however. Pricing can be very complex, and there are a lot of variables to analyze in making a cost comparison between one provider and another. Fortunately, flat-rate pricing is relatively easy to analyze, as there’s usually little or no variability in the processing rates. Interchange-plus pricing, on the other hand, is very complex, as there are a bewildering number of possible rates charged under the “interchange” portion of the processing rate formula. To get a better idea of just how complicated processing rates can be, check out our Complete Guide to Credit Card Processing Rates & Fees.
  • Contracts: No one wants to be stuck in a long-term contract with an expensive early termination fee if you close your account early, but that’s what many traditional merchant account providers will offer you. All the companies profiled here – including both PSPs and full-service merchant account providers – offer month-to-month contracts. You can close your account and switch to a different provider any time you want, and with no penalty.
  • Hardware: Unless you’re running an eCommerce-only business, you’re going to need some equipment to process your customers’ credit cards. Most of the companies profiled here offer a variety of EMV-compliant credit card terminals, POS systems, and mobile card swipers. Equipment is offered for sale at competitive prices – sometimes it’s even free! You can also buy your own equipment and have it reprogrammed to work with your provider’s service. Note that Stripe is eCommerce-only and PayPal only offers a mobile payment solution through their ancillary service, PayPal Here.
  • eCommerce support: Buying online continues to overtake traditional retail shopping, and all our profiled providers offer support for eCommerce. This includes both a payment gateway to send payment data to the processor and a virtual terminal to allow you to enter transactions on your computer or mobile device. Each provider also offers options for integrating your website with online shopping carts and developer tools for customizing the interface between your site and their services.
  • Customer support: While every provider offers customer support and service, some do a much better job at it than others. We looked for vendors that provided 24/7 telephone support, as well as an online knowledgebase that allows merchants to troubleshoot common problems on their own. As we’ve noted, some PSPs don’t provide very good customer support at all. That’s one of the trade-offs you’ll have to be aware of if you want to go with the “cheapest” option for credit card processing.

Remember, there isn’t a single processor out there that can offer the lowest costs to every merchant. What might be a very inexpensive solution for you might not be such a good deal for someone else. Also, paying the least amount of money for processing won’t be of much use to you if you have to worry about your account suddenly being frozen or shut down, or if the customer service behind your account isn’t adequate to solve technical problems for you when they arise. That said, here are our six top choices for the cheapest credit card processing companies:

Square Payments

Everyone has heard of Square (see our review) by now. With its free Square Reader, app-based payment system, and simple pricing structure, it’s one of the most popular processing services on the market for small businesses. Square’s pay-as-you-go system allows businesses that ordinarily couldn’t afford a merchant account to accept credit cards.

Retail businesses love Square for its low-priced card readers, which replace traditional credit card terminals with a smartphone-based system that’s both affordable and mobile. In addition to a card reader, you’ll need the free Square app, a smartphone, and an Internet connection. Square’s original card reader is free and you’ll receive one when you open your account. However, it can only read magstripe cards and requires a headphone jack to function. Most users will want to shell out a few extra bucks for a newer, EMV-compliant reader. The Square reader is only $49.00, and supports both EMV and NFC-based payment methods. It also uses Bluetooth to connect to your smartphone or tablet – no headphone jack required.

 

Cheapest Mobile Credit Card Processing Company

The Essentials:
✓ $0 monthly fee
✓ 2.75% for all card-present transactions
✓ Exceptional POS app included free
✓ Free credit card reader available
Proprietary software suite includes:
• Point of sale software
• Inventory management
• Mobile app
• Virtual terminal
• Invoicing/billing
• API for custom solutions
Visit the Square website
Read our Square review

Square’s pricing structure is about as simple as it gets. There are no monthly fees whatsoever for a basic account, and none of the types of “hidden” fees that traditional merchant account providers like to tack on. While some advanced features require a monthly subscription, these are entirely optional, and most businesses probably won’t need them. Square’s processing rates are also very simple:

  • 2.75% for all card-present transactions (including magstripe, EMV, and NFC)
  • 2.90% + $0.30 for all invoices and eCommerce transactions
  • 3.50% + $0.15 for all virtual terminal and keyed-in transactions

That’s it! You don’t have to worry about non-qualified transactions, batch fees, or anything else. Funds are deposited into the user’s account within 1-2 business days in most cases. Billing is month-to-month, so you don’t have to worry about long-term contracts and early termination fees. You can quit anytime you want without penalty.

