Square Loyalty Program Review

Square Loyalty Promotional Image

The concept of a punch card is nothing new; coffee shops the world over have been slinging their punched out business cards alongside foamy espresso beverages for decades. Likewise, the concept of companies offering rewards to returning companies goes way back into the annals of entrepreneurship. But as the business sector dives further into the capabilities of digital tools, loyalty programs have come along for the ride.

Square has been tinkering with loyalty features since 2012. About two years ago, they stopped offering a free add-on to the basic Square POS, creating a paid-for loyalty product instead. After some concerns about that initial re-launch, Square Loyalty is back again with a new pricing scheme and feature list.

Square has consistently expanded its business products and generally does a decent job at creating useful tools that people feel confident implementing in their businesses. How well does the new version of Square Loyalty measure up? Let’s find out!

Reader eCommerce Retail Food Service
Free App & Reader Square eCommerce Square for Retail Square for Restaurants
Get Started Get Started Get Started Get Started
Free, general-purpose POS software and reader for iOS and Android Easy integration with popular platforms plus API for customization Specialized software for more complex retail stores Specialized software for full-service restaurants
$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

Pricing

The price of Square Loyalty is determined by how many “loyalty visits” you get in a given month. A loyalty visit is exactly what it sounds like: whenever a customer signs up for or returns to your loyalty program, that counts as one visit. Square tracks your visits, then charges you based on the following pricing scheme:

Loyalty Visits Price Per Month
1-50 $25
50-100 $35
101-200 $50
201-500 $75
501-1,000 $125
1,001-2,500 $175
2,501-5,000 $250
5,001-10,000 $500

If you think you will require more than 10,000 loyalty visits in a single month, you will need to get in touch with Square for more information on exact pricing.

Ease Of Use

The team at Square has built their brand on the simplicity of their software; just about anyone can pick Square up and use it with little-to-no training. Not surprisingly, the loyalty rewards program operates with the same simplistic design. This is a system designed for intuitive use on both sides of the register for customers and employees alike. As long as you already use Square products for payment processing and point of sale, this will work just fine for you.

Setting up your rewards account is as simple as determining the economy of your rewards points (how many should customers get after a visit?) and creating the rewards themselves (how will customers spend their points once they have accumulated?). From there, you can refine your system as time goes on, making adjustments as needed–you will want to be clear with your customers about what is going on, though!

On the customer side, simply have new program members enter their phone numbers to sign up. From then on, your Square Register will remember the customer and apportion their points on subsequent views. Speaking as one who has encountered Square loyalty rewards in the wild, I can report that the system works well, and is even a little exciting!

Features

Square Loyalty comes with the following features:

  • Points System: You get to pick between three different loyalty schemes: by visit, by amount spent, or by item. Customers will get text message updates on the number of points they have built up. Basically, your decision for which system to use will come down to your industry and business model. Selling beverages or baked goods? Visit-based rewards might be best. Working retail? Amount-based might be best. Selling niche products? You might want to go by item.
  • Customer Rewards: You can select three different kinds of rewards that align vaguely with the three different loyalty schemes: free item, discount on the entire sale, or discount on a product category. Obviously, some business types will find one of these systems more useful than others; it’s up to you to determine which will be best for you.
  • Customer Data: Once your customers sign up for loyalty rewards, you can begin tracking information about them. In some industries — coffee shops, for example — you get to know repeat customers quickly as a matter of course. In others, it may be valuable indeed to know a bit more about your clientele, particularly things like their most purchased items and how often they visit your shop.
  • Analytics: Square gives you a bird’s eye view of how your loyalty program is helping your business, showing data on all your customers and how often they visit your shop. You can see how many people use your loyalty rewards, how many points they have, and more. This is the feature that will tell you how well your loyalty program is working, so I definitely recommend checking this out.

Final Thoughts

Square boasts that customers who enroll in their loyalty programs spend 37% more than non-enrolled customers. A cynical person might point out that the kind of person who signs up for a loyalty program would be automatically more likely to spend more at a particular store than other, but at the same time, 37% is difficult to argue with.

But is Square’s loyalty feature ultimately worth the price? I definitely found the monthly cost a bit prohibitive; $50 for just over 50 loyalty visits is a lot. It is possible that at higher subscription levels the price comes down and makes more economic sense, but in order for that to be true, you will need more customers to sign up.

On the other hand, from what I can tell, the feature set works reasonably well — especially when you consider how closely it plays with Square’s flagship POS product. That right there might make it worth it to stop and consider coughing up the cash, especially if you are using one of those snazzy new Square Registers. I suspect many Square Loyalty users hop on board the hype train for this very reason; they are already using some kind of Square product in the first place. In fact, one of the biggest caveats to Square Loyalty (apart from price) is the fact that in order to use it, you will have to already be using Square POS (at the very least); if you have a different system, this is not the loyalty program you have been looking for.

As usual, the final decision comes down to you. Are you using a Square product? Is the touted increase in customer engagement worth what might be an excessive price? Fortunately, you can give it a try before deciding for sure. Be warned though! Though Square provides a generous 30-day trial, your customers may feel less than generous if they discover that your rewards program has up and disappeared just as they were about to redeem one of their rewards. Tread carefully then, and make sure you are confident in your decisions before committing even to the free trial.

Reader eCommerce Retail Food Service
Free App & Reader Square eCommerce Square for Retail Square for Restaurants
Get Started Get Started Get Started Get Started
Free, general-purpose POS software and reader for iOS and Android Easy integration with popular platforms plus API for customization Specialized software for more complex retail stores Specialized software for full-service restaurants
$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

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Do High-Risk Merchant Accounts With Instant Approval Exist?

Instant approval

It all started with the telegraph. Invented in 1837, this technological advance enabled nearly-instantaneous communication across vast distances for the first time ever. Its introduction into commercial use disrupted a courier system that had been the only available method of communicating from one distant place to another for thousands of years. In 1861, the completion of a telegraph line connecting the west and east coasts of the United States rendered the fledgling Pony Express obsolete practically overnight.

Today, of course, we take instantaneous communication for granted. Thanks to computers and the internet (and the fiber optic cables that actually connect them), we can send huge amounts of data anywhere in the world in practically no time at all. Given all this wonderful technology, if you’re a high-risk merchant, you might be wondering why it takes so long to get approved for a merchant account. You might also be sorely tempted by claims of “instant approval” from merchant account providers who advertise directly to the high-risk community, especially if you’re running an eCommerce business and you absolutely need to be able to accept credit cards. In this post, we’ll explain what “instant approval” really means and why it’s usually not a good idea, no matter how desperate you are to get a merchant account. We’ll also delve into how the high-risk merchant account approval process works and what you can do to make it run a little smoother – and faster. Finally, we’ll recommend a few reputable high-risk specialists that can get you set up with a stable and fairly priced merchant account.

What Is “Instant Approval”?

We get it. It’s no fun trying to run your business with an “In God we trust; all others pay cash” sign posted next to your cash register because you can’t get a merchant account. It also means disappointed customers and lost sales. Under these circumstances, the temptation to sign up with the first provider who will actually accept your business can be pretty overwhelming. Unfortunately, it’s also a really bad idea.

The simple reality is that it always takes longer to obtain final approval for a high-risk merchant account than it does for a low-risk business. While traditional low-risk businesses can expect to be approved within a day or two, high-risk merchant accounts require a minimum of three to five business days to be approved, and this process can sometimes take as long as three to five weeks. Why so long? Approving a high-risk business requires a far more extensive investigation into the credit history of both the business and the business owner. Poor personal credit on the part of the owner is one of several reasons why a business might be classified as high-risk in the first place. You’ll have to submit far more documentation and wait far longer for this process to be completed than a low-risk business would.

So, how can some providers even claim to offer “instant approval”? Well, for one thing, it’s not really instantaneous at all. If you see a provider advertising “instant approval,” there’s usually some fine print included with the offer specifying that approval actually takes 24-48 hours. While that’s a lot faster than the normal time-frame, it’s still not exactly “instant.” What these providers aren’t telling you is that approval for your merchant account is actually a two-step process. First, you must be approved by your merchant account provider. Second, you must be approved by the acquiring bank or backend processor that is actually going to underwrite your account and process your transactions.

Getting approved by your merchant account provider is actually pretty easy, but not for good reasons. The truth is that your merchant account provider’s business model is based on signing up as many merchants as possible in order to generate a profit. They’re also quite eager to have you sign a long-term contract, guaranteeing that you’ll be on the hook for three years or even longer. And if you close your account or go out of business, they’ll usually collect a hefty early termination fee (ETF). Because these early termination fees can run into the hundreds of dollars, it’s possible in some circumstances that your provider will make more money from the ETF than they will from your processing fees. High-risk businesses tend to fail at a higher rate than low-risk enterprises, and most of these providers will not hesitate to charge you the full ETF even if you’re going out of business. Although more and more providers are now offering month-to-month billing with no early termination fees to low-risk businesses, it’s still very unusual not to be required to sign a long-term contract – with an ETF – if you’re a high-risk business. Even the most reputable high-risk specialists almost always impose these terms, so be prepared for it and be sure to review your contract documents very carefully before you sign up for an account, even with a reputable provider.

The second step of the approval process, getting your acquiring bank or processor to approve you, is where the delays and difficulties come into play. The risk departments at these institutions really don’t like to approve high-risk merchant accounts due to the increased chance that you’ll run into problems later on. Every processor has their own criteria for determining whether you’re high-risk, and their own documentation requirements you’ll need to meet before they’ll even consider approving you for an account. While your merchant account provider is highly motivated to approve your account, your processor has every reason in the world not to approve it. Getting approved for a high-risk merchant account is an uphill battle, and the chance of being turned down is very high. Fortunately, there are some really good providers out there who specialize in getting high-risk accounts approved, and they’ll work with you to get your paperwork in order and find a bank that can approve you for an account.

Unfortunately, providers offering “instant approval” sometimes take some shortcuts with this process so they can get you on the hook for that long-term contract (and usually that ETF as well). What they advertise as “instant approval” (or being “pre-approved”) in most cases really means that they’re approving your account – and getting you to sign your contract – before your acquiring bank or backend processor has completed all the necessary steps to determine whether to approve your account. In some cases, your merchant account provider won’t even complete a credit check before approving your account.

This practice is all fine and dandy as long as your processor eventually approves your account. However, there’s a high chance that they won’t approve you, and by the time they make that determination you may very well be up and running with your credit card terminal or payment gateway. If this happens, you may suddenly find your account frozen and your funds being withheld. Even worse, you may have your merchant account closed altogether. (Note that in this case, you usually won’t be liable for an early termination fee since you aren’t the party deciding to close the account). In some cases, depending on the reason for your processor closing your account, you may even find yourself being placed on the Terminated Merchant File (TMF, also known as the MATCH List). Getting put on this list is really bad news, as it can completely prevent you from getting approved for a merchant account, even with another provider, for up to five years.

If you haven’t guessed by now, we highly recommend that you avoid any merchant account provider claiming to offer “instant approval” of your high-risk merchant account. This approval process is incomplete and can easily lead to your account getting shut down shortly after you start using it. No matter how inconvenient it is to wait for the approval process to run its course, in the long run, it’s a worthwhile trade-off to get a fully-approved account that will be stable and reliable.