This all sounds great – and it is – if you’re a small business that has to watch every penny and can’t afford to shell out a significant amount of money every month just to have a merchant account. For a larger business, however, Square’s pricing actually isn’t the best deal available. Flat-rate pricing is deliberately on the high side because it has to pay for all the other services that most providers bill you separately for. At a certain point (roughly $10,000 per month in processing volume), you’re actually better off going with a full-service merchant account provider that offers interchange-plus pricing. Yes, you’ll have to pay those pesky account fees, but your processing rates will be so much lower that you’ll save money overall.

Besides high processing rates, Square has a few other drawbacks as well. We’ve already mentioned that your account is much more likely to be frozen or terminated unexpectedly, but what makes this situation worse is that Square’s customer service isn’t so great. The company didn’t even have telephone support for several years after it launched, but it does now. Unfortunately, it’s only available during business hours, and the large number of complaints about it suggests that the quality of support you’ll receive if you call in with a problem is inconsistent at best.

But is it really the cheapest way to go? Well, it depends. For a very small business that doesn’t have a high processing volume, Square’s lack of account fees and predictable pricing can make it very affordable. On the other hand, a larger business with a high processing volume will end up paying much more under those flat-rate prices than it would with an interchange-plus pricing plan.

Square keeps costs low by aggregating accounts together rather than issuing each user a unique Merchant ID number. Because of this, you won’t get a true full-service merchant account. The trade-off is that there’s a much higher chance that your account will be frozen or terminated without notice if fraud is suspected. This might be a minor inconvenience to a retail business that mostly deals in cash and only occasionally takes credit cards, but it’s catastrophic to an eCommerce business where cash isn’t an option.

PROS:

  • No monthly account fees
  • Low-cost EMV-compliant card readers available
  • No long-term contracts or early termination fees

CONS:

  • Not a full-service merchant account; no unique Merchant ID number
  • Frequent account holds and terminations
  • Flat-rate pricing is more expensive than interchange-plus for larger businesses

For a more detailed look at Square, be sure to check out our full review.

Payline Data

Payline Data (see our review) covers all the bases for small business transactions, from mobile and online payments to in-store sales. They offer easy-to-understand pricing plans that are very affordable, especially for low-volume sellers. However, the company’s website fully explains all of the extra features and their associated costs, so you know up front what you’ll have to pay. Payline also stands out from the crowd for their corporate philosophy of charitable giving and support for non-profits through discounted pricing and their “Commercial Co-Venture” program.

 

Cheapest Merchant Account Provider

The Essentials:
✓ No early termination fees
✓ Transparent interchange-plus pass-through pricing
✓ Outstanding $0 monthly fee option
✓ Exceptional ecommerce shopping cart compatibility
Proprietary software suite includes:
• Excellent mobile processing app
• Easy integration API for customization
• Virtual terminal
• Billing management
Visit the Payline website
Read our Payline review

For brand-new or mobile businesses, Payline Start is the most affordable plan. There’s no monthly fee, and pass-through markup rates are set at 0.30% + $0.10 per transaction. In addition to the free virtual terminal, you’ll also receive a free Ingenico GX5 card reader and the Payline Mobile app to go with it. If you’re looking for value, but want better equipment and lower rates, the Payline Shop plan might be right for you. This plan includes the same features as the Payline Start plan, but lowers your processing rate. The plan costs $10 per month, and markup rates are set at 0.20% + $0.10 per transaction. Mobile businesses and small to medium retailers will benefit the most from this plan.

For more information, see our complete Payline Data review.

CDGcommerce

No account setup fees. No PCI compliance fees. No gateway fees. No monthly minimums, either. There’s a lot of things that CDGcommerce (see our review) doesn’t charge you for, making them a very affordable option for small businesses and those just getting off the ground. They also offer month-to-month contracts with no early termination fee, so in the unlikely event that you aren’t happy with their service, you can close your account without penalty.