How To Expedite Approval Of Your High-Risk Merchant Account

Get your merchant funds fast. Image description: Clock with money underneath it

While the approval process is unavoidably a lengthy one, there are steps you can take as a merchant to move things along a little quicker. These actions mainly serve to avoid the kinds of problems that might lead to delays in getting your account approved. Here’s what you’ll want to do:

  • Work With A Reputable High-Risk Specialist: The signup process can be sped up by ensuring there is a good chance of approval beforehand. This means working with a partner that has a proven track record and experience in your industry. High-risk specialists such as Durango Merchant Services will work with you to ensure that your paperwork is in order and can also work with a network of acquiring banks and processors to find one that will approve your business.
  • Have Your Paperwork In Order: You’ll need to provide far more information when applying for a merchant account as a high-risk business owner. If you can present all of this information with your initial application, it will save a significant amount of time during the approval process. We recommend that you scan all required documents as PDF files so you can simply email everything you need to your provider as part of your application. See below for a discussion of specific documentation requirements.
  • Be Completely Honest About Your Business: Are you selling medical marijuana (in a jurisdiction where it’s legal)? Do you have a personal bankruptcy on your record? Have you previously had a merchant account shut down by your provider? High-risk merchants who are desperate to get approved for a merchant account are often tempted to misrepresent these and other facts that might lead to them being disapproved for an account. Don’t do it! Intentionally failing to disclose important information or getting caught in a lie will almost always lead to you being turned down for an account — or having your account closed immediately once the processor discovers your dishonesty. You’re much better off being completely honest about your background. In many cases, you can still be approved for an account despite a little negative information.

As we’ve mentioned above, there’s a lot of paperwork involved with getting approved for a high-risk merchant account. While specific requirements vary from one provider to the next, here’s a generic list of the most commonly requested information:

  • Completed Merchant Account Application (from your merchant account provider)
  • Résumé or CV of business owner
  • Photo ID or Passport
  • Business Plan
  • Personal Utility Bill (used to verify your address)
  • Processing statements for at least the last three months (if you’re switching providers)
  • Copies of supplier’s agreements (for retail merchants)
  • Copies of your personal banking statements (usually for the last three months)
  • Personal reference letter from your bank
  • Copies of your business bank account statements (usually for the last three months)
  • Articles of Incorporation (or sole proprietorship documentation)
  • Articles of Association (if applicable)
  • Screenshot of your business website’s home page (if applicable)

Final Thoughts

If you’re a high-risk merchant, we understand that merchant accounts are not easy for you. Okay, they’re not easy for anyone, but high-risk factors make them even more complicated (and expensive) than they are for everyone else. Unfortunately, it’s too easy to get turned down a few times and start feeling like you have to sign up with any provider who will take you. Also, the inevitable delays in getting your account approved can make the possibility of “instant approval” seem very tempting. Resist that temptation. Instant approval isn’t what its promoters claim it is, and it’s a good way to set yourself up for much more serious problems down the road.

The difficulties that high-risk merchants encounter in getting a merchant account have, unfortunately, created a market opportunity for unscrupulous providers who use the lure of “instant approval” (or, sometimes, “guaranteed approval”) to lock you into a prohibitively expensive long-term contract with high fees, high processing rates, and an onerous early termination fee to discourage you from canceling your account on your own. Do a Google search for “high risk merchant” account, and you’ll quickly find ads from plenty of predatory merchant account providers looking to take advantage of your desperation.

Fortunately, it doesn’t have to be this way. There are reputable providers who specialize in working with the high-risk community and will go out of their way to get you fully approved for an account. While their prices and contract terms won’t be as great as what a low-risk business could obtain, they’re still reasonable and backed up by top-notch customer support. We’d also note that none of the high-risk specialists we’ve found offer “instant approval.” Instead, they’ll work with you and help you to get your documentation squared away so you can be approved by one of their partner processors for a stable account that won’t get shut down the moment you actually try to use it.

Of all the high-risk specialists we’ve reviewed, we’ve found Durango Merchant Services and Easy Pay Direct to be among the best of the best. They both have strong track records of providing high-quality service at reasonable prices. For more recommendations, check out our post The Best High-Risk Merchant Account Providers or see the chart below.

Durango SMB Global Host Merchant Services Soar Payments

Review Visit Site Review Visit Site Review Visit Site Review Visit Site
Specialities International, Offshore, Credit Repair, Bad Credit, Vape/E-cigarettes, Fantasy Sports, Forex International, Offshore, Travel Businesses, Nutraceuticals, Multilevel Marketing, Kratom, CBD Oil Debt Collection, Life Coaching, Airlines, Loan Modification, SEO Services Antiques & Collectibles, Credit Repair, Debt Consolidation, Firearms & Ammunition, Precious Metals

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How To Accept Credit Cards Online

So you’ve realized you want to start selling online. Good for you! The ecommerce market is certainly booming. But before you can start raking in the money, you probably have a few questions, like “how do I make a website?” and “how do I accept credit cards online?” Here’s the good news: There are plenty of software options and payment processors to choose from! The bad news? There are plenty of software options and payment processors to choose from. So how do you choose?

As always, there’s no one perfect solution for everyone. You need to know your business (and where you want to go with it) and have a rough idea of what you need. If you have no idea where to start, never fear! In this article, we’ll cover some of the basic considerations about accepting credit card payments online, as well as types of payment processors and how to accept credit card payments online with and without a website. We’ll also discuss some of our favorite solutions for ecommerce and provide resources to help you learn more.

5 Questions To Ask Before You Start

It’s really important, before you dive headlong into any kind of financial investment in your business, to sit down and make sure that you know what you want and what you need. I say that a lot, but with selling online it’s especially important to look before you leap because if you get any component of your setup wrong, redoing it will cost time and money.

So before anything, here are some questions to consider:

  1. How technologically savvy are you? Simply put, are you even able to build and maintain your website yourself? If you’re not exactly a technological wizard, your priority should be finding an easy-to-manage solution. You can also outsource tasks you can’t handle yourself, such as design or even data entry for the creation of products. Of course, if you have an ambitious idea and no ready-made solution exists, or you need a lot of customization, you might need a developer who can work with software APIs to create what you need. You can find freelance developers to help out as you go, but the more high-tech you go, obviously, the more you should consider having a full-time developer.
  2. Do you already have a website? If yes, do you like your website? Would you rather abandon it for a better site with more features? If you already have a site and don’t want to go through the effort of creating a new site to sell a handful of products, payment buttons or plug-ins are better options. If you don’t have a site or you don’t mind nixing your current site in favor of something better, shopping cart software might meet the brief nicely. But of course, you don’t need a website to accept payments online. We’ll talk about all of these options more below.
  3. What’s your budget? When it comes to numbers, you need to look at both upfront costs and monthly (or yearly) costs. How much can you spend at the outset, and how much do you expect to be able to afford on a monthly or annual basis? Keep in mind the more technically advanced your website, the more you can expect to pay to build and maintain it. Likewise, the busier your site — the more products you have and the more sales you make — the more you can expect to pay. Don’t forget the tangential costs, such as hiring a designer or a developer, or data entry, and of course, the costs of payment processing itself!
  4. What are you selling? Whether you’re offering digital goods, subscriptions/services, or retail products, look for service providers that cater to your industry so you don’t have to find creative workarounds. Many solutions are generalized for a broad array of merchants, but with add-ons and integrations to make them more tailored. You can also find payment processors and software that offer ready-made specialized solutions and service plans, such as micropayments for merchants who sell low-priced digital goods.
  5. How comfortable are you with handling security features? If you want to sell online, you have to make sure your website is secure. That means ensuring your site is PCI compliant. The more involved you are in the payments process and the more sensitive information your website handles, the more of a burden you are taking upon yourself. Fortunately, many payment processors and other software providers offer solutions to keep your customers’ information secure and reduce your PCI burden — in some cases, you may not need to do anything at all.

Once you’ve got the answers to these questions and a list of the features you need and want, it’s time to actually start looking at your options. One of your primary considerations should be finding a payment processor. However, depending on your business model, you might want to first look at what kind of ecommerce options work for you and then select a payment processor from the available options.

We’ll begin by talking about payment processors and go on to look at what other software or platforms you should explore.

Types Of Payment Processors

No matter how you go about finding a payment processor — choosing a standalone, going with the default processor included with your shopping cart, or choosing a recommended partner from a software provider — you need to consider what kind of business model the processor uses. If you’ve been here before and read any of my other articles, you know that I am talking about the difference between third-party payment processors versus traditional merchant accounts.

Traditional merchant accounts are very stable. It would take a clear violation of either your contract or card network rules in order to trigger an account termination, and you’re unlikely to encounter a hold on funds unless you’ve had a series of issues with chargebacks or fraudulent transactions. However, most merchant account providers expect you to have an established business and a monthly volume of $10,000 in credit card transactions. Plus, setting up a merchant account will typically take a few days. It could take longer depending on how many processors are on your short list and how much negotiation is required.

Third-party processors are not quite as stable as merchant accounts. That’s because instead of issuing separate accounts for each of their merchants, everything is lumped together in one giant, communal merchant account. It takes very little effort to apply for an account with one of these processors, and you can often get approved and set up to accept credit cards online within a day. Factor in no monthly minimum volume requirements and third-party processors provide a great way for new businesses to take payments. However, the trade-off is that you’ll face greater scrutiny and a higher risk for account holds or terminations, often with no warning. Check out our article on how to prevent merchant account hold and freezes to learn how to reduce your risk.

While third-party processors are riskier than merchant accounts, they are a great option for new businesses who don’t know what sort of volume they can expect and don’t have an established history. Even for established businesses, there are some advantages: namely, third-party processors offer predictable, flat-rate pricing, so you know exactly how much you’ll pay. The best merchant account providers typically offer interchange-plus pricing, which, while clear and transparent, doesn’t make it easy to accurately estimate processing because interchange rates vary.

It’s up to you to decide which type of processor is right for your business. I do want to point out that some software companies (ecommerce shopping carts, point of sale solutions, invoice platforms, and more) often build white-label payments into their solutions. These solutions can take the form of third-party processors or merchant accounts, so make sure you investigate before just going with the default processor. In addition to their native payment processing services, most ecommerce software providers support integrations with an assortment of merchant accounts and third-party payment processors.

Square is our top-pick for third-party payment processor. In addition to predictable, flat-rate pricing with no monthly fees or contracts, Square offers a whole suite of seamlessly integrated apps to address in-person and online sales at no charge at all. eCommerce transactions process at 2.9% + $0.30 each.

For merchant accounts, we recommend CDGcommerce, which offers flat-rate pricing and an interchange-plus option depending on the merchant’s payment volume. There are no monthly minimums and no contracts, just a $10 monthly fee. Low-volume merchants will pay 1.95% + $0.30 for most transactions, or 2.95% + $0.30 for premium, corporate, or international cards. Merchants who process more than $10,000/month are eligible for interchange-plus pricing with a 0.30% + $0.10 markup.

Does Your Payment Processor Include a Gateway?

If you want to accept credit card payments online, it’s not enough to find a credit card processor. You also need a gateway. As the name suggests, a gateway is an intermediary software program that transfers the payment data from your website to the customer’s bank to be approved or declined (and then routes the money to your merchant account).

Many payment processors offer gateways as part of their services. For example, PayPal, Square, and Stripe all offer gateways bundled with the rest of their services at no additional cost. CDGcommerce offers its Quantum gateway as part of its services for online merchants.

However, some processors will charge you a setup fee and/or a monthly fee for use of the gateway. While it’s fair and legitimate to charge for this service (especially if you’re being offered other discounts or freebies in exchange), there’s no reason for you to overpay, either. Make sure you know how much a gateway service will cost if it’s not offered for free.

While it’s rare to find a processor that doesn’t include some sort of gateway access, they do exist. In the event that you find yourself leaning toward one of these processors, you can find your own gateway. Authorize.net is nearly universally compatible and reasonably priced, which makes it a good option for most merchants. (Worth noting: CDGcommerce’s gateway, Quantum, also includes an Authorize.net emulation mode to maximize compatibility.)

Want to know more about how payment gateways figure into your ecommerce setup? Check out our article, The Complete Guide to Online Credit Card Processing With a Payment Gateway, for more information.

How To Accept Online Payments With A Website

A website is a pretty integral part of selling online (but it’s not 100% necessary — we’ll look at some alternatives in the next section). As mentioned above, the first question to consider is: Do I already have a website? Then ask yourself: Do I like that website, or would I rather start over completely? Fortunately, there are solutions for both of these scenarios. For existing sites, you can implement payment buttons or seek out a plug-in or extension that supports ecommerce.

Adding Payments To An Existing Site

best templates

If you’ve used a site builder such as WordPress, Weebly, Wix, or Squarespace, it’s fairly simple to implement online payments. Simply check out the sitebuilder’s available third-party apps, extensions, and plugins. If you already know which payment processor you want to use, you can search directly for an available add-on. Otherwise, you can browse and see what options are ready-made for you. These add-ons will allow you to securely collect payment information from your customers as well as manage the order fulfillment process. Do your research and go with solutions from your site builder rather than third parties, if possible. Check reviews of any plugins or extensions you add and make sure they are well supported and any glitches are fixed in a timely manner.

If you run a WordPress site, WooCommerce or Ecwid could be good starter options. WooCommerce is actually a free plug-in to add to your site, with a basic theme and your choice of payment processors. It’s a very modular setup, so you can choose from a mix of free and paid extensions that allow you to customize WooCommerce to your needs. That includes payment processors, subscription tools, the ability to create add-ons (such as gift wrap for products), and more. Most WooCommerce add-ons are charged on an annual basis, which could require more of an up-front investment than a monthly subscription, so be aware of this fact.

Ecwid is another plug-in designed for WordPress. However, it also works on an assortment of other website-building platforms, including Wix and Weebly, Ecwid does offer a free plan for businesses with 10 or fewer products, but for higher-tiered plans you’ll pay a monthly subscription fee. Ecwid supports a wide assortment of integrations, including payment gateways. With higher plan tiers, you also get access to expanded sales channels.

Wix and Weebly’s website builders can be used for blogging, personal portfolios, and any other purposes. They both offer online store modules. Online stores from Wix start at $20/month with no transaction fees and your choice of processors. Upgrading to an eCommerce plan is fairly simple from within the Wix dashboard and won’t require any substantial reworking. Simply add the “My Store” module to your dashboard, make the upgrade, and start creating products.

Finally, there’s Weebly. Square actually bought Weebly in the spring of 2018, so it’s possible we could see Weebly start to favor Square pretty heavily in the future. For now, though, Weebly’s online store plans start at $8/month (on a yearly plan), with a 3% transaction fee on top of your processing costs. The transaction fee drops off with higher-tier plans, leaving just the monthly fee.

The other way to add payments to an existing site is to look for a payment processor that supports customizable payment buttons. A good payment button creator will give you power over the appearance of the buttons as well as the settings for transactions. The obvious, go-to solution for many is PayPal, which offers a pretty powerful array of tools. PayPal’s buttons are a good option whether you are selling a single product or multiple ones. You can set up payment buttons to allow products to be added to a cart or to go directly to checkout. PayPal even allows nonprofits to create a “Donate” button for their site, which can be configured for one-time and recurring donations.

An alternative to PayPal is Shopify Lite, an entry-level solution. For $9/month plus transaction costs (2.9% + $0.30), you can accept payments on your website by adding payment buttons. The plan also includes access to Shopify’s mPOS app and the ability to sell on Facebook (we’ll talk about that option in the next section, too.) And it’s worth mentioning that Ecwid also supports the creation of custom buy buttons.

While adding payments to an existing site is incredibly convenient and often requires little work, you won’t get quite as many tools as you would with a hosted ecommerce software solution. Which brings us to the best solution if you would rather build a new site or have no website to start with:

Building A New Site With Shopping Cart Software

eCommerce software apps, sometimes also called shopping carts or shopping cart software, are hosted, all-in-one solutions to online sales. Adding an ecommerce feature to an existing website requires you to choose a platform, buy the domain, and pay for hosting, but with shopping carts, you’ll get everything in a single package: online sales and product management, hosting, and sometimes even the ability to buy a domain name directly. Typically, shopping carts will also help you centralize control of sales across multiple channels, so that if you sell on social media, on eBay, or through another channel, you can handle order fulfillment through a single platform. That even includes buying postage (at a discounted rate) and printing the shipping labels. Some shopping carts will offer marketing tools or integrations with marketing platforms, as well as integrations with point of sale systems.

As far as payment processing goes, some shopping carts have opted to include their own white-label payments as a default part of their services. One such cart is Shopify, which offers its own Shopify Payments service (read our review). However, this is just a white-label version of Stripe. Be aware that choosing a payment processor other than the default can incur additional fees.

Generally speaking, even if a shopping cart doesn’t offer all of the features you want, you can search the app market for available extensions and integrations to get what you need. It’s worth researching the available add-ons as well as the native software features.

There’s a lot to consider and compare with a shopping cart. Obviously, you can use a sitebuilder such as Weebly or Wix, which both offer eCommerce modules. Then there are ecommerce-exclusive platforms, including Shopify and BigCommerce, which make it easy to build your site and customize the design (and even offer blogging so you can centralize control of your website).

If you want a whole lot of freedom and have coding knowledge, an open-source platform such as Magento might be more to your liking. Open-source platforms tend to be chock-full of specialized features (particularly if they have attracted active user communities) and you have almost limitless control of your site. A closed-source, SaaS platform is certainly a lot easier and more convenient for business owners who are just starting out and want to go the DIY route.

If you aren’t sure what you want, we recommend you start by checking out Shopify and BigCommerce, both of which are affordably priced for new businesses and offer extensive customer support resources. They also both offer multi-channel sales manage so you can sell through your own site and through other platforms but manage all of your orders from a single portal.

If you’re still curious about what makes a great ecommerce platform, check out some of our other resources!

  • The Beginner’s Guide to Starting an Online Store (eBook)
  • Shopping Cart Flowchart: Choose the Right eCommerce Software for Your Business (Infographic)
  • Shopping Carts 101: How to Choose a Shopping Cart for Your Business (Article)
  • Questions to Ask Before You Commit to a Shopping Cart (Article)

Managing Services, Subscriptions & Other Recurring Charges

A lot of merchants, from accountants and other professional service provideres to lawn care and cleaning services, could benefit from being able to automate recurring charges. And of course, the ability to automate charges is essential for SaaS providers and subscription-box sellers.

Generally speaking, the ability to accept recurring payments — for monthly services or subscriptions — isn’t a default option for payment processors or shopping carts, which tend to be retail-focused. However, you can find plenty of solutions that will work with your existing eCommerce setup. For example, Stripe and Braintree both offer extensive subscription management tools along with their payment gateway and processing services. Add-on services such as Chargify, Recurly, and ChargeBee work with a variety of processors. Zoho Subscriptions and Freshbooks also offer recurring billing tools. PayPal offers recurring billing tools for its merchants; Square offers “recurring invoices” but not a lot of advanced customization for subscription billing.

Proper research will be very important when selecting a provider that offers all of the features you need, whether you require metered billing for usage-based online services, the ability for customers to upgrade to a higher tiered plan mid-billing cycle, the ability to offer free trial periods and extend them, or a way to calculate taxes. Tools that automatically update expired cards can also help reduce failed charges and therefore improve revenues and reduce customer loss.

Accepting Online Payments Without A Website

Most people equate taking payments online with having a website. That is the most common option, but you don’t actually need your own website. Let’s talk about a few of the alternatives for how to accept credit cards online.

Creating Online Invoices

You could create your own invoices in Microsoft Office and send them out via email, but then you’ve got to keep track of which invoices have been sent and which have been paid — and you’ve still got to deal with waiting for the check in the mail. Online invoicing solutions can eliminate every single one of these hassles.

Generally speaking, invoicing software is cloud-based, so you can access it anywhere. You can customize invoices and send them via email (or generate a shareable link to the invoice). But unlike old-fashioned invoicing, these invoices include a link to pay directly in the invoice. Your customers follow the link, enter their payment details, and bam! You get paid much quicker.

Depending on which invoicing software you choose, you can get some powerful features. For example, PayPal allows you to enable partial payments on an invoice if you are willing to accept installment payments. Square’s invoicing links up with the platform’s customer database, allowing you to send recurring invoices and even store customer cards on file to make getting paid even easier. Zoho Invoice, which starts at $0/month, also allows for a customer database, as well as project management (so you can generate an invoice based on the number of hours worked). Shopify offers invoice creation within its platform at no additional charge as well — and this feature is even available on the Lite plan.

For most merchants, Square Invoices may be the most appealing, as it’s available with a Square account at no additional charge. However, Shopify’s built-in invoicing will work for merchants who want to sell with or without a website. Merchants who need project management as part of their invoicing should look at Zoho Invoice.

Using Online Form Builders

So you don’t have a website, but you still need to collect user information and accept payment. Online form builders offer an easy way to do both. Plus, you can post links to forms on social media or send them out via email.

Off the top of your head, you might think of Google Forms, which is free to use and quite advanced for a freemium software. However, it doesn’t integrate seamlessly with payment processors. Your best option, in this case, would be to use PayPal’s embeddable buy buttons and include the button in the form’s submission confirmation page as a second step. However, you’ll have to manually reconcile the payment records versus form submissions.

Subscription-based form builders will cost you money but offer far more capabilities than Google Forms, including direct integrations with payment processors/gateways such as PayPal, Stripe, Square, and Authorize.net. Subscriptions generally work on annual or monthly plans, but one option, Cognito Forms, offers an entry-level plan that charges 1% of the transaction amount instead. (Note, that’s in addition to any processing fees.) Other form solutions worth looking into are Zoho Forms and Jotform. Zoho Forms starts at $10/month and includes unlimited forms and up to 10,000 submissions. It integrates with both PayPal and Stripe. Jotform’s paid plans start at $19/month and are limited to 1,000 submissions, but include integrations for quite a few payment processors, including PayPal, Stripe, Square, and even Dwolla. Cognito Forms’ paid plans start at $10/month plus 1% of the transactions and include up to 2,000 form submissions. Integrations include PayPal and Stripe.

And we haven’t even talked about event registration sites. There are a lot of them, but the one many people are likely familiar with is EventBrite. EventBrite allows you to put all the details of your event online and sell tickets — including setting multiple tiers of admission and promotion cards, automatically setting price changes for registration deadlines, and so on. You can even collect marketing data about your patrons, from their zip codes to how they heard about the event. Your event is searchable from within the EventBrite platform, allowing people searching for something to do to discover your event as well. EventBrite does charge fees on top of processing costs, but these can actually be passed onto event registrees, saving you some money at least.

Selling On Social Media

It wasn’t all that long ago that the idea of being able to buy products directly through social media channels was novel and experimental, but nowadays you can create your own online shop through Facebook, or sell on Instagram or even Pinterest.