So, what do you pay for? Besides processing charges, you’ll only have to pay a $10.00 monthly account fee. This gets you both a full-service merchant account and a payment gateway. You can select either CDG’s own proprietary Quantum gateway or Authorize.Net. Either way, there’s no fee for using the gateway, and no additional per-transaction processing fee. While this is a great deal, you also have the option of adding the cdg360 security package for an extra $15.00 per month. It comes with customized security alerts, PCI-DSS vulnerability scans, and $100,000 in data breach/theft protection. It’s well worth paying a little extra for, especially for eCommerce merchants.

Good Option for Online Payment Processing

The Essentials:
✓ No early termination fees
✓ Transparent interchange-plus pass-through pricing
✓ Free payment gateway option with activation within an hour
✓ Exceptional ecommerce shopping cart compatibility
✓ Over 20 years with excellent reputation
Proprietary fraud prevention suite includes:
• Automatic high-risk order detection
• Dialverify phone order verification
• Cardholder authentication (VbV/MSC)
• Chargeback defender
• Easy integration and API for customization
Visit the CDGcommerce website
Read our CDGcommerce review

We don’t recommend leasing a credit card terminal, but CDG has a program that’s very different from traditional leases, and is actually a good deal. For only $79 per year (for terminal insurance), CDG will provide you with a terminal and keep it updated. This works out to $6.58 per month, a fraction of what most terminal leasing companies will charge you. If you need a wireless terminal, you’ll also have to pay $20.00 per month for wireless data and an additional $0.05 per transaction in processing fees.

You won’t need to negotiate with CDG to figure out your processing rates. All their rate plans are interchange-plus and are fully disclosed on their website. The company offers a choice between Simplified and Advanced pricing plans, with Simplified pricing being designed for merchants processing less than $10,000 per month, and Advanced pricing being for those processing $10,000 or more per month. Here are their current rates:

Simplified Pricing:

  • Online: interchange + 0.30% + $0.15 per transaction
  • Retail (swipe or POS): interchange + 0.25% + $0.10 per transaction
  • Mobile: interchange + 0.25% + $0.10 per transaction
  • Non-profit: interchange + 0.20% + $0.10 per transaction

With very low account fees and competitive interchange-plus processing rates, CDGcommerce offers a great combination of price and value. If you’ve been using Square or PayPal and want to upgrade to a full-service merchant account, they’re an excellent option.

PROS:

  • Interchange-plus pricing
  • Month-to-month billing with no long-term contracts or early termination fees
  • Free payment gateway with virtual terminal
  • Excellent customer service

CONS:

  • Only available to US-based merchants

For more information, see our complete review here.

Dharma Merchant Services

Headquartered in downtown San Francisco, California, it should come as no surprise that Dharma Merchant Services (see our review) is far more socially responsible than just about any other merchant account provider in the industry. For you, that enlightened corporate philosophy translates into fair and transparent pricing, reasonable contract terms, and excellent customer support.

Because they don’t try to squeeze extra money out of struggling small business owners, you won’t have to pay an account setup fee or an annual fee. There’s no monthly minimum, either. You will pay a $10.00 monthly fee and a $7.95 per month fee for PCI compliance. Other fees (most of which are per-occurrence, such as chargeback fees) are fully disclosed on their website. Like many of our other favorite processors, Dharma doesn’t have long-term contracts, either. Billing is month-to-month, and there’s no early termination fee if you close your account.

Dharma Merchant Services review

Good Option for Nonprofits and B2B Payments

The Essentials:
✓ Provides discounted rates for nonprofits
✓ Exceptional customer service
✓ Transparent interchange-plus pass-through pricing
✓ Proven track record with nonprofits
Free MX Merchant Software includes:
• Level 2 and level 3 data for lower interchange rates on B2B processing
• Virtual terminal
• Invoicing/billing
Visit the Dharma Merchant Services website
Read our Dharma Merchant Services review

The company uses interchange-plus pricing exclusively and lists their rates right on their website. Here’s their current processing rate information:

  • Storefront: interchange + 0.25% + $0.10 per transaction
  • Virtual: interchange + 0.35% + $0.15 per transaction
  • Restaurant: interchange + 0.20% + $0.07 per transaction

If you need a terminal, Dharma will sell you either the First Data FD-130 or Verifone Vx520. They’ll also reprogram your existing terminal, if you have one. Need a POS system? Dharma offers the Clover Mini, and will sell it to you outright rather than leasing it. If you need a mobile payments system instead, Dharma offers the Clover Go for $99.00, plus a $10.00 monthly fee. For $139, you can upgrade to the Clover Go Contactless, which connects via Bluetooth instead of your phone’s headphone jack.