With Facebook, you just need a Facebook business page to get started. You can choose your payment processor (PayPal or Stripe) and start manually uploading products, all of which have to be reviewed by Facebook before they can go live. An easier option is to link your Facebook shop to an online store builder such as BigCommerce, Ecwid, or Shopify.

Shopify is actually an interesting solution because, while its core offering is an online shopping cart, it offers a “Lite” plan for $9/month that includes access to its mPOS app, buy buttons for a website, and a Facebook store with automated tools to make the process easier. You wouldn’t necessarily have to go through the hassle of building a website with Shopify just to sell on Facebook, but you still get more tools than you would by going through Facebook directly. Check out our Shopify Lite review for an in-depth look at the plan and all its features.

Selling on Instagram requires you to have a Facebook shop (because Facebook owns Instagram) to create what it calls “Shoppable posts.” That shop can be managed directly via Facebook itself, or via Shopify or BigCommerce as one of multiple sales channels. I’d like to point out that Instagram isn’t available as a sales channel with the Lite plan; you’ll need to upgrade to Shopify Basic at $29/month to be able to manage sales via Instagram.

Lastly, Pinterest allows merchants with a business account to create “Buyable pins,” so you can sell from your Pinterest page. Unlike Facebook, where you can manage the buyable pins from the platform, to sell through Pinterest you will need to go through either Shopify or BigCommerce and actually apply for approval before you can start selling.

Shopify Lite is an ideal option if you want to start with Facebook and maybe add buy buttons to a website. You can upgrade to Shopify Basic ($29/month) to get your own site, plus access to Instagram and Pinterest if that appeals to you.

Selling In Marketplaces

Online marketplaces are a good alternative to having your own website if you’re selling retail goods. You don’t have to pay for hosting or invest anything in web design. You simply create your product listings using the tools provided and publish them. Marketplaces allow you to get your products in front of a large audience without you having to build a stream of traffic yourself. However, the trade-offs are that you generally pay more in fees (listing fees, seller’s fees, and payment processing) than you would with your own website, and you have zero control over the design of the site or even how your products are displayed. Generally speaking, you are limited to using whatever payment processing the marketplace offers as well.

A few popular marketplaces include:

  • eBay
  • Etsy
  • Amazon
  • Jet (owned by Walmart)
  • Ruby Lane

Accepting Payments Through Virtual Terminals 

The final alternative is a bit of a stretch, I’ll admit, but it can be a powerful tool for some merchants. A virtual terminal is a web portal where you can manually enter credit card information to process a transaction. (There’s the stretch: VTs require an internet connection, so they’re technically online payments.)  Virtual terminals are a necessity for merchants who want to accept payments over the phone (or even by mail).

Some payment processors offer a virtual terminal as part of their software package, others as an add-on. These providers include PayPal, Payline Mobile, Square, and Fattmerchant. However, if you want the best value for a virtual terminal, we recommend Square. You pay only the payment processing costs (3.5% + $0.15) and it is interoperable with the rest of Square’s platform.

Beyond Credit Cards: Alternative Online Payment Methods

Credit cards are the go-to for accepting payments online, but they aren’t the only options. For starters, there are ACH bank transfers, which are generally less expensive for merchants to process. They’re often preferred in B2B environments, but some consumers favor them too.

Offering ACH processing as an additional option, especially if you’re in the B2B space, could win you more customers. According to a 2017 Payment Benchmarks Survey by the Credit Research Foundation and the National Automated Clearing House Association (NACHA), ACH transfers currently account for 32 percent of B2B transactions, lagging behind checks, which took the no. 1 spot at 50 percent. Credit cards account for just 11 percent of B2B transactions. By 2020, the survey estimates that ACH will take the top spot and account for 45 percent of B2B transactions.

Despite this, most merchant accounts or even third-party processors don’t offer ACH by default. Some offer it as an add-on plan, others may require you to look for a supplemental option for ACH acceptance.

ACH is far from the only option as far as “alternative” payment processing now, too. Mobile wallets are bridging the gap between in-person and online payments, and card networks have implemented their own online checkout options for cardholders. The major advantage to accepting these options is that they offer an extra layer of security for consumers. For example, Apple Pay on the web still requires biometric authentication before approval.

Some of these alternative payment methods include:

  • Apple Pay on the Web
  • Google Pay
  • Microsoft Pay
  • Chase Pay
  • MasterPass
  • Visa Checkout
  • Amex Express checkout

Apple Pay and Google Pay are fairly widely supported, but you may not see the other options on this list everywhere.

Two noteworthy providers that offer ACH, as well as other alternative payment options, are Stripe and Braintree. However, both are developer-focused platforms, so you’ll need someone with the technical know-how to implement them. Merchant accounts that specialize in eCommerce and provide a solid gateway might offer these options too.

We recommend Stripe because of its extensive developer tools, customizable checkout, and resources for recurring billing. The company also offers round-the-clock customer support (an admittedly recent addition to its feature set). Plus, Stripe is great for international merchants who want to be able to accept localized currencies in Europe and Asia.

Begin Accepting Payments Online

Starting an online store and learning how to accept credit cards online can seem like a daunting task! There are so many factors to consider, but I hope I’ve been able to shed some light on the process and point you in the direction of some good options. A merchant account can give you security and stability, but it may not be the most cost-effective option for low-volume merchants. A third-party processor can get you set up quickly with predictable pricing that often favors low-volume merchants, but the trade-off is account stability. And of course there’s the matter of compatibility: You need to make sure that whatever payment processor you choose offers a gateway compatible with the software (and sales channels) you want to use.

But you also need to have a good idea of what you can afford to spend up front and on a monthly basis and understand your limitations when it comes to technology and software. If you want to go the DIY route, you’ll need to be fairly tech-savvy. Otherwise, be prepared to outsource tasks to designers, developers, and even admin assistants. Some software solutions make it incredibly easy to do everything yourself, others will require lots of hands-on effort to make them work.

If you’re still not sure where to go from here, we recommend you check out our article: The Best Online Credit Card Payment Processing Companies. You can also view our merchant account comparison chart for a quick look at our favorite providers.

Have questions? We’re always happy to hear from our readers, so please leave us a comment!

The post How To Accept Credit Cards Online appeared first on Merchant Maverick.

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The Best Offshore Merchant Account Providers

Offshore Merchant Account Providers

Ordinary payment processing is complicated. But finding good offshore, international, or high-risk payment solutions can be a real nightmare. If you fall into one of these categories, you’ve likely had your merchant account applications denied at least a few times. Even worse, perhaps you’ve had your processing service terminated and your money withheld from you for months. We understand your struggle. We’ve seen hundreds of businesses go through the exact same thing, and we’re here to help you find the perfect offshore merchant account for your high-risk business.

If you’re just looking for a run-of-the-mill high-risk merchant account for your business, you’ll want to check out our article The Best High-Risk Merchant Account Providers. The high-risk category often includes business types that you wouldn’t normally associate with the term “high-risk,” such as airlines or online furniture sales. While these types of businesses are usually treated as high-risk by banks and processors, they can usually be approved for a domestic merchant account by working with a high-risk specialist.

For our purposes, we’ll use the terms offshore merchant account and international merchant account interchangeably, as they mean the same thing. Both terms refer to a merchant account that is underwritten by a bank or processor that is situated in a different country from the one where the business is located. The most common reasons for needing an offshore account include the following:

  • You do a significant amount of business in a foreign country and need to accept payments in the local currency.
  • Your business has offices in multiple countries, and you need separate merchant accounts for each location.
  • Your business is considered to be so risky that you cannot obtain a regular high-risk merchant account in your own country.

Below, we’ll discuss the factors to evaluate when considering an offshore merchant account and several special features that you’ll want to include in your service. We’ll also profile four offshore merchant account providers that we feel offer superior service and overall value in comparison to their competitors.

Factors To Consider When Selecting An Offshore Merchant Account

While many offshore merchant account providers also specialize in high-risk accounts more generally, not all high-risk processors work with international merchants or provide offshore accounts for domestic merchants. Many high-risk specialists only work with US-based businesses, and only provide accounts through US-based banks and processors. Before you apply for an offshore account, you’ll want to confirm that the company you’re considering works with businesses located in your country. This information might be spelled out explicitly on the provider’s website, or you might have to talk to their sales staff to get a confirmation.

Providers that specialize in setting up offshore merchant accounts can usually get you an account in just about any country around the world, though obviously, there are exceptions. As a US-based merchant, don’t expect to set up your offshore account in a place like Afghanistan or North Korea. It’s simply not going to happen. With the exception of countries limited by political considerations or a high level of instability, however, the possibilities are wide open.

In most cases, you should aim to get an account in a country where you expect to do a significant amount of business. On the other hand, if your business is going to operate exclusively in the United States, an offshore account serves mainly as a last resort for getting a merchant account when you simply can’t get approved for a domestic high-risk account. Banking regulations are more relaxed in certain other countries, and the willingness on the part of banks and processors to work with high-risk businesses is also more favorable. At the same time, you should be aware that setting up an offshore account under these circumstances, while it might be your only option for accepting credit cards, can present some serious risks to you as well. Your ability to pursue a legal remedy against a foreign bank or processor might be severely limited – or even nonexistent. At a minimum, you should consider legally registering your business in the country where your account will be located. Even with legal standing in the country, however, be aware that it might be extremely inconvenient and expensive to pursue a legal action outside of your own country.

There’s also an increased risk that you could become the victim of fraud or identity theft. Banks in other countries collect the same personal data about you and your business that US-based banks do, but they don’t always do as good a job of protecting it. You’ll want to keep an especially close eye on your merchant account, your business account, and any personal accounts about which you’ve released information to get approved for an offshore merchant account.

High-risk merchant accounts are notorious for including higher processing rates and account fees, and offshore accounts can be even worse. Providers know you’re particularly desperate and some, but not all, will take advantage of your situation by charging you as much as they think they can get away with. We recommend that you shop around and compare multiple quotes when looking for an offshore account. Don’t accept the first offer from a bank or processor just because they’re the first one that hasn’t rejected your application due to the nature of your business.

Note that merchant account providers who market offshore accounts often downplay or fail to mention these risk factors, so it’s up to you to look out for yourself. Do your own independent research, compare multiple offers, and thoroughly review all contract documents before you sign up for an account.

Special Features Of Offshore Merchant Accounts

For the most part, you’ll want the same services and features for an offshore account that you would want for a traditional merchant account. This includes processing hardware such as credit card terminals and POS systems for retail merchants, and a robust payment gateway for eCommerce merchants. You’ll also want an online account dashboard of some kind that allows you to monitor your sales in real-time. While online account access is now a standard feature in the United States, you might not always find this feature with an offshore account. Mail-order and telephone-order (MOTO) businesses often find a virtual terminal to be the most cost-effective method for inputting transactions. Depending on the needs of your business, a smartphone- or tablet-based mobile processing system might also be important. Almost all providers offer some type of mobile processing system these days, either as a proprietary product or through a partnership with a third-party provider. Be aware that very few mobile processing systems have begun to offer EMV-compatible card readers, and you’ll often be stuck with a magstripe-only reader.

In addition to these basic merchant account features, there are several special features that your offshore merchant account might (or might not) include. How important these features are to your business will be determined by how you intend to use your account. Extra features to look for in an offshore merchant account include the following:

  • Multi-Currency Support: If you’re going to do business in a foreign country, it only makes sense that you’ll want your customers to be able to pay in their local currency. Multi-currency accounts allow you to maintain balances in multiple currencies and can save you a ton of money in currency conversion costs.
  • Currency Conversion Services: Having an offshore account will invariably require you to convert funds into your own local currency at some point. Most offshore account providers include built-in currency conversion services that allow you to convert foreign funds when it comes time to transfer them to your business account. While these services can sometimes offer you much lower conversion fees than what a bank would charge you, it still pays to shop around for the best deal on this service. You might save money by using an international transfer service such as TransferWise or OFX.
  • Expanded Anti-Fraud Features: Offshore merchant accounts invariably involve a higher degree of risk of fraud than their traditional counterparts, so you’ll want as many extra services to avoid it as you can get. Most offshore account providers offer a number of enhanced anti-fraud features as a standard part of their service. These features automatically detect suspicious activity, hopefully stopping any fraudulent activity before it can affect your business. Providers are increasingly turning to artificial intelligence (AI) features to improve their ability to detect potential fraud beyond what would be possible with a traditional algorithm.

With these considerations in mind, let’s take a brief look at four of our overall favorite offshore merchant account providers:

Durango Merchant Services

Durango Merchant Services is a small merchant account provider headquartered in Durango, Colorado. Established in 1999, the company specializes in providing high-risk and offshore merchant accounts to hard-to-place businesses. They work with a wide variety of banks and processors to find a suitable account for almost any business. While they can’t place 100% of the merchants who apply to them, their track record is very good, and their sales process is so transparent and honest that we’ve even seen praise for the company from merchants who’ve been turned down for an account.

If you need an offshore account, Durango has you covered. Their accounts include multicurrency support as well as enhanced anti-fraud features to keep you protected. They can set up accounts in countries as diverse as Germany, Panama, Spain, and many others.

Durango doesn’t try to set you up with expensive leases when it comes to processing equipment. Instead, they offer a variety of terminals for sale right on their website. Options include both wired and wireless models, with some offerings that support NFC payments. They also sell the iPS Mobile Card Terminal, which connects to a smartphone to provide mobile payments capability in conjunction with the iProcess mobile app. If you’re using a virtual terminal, they sell the MagTek DynaMag, a USB-connected magstripe card reader that attaches to your computer. Unfortunately, it’s Windows-only. Durango currently doesn’t offer any POS systems for sale.

The company supports eCommerce through its proprietary Durango Pay payment gateway, which integrates with the numerous processors the company uses and includes support for most of the popular online shopping carts. Durango’s gateway also features an Authorize.Net Emulator, which allows it to interface with any shopping cart that works with Authorize.Net (see our review).

Because Durango works with such a wide variety of third-party processors to set you up with an offshore merchant account, they don’t list rates or fees on their website. These will vary tremendously depending on which processor they set you up with. While we normally like to see more transparency from merchant account providers, in this case, it’s understandable. Depending on your qualifications, you can expect either an interchange-plus pricing plan or a tiered one. Merchant accounts through Durango don’t seem to have standardized fees. Again, these will depend on the terms that your backend processor imposes.

Durango assigns a dedicated account manager to every one of their merchants, which means you’ll be talking to the same person every time you have an issue. While this can sometimes be problematic outside of regular business hours and when your account manager isn’t available, overall it provides a much higher level of service than you’ll get from a random customer service representative.

Pros

  • Direct sales of processing equipment
  • Reasonable rates and fees based on your business and your backend processor
  • Dedicated account manager for customer service and support

Cons

  • No support for POS systems
  • USB card reader not compatible with Mac computers

For more information about Durango Merchant Services, read our complete review.

SMB Global

SMB Global logo

SMB Global is a new high-risk provider that was spun off from one of our favorite providers, Payline Data in 2016. Headquartered in South Jordan, Utah, the company specializes in providing merchant accounts to high-risk and offshore businesses. Using a variety of backend processors, they’re able to approve a merchant account for almost any high-risk business (including those selling CBD oils). They have an excellent reputation for fair prices and top-notch customer service.

As a newly-established business, SMB Global is still a little rough around the edges, lacking a mobile processing system and credit card terminals for retail merchants. At the same time, they offer a full range of services for eCommerce merchants, including a choice between the NMI Gateway and Authorize.Net.

Because they work with so many banks and processors to get you approved for an account, the company doesn’t offer any pricing information. Processing rates, account fees, and contract terms will all vary widely depending on which backend processor is handling your account. While we highly recommend that you request an interchange-plus pricing plan, be prepared to have to accept a tiered plan instead, particularly if you haven’t been in business for very long. Likewise, you can also expect to have a standard three-year contract with an automatic renewal clause and an early termination fee if you close your account early. As a high-risk merchant, you should be prepared to have a rolling reserve included in your account agreement.

SMB Global requires a minimum processing volume of $50,000 per month for an offshore merchant account, although they will occasionally waive this requirement if your business has a very strong financial history. Offshore accounts support multi-currency processing, allowing you to avoid cross-border fees. They also feature dynamic currency conversion, letting your customers pay in either their local currency or the currency in which you bill them.

Pros

  • Offers international merchant accounts to a wide variety of industries
  • Reasonable pricing and contract terms
  • Excellent customer service

Cons

  • No mobile app
  • No information available about credit card terminals or POS systems

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

Host Merchant Services

Host Merchant Services is a relative newcomer to the merchant accounts business, first opening in 2009. The company is headquartered in Newark, Delaware and has a second office in Naples, Florida. While they primarily cater to traditional, low-risk businesses, they can accommodate several categories of high-risk businesses and also offer offshore accounts. Their interchange-plus-only pricing and a full range of products and services make them an excellent choice – if you can get approved. A former web hosting company, HMS is ideally suited for eCommerce merchants. They use TSYS as their primary backend processor, but can also work with several international banks and processors to get you an account.

For retail merchants, HMS offers a variety of Verifone and Equinox (formerly Hypercom) terminals. Terminals are offered for sale, and the company does not lease its equipment. While prices are not disclosed on the HMS website, you should be able to negotiate a very reasonable deal on terminals, especially if you need more than one. If you already have a compatible terminal, they’ll reprogram it for free.

HMS also offers a variety of POS systems that utilize either tablets or touchscreen displays. Choices range from an 8” tablet-based system up to a 17” touchscreen monitor. The company’s Starter, Plus, TouchStation Plus, and Custom POS options should meet the requirements of just about any business that needs or wants a POS system.

If you need a mobile processing capability for your business, HMS has you covered, offering the ProcessNow mobile payments system via a partnership with TSYS. ProcessNow works with either iOS or Android phones, but the current card reader is magstripe-only and requires a headphone jack to plug into.

As a tech-focused company, eCommerce is HMS’ specialty. The company has recently introduced their proprietary Transaction Express payment gateway, which includes a free virtual terminal. HMS also supports a large number of third-party gateways, including Authorize.Net.

HMS uses interchange-plus pricing exclusively for its low-risk merchants, but you might have to pay tiered rates if you have an offshore account. While they don’t disclose their rates on their website, they’re based primarily on monthly processing volume and are very competitive. Fees are not disclosed either, but include a $24.00 annual fee, a $14.99 monthly account fee (which includes PCI compliance), a variable payment gateway fee ($5.00 per month for Transaction Express, $7.50 per month plus $0.05 per transaction for Authorize.Net) and the usual incidental fees (i.e., chargebacks, voice authorizations, etc.). High-risk and offshore merchants should expect to pay higher fees than these, and possibly additional fees as well. In particular, be prepared to have a rolling reserve included as part of your account.

HMS provides customer service and support via 24/7 telephone and email. Chat is available via the HMS website during regular business hours. They also feature an extensive collection of articles and blog posts on their site for customer education. Support quality appears to be well-above-average, based on the almost complete absence of complaints about it on the BBB and other consumer protection websites. If your business falls into one of the categories of high-risk activities that the company can accommodate, HMS is an excellent choice for an offshore merchant account.

Pros

  • Full range of products and services for retail and eCommerce businesses
  • Exclusive interchange-plus pricing plans (for low-risk businesses)
  • Excellent customer service and support

Cons

  • Rates and fees not disclosed on website
  • Can only accommodate a small number of high-risk business categories
  • Mobile card reader not EMV-compliant

For more information, see our complete review.

Easy Pay Direct

Easy Pay Direct logo

Easy Pay Direct is headquartered in Austin, Texas and has been in business since 2000. The company’s primary product is their proprietary EPD Gateway, but they also provide full-service merchant accounts for international, high-risk, and traditional non-high-risk merchants. High-risk merchants will have to pay a premium in terms of processing rates and account fees, whether they’re partnered with a domestic or offshore bank or processor. However, the additional expense is entirely reasonable under the circumstances.

Like most offshore merchant account specialists, Easy Pay Direct works with a variety of banks and processors, both domestic and international, to find one that’s a match for the needs of your business. You’ll have to pay a $99 account setup fee to get started, but considering the extra effort required to underwrite a high-risk or offshore account, we feel the expense is justified in this case. Processing rates will be under a tiered pricing plan, but you should still have some room to negotiate your rates, especially if you have a high monthly processing volume. Contracts generally follow the industry standard, or a three-year initial term that automatically renews for one-year periods after that. One very positive feature about Easy Pay Direct’s contracts is that they do not have an early termination fee, even for high-risk businesses. While this isn’t quite the same thing as true month-to-month billing, it does make it much easier to close your account without penalty if you have to.

One helpful feature offered by Easy Pay Direct is called load balancing, where a business can divide its incoming funds among multiple merchant accounts. This is particularly helpful for high-risk businesses that often exceed the monthly processing volume limits imposed by the processor underwriting their account. Just be aware that you’ll usually have to pay separate monthly fees for each account, so it might not be cost-effective for some merchants. Also, be aware that you might not need this feature if you opt for an offshore account. Underwriting guidelines in some (but by no means all) foreign countries are more relaxed, and you might not have a monthly processing limit imposed on your account at all.

Although Easy Pay Direct doesn’t get as much attention as other, better-known processors, it’s a solid choice for merchants in the high-risk category or those who need an offshore account. We particularly recommend the company for high-risk eCommerce businesses due to the robust feature set of their EPD Gateway.

Pros

  • Load balancing feature for high-risk merchants
  • No equipment leases
  • No early termination fee

Cons

  • $99 account setup fee
  • Three-year contract with automatic renewal clause

Check out our full review of Easy Pay Direct for more information.

Final Thoughts

Having a hard-to-place business doesn’t mean you have to run your company through Bitcoin. You can accept credit card payments just like any other business by finding a payment processor that will set you up with the right acquiring banks. At the same time, you need to be fully aware that, for a US-based business, signing up for an offshore merchant account is a risky endeavor. You’ll want to be very cautious and carefully research any provider you consider, even the ones we’ve recommended above. Take extra care to protect your sensitive personal financial data and be sure your account includes additional fraud prevention features. You might also want to consider registering your business in the country where your merchant account is located – just in case. Having a merchant account in Panama might sound very tempting if you’ve been repeatedly turned down by domestic providers, but it will be very expensive to have to travel there in person if you later run into legal troubles with your account provider.

Of the four offshore merchant account providers we’ve reviewed above, Durango Merchant Services is undoubtedly the best all-around provider of the group. They disclose more detailed information about offshore accounts than any of the other providers. SMB Global is also an excellent choice. While the company itself is very new, they have an impressive track record from their days operating as the high-risk division of Payline Data. Finally, both Easy Pay Direct and Host Merchant Services offer a solid line-up of products and services for both eCommerce and retail merchants. If you need an offshore account to break into the world of accepting credit cards, they both have everything you need to get started.