Dharma doesn’t have a minimum monthly volume requirement, but they do acknowledge that their fees and rates aren’t the lowest on the market for businesses that process less than $10,000 per month. You’re still free to sign up if you need a full-service merchant account, but they recommend either PayPal or Square if you don’t.

PROS:

  • Transparent interchange-plus pricing
  • Minimal account fees
  • Full range of services and equipment for both retail and online businesses
  • Great customer support

CONS:

  • Not a good fit for low-volume (less than $10,000 per month) accounts

For more information on Dharma, see our complete review here.

Helcim

Headquartered up in the Great White North, Helcim (see our review) provides outstanding service and affordable prices to both Canadian and US-based merchants. They offer interchange-plus pricing exclusively, and their website features one of the most detailed and transparent explanations of their rates and fees that you’ll find anywhere.

Transparency and honesty are major themes with Helcim, which is something you won’t often find with many other providers. Reading their website will give you a quick education on all the sneaky, misleading tricks that other companies use to squeeze more money out of their merchants. Fortunately, you won’t have to worry about this kind of behavior with Helcim. Not only do they fully disclose their processing rates, account fees, and contract terms, but they also provide all their services at fair, competitive prices.

 

Good Option for Canadian Businesses

The Essentials:
✓ No early termination fees
✓ Transparent interchange-plus pricing
✓ Exceptional reputation in Canada
✓ High-quality all-in-one payment platform
✓ Great educational material
Proprietary Helcim Commerce solution includes:
• Point of sale software
• Inventory management
• Billing and invoicing
• Virtual terminal
Visit the Helcim website
Read our Helcim review

Unlike many of their competitors, Helcim encourages merchants to buy their credit card terminals outright rather than leasing them. The company offers a number of popular models, most of which are EMV-compliant. For a little extra cash up front, you can also get an NFC-capable terminal that supports Apple Pay and other similar mobile payment methods. If you already have a terminal, they’ll reprogram it to work with their system for free. Unfortunately, Canadian EMV-compliant terminals are not designed to be transferred or resold, so Canadian customers will have to use the rental option or buy a new machine. Renting on a month-to-month basis (which is not the same as leasing) is usually the best choice for Canadian merchants.

Helcim offers three basic pricing plans: a Retail Plan, an eCommerce Plan, and a combined Retail + eCommerce Plan. The Retail Plan costs a flat $15.00 per month. This fee covers PCI compliance, and there are no account setup or statement fees. There’s also no monthly minimum. All swiped transactions are processed at a rate of interchange + 0.25% + $0.08 per transaction.

Helcim’s eCommerce Plan works the same way, but it costs $35.00 per month. This gives you access to the company’s proprietary Helcim Payment Gateway, which includes support for recurring billing, a customer information storage system, shopping cart integration, and a customizable payment gateway API. The plan also includes a virtual terminal that allows mail order or telephone order businesses to key in transactions on any computer. All online (i.e., card-not-present) transactions are processed at a rate of interchange + 0.45% + $0.25 per transaction.

The Retail + eCommerce Plan includes all features of the other two plans, and costs $50.00 per month. Processing rates are the same as for the other two plans.

There are few downsides to Helcim’s services. One way they’re able to keep costs so low is to exclude high-risk merchants from signing up. This policy lowers the company’s overall risk profile, but it also means you’ll be out of luck if you meet their high-risk criteria. Because they charge a monthly fee (albeit a very reasonable one), they’re also not quite as affordable as Square, PayPal, etc. if you’re processing below $2,500 per month. We’re also still waiting for the company to introduce an EMV-compliant mobile card reader. They currently offer a basic, magstripe-only reader that requires a headphone jack to communicate with your smartphone or tablet.

PROS:

  • Extremely transparent fee structure
  • Very competitive rates for businesses processing over $1,500 per month
  • Excellent customer service and support

CONS:

  • Not suited for very small businesses processing less than $1,500 per month
  • Not available for high-risk merchants
  • Mobile card reader isn’t EMV-compatible

For more information, see our complete review here.