Finally, we can’t caution you strongly enough that selecting and setting up an offshore merchant account involves a higher level of risk on your part, and you’ll need to be extra cautious in choosing a company to go with. Relaxed underwriting guidelines and a general lack of monthly processing limits make offshore accounts very tempting to merchants who’ve had a hard time getting their business approved for a traditional account, but these advantages come at a price. If anything goes wrong in your relationship with your provider, you might face some real challenges in pursuing a legal remedy. You should also be aware that if this happens, the US-based provider that brokered your account will not be able to help you in most cases.

Do your homework! Research your provider thoroughly and review all contract documents very carefully before signing up. While these steps won’t eliminate the chance of things going sideways somewhere down the road, they will shift the odds considerably in your favor.

The post The Best Offshore Merchant Account Providers appeared first on Merchant Maverick.

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How to Analyze Your Credit Card Processing Statement

Here at Merchant Maverick, we’ve received countless questions over the years from concerned business owners regarding their merchant account statements. In fact, our website owes a large part of its very existence to the complex pricing, convoluted statements, and hidden markups that are hallmarks of the card processing industry. This is the unfortunate state of affairs that keeps us researching, writing, and advocating for small business owners.

Questions we frequently field from our readers about their processing bills include:

  • Am I paying too much for card processing? (That’s the big one everyone wants to know!)
  • Why did my processing costs suddenly go up this month?
  • What is this unexpected/oddly-named/junky-looking fee? Is it legit?
  • Is there anything I can do to lower my costs without changing providers?
  • Should I change account providers?

Only a thorough understanding of your own statements will yield the answers to these important questions. The inherent difficulty of the task is that you can’t completely rely on your provider’s statement guide, nor its sales or customer service reps, to explain all the fees. If your account provider is being sneaky about extra markups and unnecessary fees, the responsibility falls directly on you to decipher what’s really going on.

There’s no one-size-fits-all method for analyzing a statement, because every business and situation is a bit different. Still, there are definitely some foundational concepts that should help demystify the process. For example, here’s one quick tip to kick things off: Examine more than one statement side-by-side to avoid missing anything. Often times you need two months of statements just to completely view one month’s worth of charges. So, grab at least two or three consecutive statements and let’s get started!

Detail Vs. Big Picture

Analyzing a processing statement is always a balancing act between the details and the big picture. If you’re worried about a questionable charge, or suspect you’re paying too much overall, you may need to check every fee on your statement to identify its source and confirm the amount is what it should be. I’d encourage all merchants to at least give this a try on a few statements. If anything, you’ll verify that the fee schedule from your merchant agreement was implemented as you expected.

On the flip side, you actually needn’t worry too much about all the individual fees and rates on your statement if you track the big picture numbers (your overall costs) month-over-month. As long as the big picture amounts remain reasonable and consistent, you’re pretty much good to go. If they do change significantly, though, you’re back to looking at the details of your statement to figure out why. Fortunately, if you’ve already mastered the baseline details of your statements, you’ll easily identify the culprits that are most impacting your costs.

In short, understanding the interplay of your big picture numbers (what you’re paying overall) and detailed costs (why you’re paying it) is the best way to protect yourself from paying too much.

With that bit of philosophy out of the way, let’s look at the main big picture percentage that all merchants can calculate.

Effective Rate

Your effective rate is the “all-in” percentage rate you’re paying for the privilege of accepting card payments. All business owners should take a first crack at calculating this rate before conducting any detailed analysis. It’s a simple formula:

(Total monthly fees / Total monthly sales) x 100 = Effective Rate

By total monthly fees, we mean processing charges, gateway fees, statement fees, monthly fees, equipment leases, weird fees you can’t figure out — everything. Sometimes you can grab these numbers from a summary section, as below:

calculating-effective-rate-statement

$5,907.03 / $98,511.45 = 0.0599, or an Effective Rate of 5.99%

I still always recommend calculating your effective rate again once you’ve analyzed your statement in full. That way, you can ensure your summary section didn’t sneakily omit any charges. You’d be surprised how often this happens. (Or, maybe you wouldn’t be!)

Your effective rate provides a basic answer to “How much am I being charged for card processing?” and “Am I paying too much?” The precise answer to that second question is, of course, more nuanced for each business. For a large retail corporation, a 2.5% effective rate might be too high. For a high-risk ecommerce operation with lots of small transactions, 4.5% might be a screaming deal. Even with this variation, however, the effective rate gives you an important birds-eye view of where you stand.

Types Of Fees

You’re probably already aware that there are multiple layers to the card processing industry. Not surprisingly, each entity involved takes a cut of your card sales in one form or another. We’ve covered a lot of this territory in our complete guide to rates and fees, but I’ll quickly recap the main players in the industry, and whether they each charge wholesale costs (fixed throughout the industry) or markups (variable and negotiable depending on your business situation and account provider).

Wholesale

  • Card Networks: We’ve all heard of these folks — Visa, MasterCard, and the like. These associations take their cut of processing costs in the form of card association fees and assessments. If you don’t think you’d be able to recognize these charges on your statement, head over to our card brand fee article for an explanation and full reference list.
  • Card-Issuing Banks: The banks that have issued credit and debit cards to your customers charge interchange fees — the cost of running each individual type of card and transaction. The card associations actually set these fees for the issuing banks, and also publish and frequently update lists for merchant reference.

Not everyone will be able to see pure wholesale costs on their statements. This is because sometimes wholesale costs are passed through directly to merchants, while in other cases they’re blended in with markups. This mostly depends on your pricing model (we’ll have a section on that topic coming up). Still, regardless of what “should” be happening with wholesale charges according to your pricing model, it’s worth checking to see if any have been passed through to you, and if the amounts are correct. Interchange fees are usually pretty easy to spot — they’re typically in a giant itemized list if you can see them at all. Card brand fees can be more difficult to identify, so definitely consult a reliable reference list.

Markup

Everything besides those two types of wholesale fees we’ve just discussed counts as a markup. Here are the main players that add costs above wholesale:

  • Processor/Acquirer: You may know some of the big ones — First Data, TSYS, Vantiv/Worldpay, Chase, Elavon, etc. These entities are also usually involved with an acquiring bank (e.g., Wells Fargo or B of A) if they aren’t already one themselves. The processor behind your merchant account can add its own extra fees and markups.
  • Merchant Service Provider (MSP): This is the entity that actually sets up and manages your merchant account — the company you interface with most directly. You also access your monthly statements through your MSP, even though the statement might have the big processor’s name across the top. You may have signed up for your account with the MSP department of one of the large processors we’ve already mentioned, or you may have used a separate MSP/ISO that has teamed up with one or more processors to provide accounts. Regardless of the setup, your merchant services provider adds its own markups as well.
  • Additional Service Providers: Charges from other third parties (such as gateway or equipment providers) may also show up on your merchant account statement.

A word of caution about “pass-through” fees: Just because your MSP claims to be merely “passing through” a fee to you “at cost,” doesn’t necessarily mean it’s a wholesale charge (from the card associations or card-issuing banks). As you can see above, the big processor/acquirer behind the scenes may also charge its own fees and markups, and often other third-party equipment and software providers do as well. These “pass-through” fees should be counted as variable markups, even though your MSP may not see any money from the charges.

Effective Markup

If you can see all interchange fees and card brand fees (wholesale costs) itemized on your statement, you can calculate your effective markup. Let’s take a look at what this is, and why it’s an advantageous number to crunch if you can swing it.

Remember, the markup is the piece that varies between MSPs. Not only can the overall amount vary widely, but the way markups are charged is also variable between providers. For example, one MSPs might charge a low markup percentage on your individual transactions, but several different monthly fees as well. Meanwhile, another MSP might charge a high markup percentage on transactions, but hardly any monthly fees. Which one’s a better deal? This is why it’s good to know your markup as an overall percentage.

You’re effective markup not only lets you know how much you’re really paying in controllable costs each month, but it’s also a handy figure to have if you’d like to compare your statement with other merchant account offers.

Here’s the basic formula (always multiply by 100 to convert to a percentage):

Markup Fees  / Total Sales = Effective Markup

Depending on how your statement is laid out, here’s another way to think of the calculation that might be more helpful:

[Total Fees – (Interchange Fees + Card Brand Fees)] / Total Sales = Effective Markup

I like this second way because it’s a clear process of elimination. Once you’ve got all the wholesale fees accounted for and subtracted away from your total fees, you automatically know everything else you’re charged is a markup.

You might have a summary section on your statement that divides up your fees in such a way to make this calculation simple. It’s more likely, however, that you’ll have to pick through your statement to make sure you understand your pricing structure and the true classification of each fee before you can add up the numbers and perform the effective markup calculation with confidence. Call me paranoid, but I have a mistrust of so-called “summary” sections on statements. Been burned way too many times!

What if you can’t calculate your effective markup at all, because your statement doesn’t make it possible to see all wholesale fees separately? That’s fine — just focus on tracking your effective rate for now. It’s not as telling a number as your effective markup, but it’s an excellent starting point for staying on top of your costs.

Pricing Model

Knowing your pricing model is absolutely critical to understanding your statement, so if you don’t already know it, now is the time to figure it out! We have an article that walks you through the process of identifying your pricing model by looking for specific, telltale signs on your statement, as well as in-depth articles on each of the four main models most MSPs offer.

We’ve already alluded to the fact that your pricing model determines whether or not you can distinguish wholesale costs from markups. You’ll never know exactly where you could be saving money (or where you’re getting ripped off) if you can’t make this distinction.

This is a complicated topic, so it may take you a while to wrap your mind around which model you have and how it impacts your statement. That’s okay — take your time. We do also occasionally come across some interesting hybrid models, so if you still need assistance figuring out your model, feel free to reach out to us.

So, how do the pricing models work? Well, the models were developed based specifically on interchange fees and whether or not they are blended in with MSP rate markups. (Card brand fees are not tied as tightly to your pricing model, so I’d just recommend checking your own statement to see if any are passed through.) Below are links to articles on each of the models, as well as a super-brief overview of each.

Interchange separate from markup:

  • Interchange-Plus (Cost-Plus) Pricing: Interchange rates are itemized and passed through separately from the MSP markups. Rate markups typically include a percentage markup and a per-transaction fee markup.
  • Membership (Subscription) Pricing: A version of interchange-plus pricing in which a monthly membership fee is charged as a markup in lieu of a percentage markup over rates.

Interchange blended with markup:

  • Tiered Pricing: Interchange rates are blended in with markups to create multiple rate tiers.
  • Flat-Rate Pricing: Interchange rates are blended in with markups to create a flat processing rate (most often used by merchant aggregators like Square, Stripe, and PayPal — not traditional MPSs).

In theory, you should be able to calculate your effective markup if you have one of the first two models, because wholesale fees are kept separate. This is one reason we favor MSPs that offer transparent interchange-plus or subscription models to all merchants. For the other two blended plans, you’ll need to stick to monitoring your effective rate only.

Billing Cycle

Beyond understanding your pricing model, you should be aware of exactly when you’re charged the various fees and rates due on your account. A closer look at your billing cycle could potentially reveal that you’re not calculating your effective rate properly, or that you’re paying higher processing rates than you originally thought. Here are a couple of tricky billing methods to watch out for:

Daily Discount (Vs. Monthly Discount)

“Discount” here refers to your card processing fees (as opposed to scheduled monthly fees). Your discount method is totally irrespective of your pricing model. Most merchants are on a monthly discount plan, meaning their discount fees are all charged in one lump sum at the same time as the rest of their scheduled monthly fees. In other words, you receive gross deposits from your batch settlements throughout the month, and then pay all your discount fees along with all other scheduled fees all at once.

On a daily discount cycle, your discount fees (or a portion of them) are deducted from each batch settlement as the month progresses. This leaves you with net deposits from your batches, and all your other scheduled fees are charged in a separate chunk. You can often tell if you are on a daily discount cycle if your statement contains terms like “less discount paid,” or shows net versus gross amounts in sales columns. With daily discount, you must be careful to add the discount fees you’ve already paid throughout the month to the other monthly fees you still need to pay. Don’t be mislead by the “total charges” figure, which may not include the discount fees you’re already paid.

Add together the “less discount paid” of $168.03 and “total card fees” of $50.95 to find the actual amount that is paid for the month: $218.98!

Billback

This is a rolling billing method that is technically different from (but often combined with) both a daily discount setup and a tiered pricing model. On a normal tiered plan, you’re charged the different rate tiers (qualified, mid-qualified, non-qualified) for your transactions all in the same month. With billback, however, you are charged the qualified (lowest possible) rate for all your transactions first, but then charged a fee the next month to recoup all the extra cost for any higher-tiered transactions you ran.

With this rolling system, you actually need two months of statements to even calculate your effective rate for a given month, since your charges for one month are split over two months — possibly more. Even worse, the Enhanced Billback method (a.k.a. Enhanced Recovery Reduced) adds an additional markup to the next month’s recouping fee. You may see BB, EBB or ERR abbreviations (along with a past month’s abbreviation) listed on your statements if you’re in a billback situation, but you may just need to spot the extra fees on your own.

enhanced billing merchant services

Billback statement: Extra fees for April transactions charged in May.

Nitty-Gritty Numbers

As we discussed at the beginning of the guide, you needn’t identify every fee every month into eternity, but I’d strongly recommend going for it on a few statements. Maybe you’re just curious and would like to become a more cost-savvy merchant, or maybe you suspect a hidden fee, or maybe your processing bill has spiked lately and you want to know why. Not to mention, sometimes statements contain run-of-the-mill mistakes that need catching! After all, not all MSPs are pure evil. Just most of them.

Of course, I can’t tell you every fee you’ll ever see on a statement and whether it’s legit. What I can do is offer you a few general tips I’ve found helpful as I’ve analyzed statements:

  • Identify Percentages vs. Dollar Amounts: Costs may come through as percentages of sales volume, per-transaction fees, or flat fees. At times, half the battle is just confirming which fees are percentages and which are dollar amounts, because they may all be shown in decimal form (and all mixed into the same columns!). The good news is that a quick calculation of your own can usually confirm which are which.
  • Use Fee Guides: Absolutely make use of any statement guide from your provider, but also check out an outside resource or two. Our fee guide lists the common fees you’ll encounter on a statement, and our fee infographic shows the typical cost range of many standard charges. I know I’ve said this a bunch of times already, but you’ll also need a good card brand fee reference list to confirm these fixed-yet-esoteric charges.
  • Ask Yourself Fee ID Questions: As you work through each charge, see if you can answer the following queries:
    • Who charges this fee/rate? (see “Types Of Fees” section above for possible culprits)
    • Is this charge a markup, wholesale cost, or a blend of the two?
    • Is this wholesale charge correct according to interchange tables or the card brand fee list?
    • Is this markup (or blended cost) correct according to my merchant fee schedule from my MSP?
  • Don’t Trust The Layout: We’ve dissected some horrifically disorganized statements over the years, which has only confirmed in my mind that you simply cannot rely on the sub-headings on a processing statement to properly categorize your fees. Wholesale fees are very often interspersed with markups and vice versa, so be on your guard. I’m particularly vigilant about “authorization” sections —  the perfect hiding spot for extra per-transaction fees.
  • Don’t Trust Fee Names: This last tip sounds strange at first, but hear me out. Names and abbreviations for fees have little standardization across the industry — even wholesale fees that are supposed to be the same for everyone! This makes it all the more difficult to identify extra or padded fees on a statement. If you’re trying to pin down a particular charge, it’s often best to consider the amount first while taking the fee’s name with a grain of salt. Here’s one good rule of thumb: Just because a charge has a card brand abbreviation in front of it doesn’t guarantee it’s all from the card brand!

Poor layout example: An MSP markup fee buried in the middle of a giant alphabetical list of wholesale card brand fees. And, the section name is just “Other Fees.” Not cool! (Note: this is an old statement with non-current card brand fee amounts)

Fine-Tuning Fees

We’re about take this detailed numbers analysis thing to the next level. Ready?

So, remember how we said that wholesale fees are fixed, non-negotiable and completely out of your control, and that markups from your MSP are the variable, negotiable costs of processing? Well, in reality, this is a slight oversimplification of the system. There are some nuances and gray areas that once recognized on your statement can help you catch problems, and potentially even adjust your processing habits to save money.

  • Avoidable Penalty Fees: Most card brand fees are simple, blanket assessments on your transactions, but others are in place specifically to punish you for not following the proper protocols for authorization and settlement. They’re small fees, but can add up fast if they’re applied to a large portion of your transactions. If you’re seeing a lot of transaction “integrity” type fees, you should take the initiative to find out why this is happening. (While we’re on the topic, don’t forget that MSPs can also charge avoidable penalty fees — a PCI-non compliance fee is one common example.)
  • Optimizing Interchange Rates: While interchange rates themselves are fixed and pre-established across the processing industry, you may have more control over which categories of interchange your transactions fall into than you think. The process of ensuring you get the best interchange rates possible is called interchange optimization. B2B transactions using commercial cards can be processed with additional Level 2 and Level 3 data to get the optimal interchange rate, for example. Transactions can also end up “downgraded” to higher-cost interchange categories if you do not authorize and settle them properly (in this way, downgrades are basically another type of penalty fee). Interchange downgrades happen more commonly to card-not-present businesses because there is more margin for data-entry error and omission than when cards are read directly by processing equipment. Common statement codes for downgraded interchange rates include EIRF (electronic interchange reimbursement fee) and STD (standard). It’s normal for a few transactions to be downgraded, but if you’re seeing interchange downgrades on the majority of your transactions, this is a definite red flag.

This merchant’s largest Visa Card Brand fee for the month was $25.30 for 253 transactions that didn’t follow proper authorization/settlement procedures. It’s likely these transactions are getting downgraded to higher-cost interchange categories as well. The merchant should look into adjusting its processing procedures to avoid these unnecessary costs.

Pulling It All Together

After you’ve worked through the details of your 2-3 consecutive statements, it’s worth repeating your effective rate calculation on each one, just to ensure you didn’t miss any charges. You may have also spotted an extra or padded fee here and there that you’re ready to confidently take up with your MSP. You should also be able to locate any anomalies that occurred during a given month (e.g., excessive penalty fees, chargebacks, one-time incidental fees, etc.) that may have impacted your effective rate.

If your statements itemize interchange rates and card brand fees separately from markups (interchange-plus or subscription models only), you’re finally ready to do that magical effective markup calculation accurately. Remember to only count interchange fees and card brand fees as true wholesale. Everything else is technically a markup!

Final Thoughts

We’ve covered a lot of ground in this guide, but hopefully you’re ready to tackle some big picture calculations (like your effective rate), as well as better identify any specific “what the heck is that?” charges from your statement. If you’re ready to become the consummate master of your processing statements from here on out, the first step will be to get on a cost-plus pricing model (interchange-plus or subscription/membership). This is the only way you’ll see what you’re paying each month above wholesale processing costs that are largely out of your control. All but very small merchants will benefit from one of these pricing models from a trustworthy MSP. If you’re not on a cost-plus plan already, make it a priority if you change providers.

Meanwhile, keep on tracking that effective rate (and effective markup if your statement allows) month-over-month for the lifetime of your merchant account. Once you’ve got a handle on your statement, it will be totally worth the 12 seconds the calculation will take you each month. I’m a super detailed-oriented person as a matter of principle, and even I give you my blessing to pretty much ignore all the stupid little fees and markups your processor or MSP may charge, as long as you’re satisfied your big picture numbers are remaining sensible and consistent. Just know I’ll send you right back into the details if those effective numbers go up!

Still need help with pricing or statements? Check out the transparent pricing of our highest-rated merchant account providers, or try these additional resources:

  • Never Overpay for Credit Card Processing Again
  • How Much Should You Pay for Credit Card Processing?
  • How to Negotiate the Perfect Credit Card Processing Deal

The post How to Analyze Your Credit Card Processing Statement 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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The Complete Guide to B2B Payment Processing

B2B Payment Processing

Business-to-business (B2B) transactions have been around forever, but with the dramatic increase in credit card usage by corporations, they’ve also become a lot more complicated to deal with for merchants who process them. Traditionally, businesses made their purchases by placing an order in person, through the mail, or over the telephone. The merchant would then ship the products and send the business a paper invoice for payment. They would then wait – sometimes for weeks – for payment to arrive in the form of a paper check. Cashing the check and receiving funds added several more days to the process.

With the advent of the internet, B2B transactions can now be received and processed in very little time. Specialized credit cards designed for small businesses and larger corporations allow nearly instantaneous payments, but also cost more to process than the old paper invoice method. For most merchants, the ability to bring the delay in receiving funds down to just 1-2 business days more than makes up for the extra expense. Accepting credit cards for B2B transactions also leads to a significant increase in overall sales, as more and more companies use credit cards exclusively for their business purchases.

While B2B credit card processing has a reputation for being expensive, you can actually save a very significant amount of money on your processing costs – if you know how to take advantage of the lower interchange rates available to B2B merchants. In this article, we’ll walk you through the basics of B2B processing and show you how you can save hundreds – or possibly even thousands – of dollars in processing costs by properly establishing yourself as a B2B merchant and taking advantage of the discounted rates offered by the major credit card associations.

What Are B2B Transactions?

A B2B transaction is simply a transaction where the customer is another business rather than an individual consumer. The transaction may involve goods, services, or a combination of both. You’ll also hear the term B2G (business-to-government) transaction, which describes transactions between a business and a local, state, or Federal government agency.

The most obvious example of a B2B transaction is when a company purchases supplies for its operations. However, many other types of transactions can also be classified as B2B transactions. For example, when a company hosts a luncheon for employees at a restaurant and uses a business credit card to pay for it, this would be a B2B transaction. The business making a B2B purchase can be anything from a large corporation to a solo freelancer using a business credit card to keep business and personal expenses separate.

In establishing a strategy for dealing with B2B transactions, the most important thing to consider is the percentage of B2B purchases your business expects to experience. Some businesses sell almost exclusively to individual consumers, and see very few, if any, B2B transactions. At the opposite end of the spectrum are businesses that sell almost exclusively to other businesses and make few direct sales to consumers. Most businesses, however, will fall somewhere in the middle, with B2B transactions making up a small, but significant percentage of their overall transactions. As we’ll see below, B2B transactions can entitle you to lower interchange costs and lower overall processing costs. However, you’ll have to jump through several hoops to establish yourself as a B2B merchant, and the specialized software you’ll need to take advantage of those lower rates isn’t free. You’ll want to evaluate very carefully whether it’s cost-effective to add specialized B2B processing services to your merchant account.