Popular (But Less Reliable) Inexpensive Options

PayPal

Everyone has heard of PayPal (see our review). And just about everyone uses it. With an active user base of almost 200 million customers in 200 markets around the world, it’s a good bet that most of your customers use it, too. But can the company fill all your processing needs? The short answer is yes. PayPal has all the features you would need to run a business – either retail or eCommerce – using just their payment processing services and equipment. But would this be cost-effective? Here’s where it gets complicated. While the company offers flat-rate pricing and no monthly fees for its basic accounts, those flat-rate prices are kind of on the high side. Also, if you need features such as a virtual terminal, your account isn’t free. Instead, it’s $30.00 per month, plus your processing charges.

PayPal doesn’t offer true, full-service merchant accounts. Instead, they function as a payment service provider (PSP), which keeps costs relatively low, but also means that they’re quick on the trigger to freeze your account if they suspect that fraud has occurred. Like most PSPs, they don’t have long-term contracts and don’t charge early termination fees. Billing is month-to-month, and an account that doesn’t have a monthly fee is good for a business that only processes credit card transactions occasionally.

PayPal’s basic rate for online transactions is 2.9% + $0.30 per transaction. International payments and transactions processed through their virtual terminal cost more, while registered charities and mobile payments get a discount. PayPal fully discloses their rates on their website, so you’ll always know in advance what you’ll be paying.

While PayPal is designed primarily for eCommerce businesses, the company also supports retailers through integration with numerous third-party mobile POS systems and their own mobile payments system, PayPal Here. The latter now includes a Bluetooth-enabled EMV card reader. While many companies offer a free virtual terminal, but charge a monthly fee for the payment gateway needed to use it, PayPal does just the opposite. Their PayFlow Payment Gateway comes with no monthly fee, but if you also need a virtual terminal, you’ll pay $30.00 per month for it. There’s also a small additional per-transaction processing charge.

While these are all great features, there are also some not-so-great things about PayPal that you should be aware of before you sign up. Customer support through their telephone support line is very inconsistent. Some customer service representatives are quite knowledgeable and helpful, while others are not. Fortunately, the company provides an online knowledgebase that should help you solve common problems on your own. As we’ve mentioned, sudden account holds or terminations are also a possibility. If you simply can’t afford to lose access to your account temporarily, consider a different option.

For some businesses, PayPal is really all you need. If you don’t need a virtual terminal or any of the other features of the $30 PayPal Payments Pro plan, you can avoid monthly fees altogether and operate on a pay-as-you-go basis. For larger businesses and those with more specialized needs, PayPal makes an excellent secondary payment option on top of your regular merchant account.

PROS:

  • No monthly fees (for standard account)
  • Transparent flat-rate pricing
  • Most customers have a PayPal account

CONS:

  • High flat-rate processing charges
  • Frequent account freezes, holds, and terminations
  • Inconsistent customer support

For more detailed information about PayPal, see our complete review here.

Stripe Payments

Stripe logo

Just like Square is popular with small retail businesses, Stripe (see our review) is the darling of the eCommerce world. The company functions as a payment service provider (PSP), aggregating accounts and keeping costs low for their clients. There are no monthly fees, and their flat-rate processing plan is extremely simple.

Stripe is so focused on eCommerce that they don’t offer much of anything to retailers. There are no credit card terminals, POS systems, or even mobile payments systems for your smartphone or tablet. So, if you’re a retailer, you can skip right on ahead to the next company profiled below. Stripe is not for you.

eCommerce-only merchants, on the other hand, will find a very robust variety of services to help them sell online. Integration is the name of the game at Stripe, and their payments processing service works with just about every online shopping cart on the market. They also have a vast library of APIs that allow businesses to customize the interface between Stripe and their websites. If you’d like to sell your products through your own app as well as on your website, they offer an impressive in-app purchasing capability.

So, how much does all this techy goodness cost? The short answer is not much – at least under certain circumstances. Since all your transactions will be processed online without a physical card being swiped or dipped, Stripe charges a flat 2.9% + $0.30 for all credit and debit card transactions. eCheck (ACH) and Bitcoin payments are charged a mere 0.8% per transaction. This is the same rate that Square and PayPal also charge for online transactions. There are no additional account fees, although you will be charged $15.00 for each chargeback. Chargeback fees are unavoidable with any processor, but unlike most companies, Stripe will refund your money if the chargeback investigation comes out in your favor.

You also won’t have to worry about long-term contracts or early termination fees, as Stripe bills on a month-to-month basis. This is a useful feature for a growing eCommerce business, as Stripe’s flat-rate pricing suffers the same flaw that plagues Square and PayPal: for a high-volume business, their flat-rate pricing is actually more expensive than what a full-service merchant account can provide through interchange-plus pricing.

While Stripe has some very impressive features, it also has a few serious drawbacks. Like other payment service providers (PSPs), account holds and terminations occur frequently and without notice. Stripe uses a machine learning-enabled algorithm to scan accounts for possible fraud, and it’s definitely programmed to err on the side of caution. This wouldn’t be so bad if you could call up a human customer service representative on the phone and resolve the situation. Unfortunately, you can’t – Stripe doesn’t offer telephone support at all. Instead, you’ll have to contact the company through email and wait for a response. Judging from the many complaints about Stripe’s customer service, the quality of those responses leaves a lot to be desired.

Despite its shortcomings, Stripe is a good choice for a new eCommerce venture. You’ll enjoy pay-as-you-go service with no monthly fees, and you won’t have to worry about long-term contracts. The company’s extensive library of developer tools can offer you options that you might not be able to find with other providers. Just be aware that when your business grows beyond a certain point, you’ll need the security and reliability of a full-service merchant account. You’ll also save money on processing charges by switching to interchange-plus pricing.

PROS:

  • Simple flat-rate pricing structure
  • No additional fees or long-term contracts
  • Huge API library for developers

CONS:

  • Flat-rate pricing is more expensive than interchange-plus for high-volume merchants
  • Frequent account holds and terminations
  • No telephone customer support

For more information, see our complete review here.

Final Thoughts

As you’ve probably noticed by now, pricing for credit card processing is a ridiculously complicated subject. With dozens of interchange rates and a wild assortment of fees, trying to figure out how much accepting credit cards is going to cost your business inevitably comes down to guesswork. While you can make a reasonable estimation based on your processing history and your business type, it’s not realistic to expect that you’ll be able to come up with a precise figure. Fortunately, the companies we’ve profiled here fully disclose their processing rates and fees, making your job of estimating your costs much easier.

We’ve only listed six of the most popular and most affordable processors here, so be aware that the cheapest processor for your particular business might not be one of them. There are plenty of other providers out there who are also competing for your business, so check them out, too!

Here are a few very general rules of thumb regarding merchant account pricing:

  • If your business has a low processing volume, you’ll want to find a provider with low monthly and annual fees. One of the most appealing aspects of Square or PayPal is that they don’t charge any monthly fees. This is a great feature if your business is seasonal or you only occasionally have a need to accept credit cards. Processing rates won’t be as important for low-volume merchants.
  • If your business has a high processing volume, fees aren’t as important, and you’ll want to get the lowest processing rates you can find. Paying one or more monthly fees for a merchant account is an insignificant expense for a larger business, but higher processing rates can make a serious dent in your profits.
  • Carefully analyze both the percentage rate and the per-transaction processing fee when evaluating rates. While you’d ideally like them both to be low, which one is more important will depend on your average transaction size. If you process a lot of smaller transactions, a $0.30 per transaction fee can add up quickly. On the other hand, if your transactions are usually larger, you won’t need to be as concerned with the per-transaction fee, and should try to get the lowest percentage rate you can find.

While all the companies we’ve profiled here provide excellent service at an affordable cost, some are better suited to particular types of businesses than others. Square, for example, works best for very small retail businesses. PayPal and Stripe, on the other hand, are a better fit for small eCommerce merchants. Full-service merchant account providers like Helcim, CDGcommerce, and Dharma are more well-rounded, but CDG is a better fit for smaller businesses, while Helcim and Dharma work better with larger ones. For a side-by-side comparison of some of the companies listed here (and a few other excellent providers), please see our Merchant Account Comparison Chart.

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