Merchant Category Codes (MCC Codes)

Merchant Category Codes (or MCC codes) are assigned by the credit card associations to classify businesses according to the products and services they provide. Before you can take advantage of the lower interchange rates available for B2B transactions, you’ll need to be assigned an MCC code that identifies you as a B2B merchant.

Unfortunately, all the major credit card associations have their own set of MCC codes, and they all treat them differently when it comes to B2B transactions. Visa, for example, will offer you a discounted interchange rate on B2B transactions if you’re assigned a qualifying MCC code and meet certain other criteria. MasterCard also uses MCC codes, but doesn’t offer a discount for B2B transactions.

Because each card association uses its own set of MCC codes, your business will end up with a separate code for each type of credit card you accept. Establishing the proper MCC code for your business is ultimately up to the credit card associations, although your merchant services provider can assist with this task to make sure you’re assigned an appropriate code.

Here’s a list of MCC Codes recognized by Visa as qualifying for B2B merchant status:

  • Accounting, Auditing, and Bookkeeping Services (MCC 8931)
  • Advertising Services (MCC 7311)
  • Books, Periodicals, and Newspapers (MCC 5192)
  • Business Services (MCC 7399)
  • Chemicals and Allied Products (MCC 5169)
  • Cleaning, Maintenance, and Janitorial Services (MCC 7349)
  • Commercial Equipment (MCC 5046)
  • Commercial Footwear (MCC 5139)
  • Commercial Photography, Art, and Graphics (MCC 7333)
  • Computer Maintenance, Repair, and Services (MCC 7379)
  • Computer Programming, Data Processing, and Integrated Systems Design Services (MCC 7372)
  • Construction Materials (MCC 5039)
  • Durable Goods (MCC 5099)
  • Electrical Parts and Equipment (MCC 5065)
  • Employment Agencies and Temporary Help Services (MCC 7361)
  • Florist Supplies, Nursery Stock and Flowers (MCC 5193)
  • Industrial Supplies (MCC 5085)
  • Information Retrieval Services (MCC 7375)
  • Insurance Sales, Underwriting, and Premiums (MCC 6300)
  • Landscaping and Horticultural Services (MCC 0780)
  • Management, Consulting, and Public Relations Services (MCC 7392)
  • Medical, Dental, Ophthalmic and Hospital Equipment and Supplies (MCC 5047)
  • Men’s, Women’s, and Children’s Uniforms and Commercial Clothing (MCC 5137)
  • Metal Service Centers and Offices (MCC 5051)
  • Miscellaneous Publishing and Printing (MCC 2741)
  • Motion Picture and Video Tape Production and Distribution(MCC 7829)
  • Motor Freight Carriers and Trucking (MCC 4214)
  • Nondurable Goods (MCC 5199)
  • Office and Commercial Furniture (MCC 5021)
  • Paints, Varnishes, and Supplies (MCC 5198)
  • Photographic, Photocopy, Microfilm Equipment and Software (MCC 5044)
  • Piece Goods, Notions, and Other Dry Goods (MCC 5131)
  • Plumbing and Heating Equipment and Supplies (MCC 5074)
  • Professional Services (MCC 8999)
  • Special Trade Contractors (MCC 1799)
  • Specialty Cleaning, Polishing and Sanitation Preparations (MCC 2842)
  • Testing Laboratories (Non-Medical Testing) (MCC 8734)
  • Typesetting, Plate Making and Related Services (MCC 2791)

Note that these codes only apply to Visa. MasterCard, American Express, and Discovery use their own separate sets of codes. Also, having an appropriate MCC code to qualify as a B2B merchant doesn’t automatically qualify you for discounted interchange rates on B2B transactions. You’ll also have to submit Level II (and possibly Level III) credit card data, as explained below.

Data Levels

In addition to being a properly-coded B2B merchant, you’ll need to submit additional payment data with each B2B transaction to be eligible for discounted processing rates. Credit card associations recognize three levels of payment data: Level I, Level II, and Level III data. Once again, the major credit card associations have their own separate ways of classifying and treating this data. Visa, for example, refers to these three data categories as “data levels,” while MasterCard calls them “data rates.”

For standard transactions between your business and individual consumers, only Level I data is required to process a transaction. Level II and III data is not submitted, and won’t get you a discount on interchange rates anyway. Because most businesses primarily sell to individuals rather than other businesses, your merchant account will only be set up to handle Level I data unless you add a service to record and transmit Level II and Level III data. Since most businesses won’t need this service, it’s often only available as an optional upgrade, and you’ll usually be charged an additional monthly fee for it. If your business only processes a small number of B2B transactions, you’ll want to weigh carefully whether the discounted interchange rates are worth this added expense. Remember, you’ll be paying the additional fee for Level II/III processing every month regardless of whether you use it regularly or not.

Processing of Level II and III data is further complicated by the fact that once again, the credit card associations have separate policies for handling this additional data. Discover, for example, only handles Level I data and won’t give you any discount on interchange rates for submitting Level II or III data. American Express, on the other hand, accepts both Level I and II data, but not Level III data. Acceptance of Level II data also requires prior approval for your business directly from American Express. Visa and MasterCard have the most liberal policies, accepting all three levels of credit card data without the need for prior approval. Note that you will still need to be properly coded with a Merchant Category Code identifying you as a B2B merchant.

So, just what “data” is included in these various data levels, anyway? Think of transaction processing data as a very large database, with each transaction being a record, and each record consisting of several fields that have to be filled in. All transactions will have to include all required fields for Level I data before they can be approved and processed. Level II and III data require additional fields that have to be filled in for the transaction to be processed as a Level II or III transaction and qualify for a lower interchange rate. Again, there are some slight variations in the data requirements among the various credit card associations. Here’s an overview of the common data requirements for each data level:

Level I data is required for all transactions, B2B or otherwise, and generally includes the following fields:

  • Merchant DBA name
  • Transaction amount
  • Billing zip code

Level II data includes all Level I data, and the following additional fields:

  • Sales tax amount
  • Customer code
  • Merchant postal code
  • Merchant tax identification number
  • Invoice number
  • Order number

Level III data includes all Level I and Level II data, plus the following additional fields:

  • Product commodity code
  • Item ID or SKU
  • Item description
  • Unit price
  • Quantity
  • Unit of measure (each)
  • Extended price
  • Line discount

As you can see, entering Level III data requires a lot of additional data for each transaction. Unfortunately, manually entering this data on a standard countertop credit card terminal is not an easy process. If you’re using a virtual terminal or a payment gateway, it’s a little easier since you’ll have access to a full alphanumeric keyboard. Some merchant services providers can also set you up with a specialized software load for your terminal that automatically captures the required data, but you’ll have to pay extra for it. The bottom line is that manually entering Level II and III data is only a practical option for merchants who only handle the occasional B2B transaction and for whom specialized B2B processing software would not be cost-effective.

B2B Processing Rate Discounts

As we’ve noted above, including Level II and III data when processing a B2B transaction can save you money on processing costs by lowering the interchange rate that you have to pay to the credit card associations for each transaction. How significant are these savings? Perhaps more importantly, are they significant enough to offset the cost of paying for an additional B2B processing service for your merchant account?

To answer these questions, you’ll have to understand interchange fees and how they impact your overall costs for credit card processing. Interchange fees are the fees you’ll have to pay to the credit card association for each transaction. You’ll also have to pay an additional markup to your processor, but in most cases, the interchange fee will constitute a majority of your overall transaction processing cost. For a more in-depth explanation of interchange fees, check out our article Interchange Reimbursement: What You Need to Know About Your Most Costly Merchant Account Fee.

Each credit card association has its own set of interchange fees that apply to a variety of transactions. For our example, we’ll be using the 2018 Visa USA Interchange Reimbursement Fees schedule. You can find similar fee schedules online for the other major credit card associations. Be aware that these fee schedules are frequently updated – usually because the credit card associations have raised their rates. Here’s an extract from Visa’s current interchange fee schedule that applies to B2B transactions:

Visa Level II & III Interchange Rates - 2018

As you can see, a standard Commercial Card-Present transaction made on a business credit card will incur an interchange fee of 2.50% + $0.10 per transaction. However, if you include Level III data when submitting the transaction, the interchange fee drops to 1.90% + $0.10 per transaction. That’s a savings of 0.60%, and even larger savings are possible for other types of B2B transactions. While this may not sound like a significant amount of money, it can really add up quickly, particularly if your business processes a lot of B2B transactions.

Here’s an example of how these savings work. Let’s say you have a single B2B transaction for $1,000. If you only include the Level I data, you’ll pay $25.10 in interchange fees alone. Your actual processing costs will be even higher once you pay whatever markup your processor charges you. For the same transaction, including Level III processing data reduces your interchange fees to $19.10. While that $6.00 savings might not seem like much, it can really add up in a hurry if a significant number of your transactions are B2B.

Large-ticket transactions are common in the B2B world, and the inclusion of Level III data will result in a very significant savings on interchange fees if your transaction amount is large enough to qualify. In the extract above, you’ll see that a Commercial Product Large Ticket transaction incurs an interchange fee of 1.45% + $35.00 per transaction. This special large-ticket rate only applies to single transactions over $6,500.

Given the hefty $35.00 per transaction charge, you might understandably be skeptical that this “special” rate will save you any money. So, let’s do the math. A transaction for $6,500.01 – barely large enough to qualify – would incur an interchange fee of $162.60 if processed at the standard Commercial Card-Present rate of 2.50% + $0.10. However, under the Commercial Product Large Ticket rate of 1.45% + $35.00 your interchange fee would only be $129.75. That’s a savings of $32.85. At the same time, the same transaction would only cost $123.60 under the Commercial Level III rate of 1.90% + $0.10. The break-even point between the Commercial Product Large Ticket rate and the Commercial Level III rate occurs at $7,758.50. Thus, for any transaction over this amount, the Commercial Product Large Ticket rate will actually save you money in interchange costs. Remember in comparing these rates that the markup you pay to your processor under an interchange-plus pricing plan will add to your overall processing costs, but it will be the same regardless of whether the transaction is B2B or not, and regardless of the ticket size.

How Processing Rate Plans Affect B2B Processing

If your head is spinning a little by now, we understand. There are a lot of variables involved in comparing B2B processing rates against standard business-to-consumer rates. There is, however, one simple and very important point that you need to understand: B2B processing rates will only save you money if you have an interchange-plus or subscription-based pricing plan. With an interchange-plus pricing plan, you pay the applicable interchange rate plus a fixed markup (usually a percentage of the transaction plus a small per-transaction fee) that goes to your merchant services provider. Subscription-based (or membership) pricing plans modify this arrangement by offering much lower per-transaction costs in exchange for a higher monthly subscription fee. One of our favorite providers, Fattmerchant (see our review) only charges a low per-transaction fee with a 0% markup (although their $99 per month subscription fee might not be cost-effective for low-volume businesses). Interchange-plus and subscription-based pricing plans pass the interchange costs directly onto you with a fixed markup. If the interchange costs go down due to using Level III data for B2B transactions, this lower rate is also passed on, meaning you save money.

Unfortunately, the same cannot be said for flat-rate or tiered pricing plans. Providers such as Square (see our review) will charge you a flat rate for each transaction regardless of the underlying interchange fee. As a result, you won’t see any savings on B2B transactions with Level III data. In fact, if such a transaction does result in a lower interchange fee, your provider gets to keep the savings. Tiered pricing works the same way, with transactions being processed according to fixed rates based on whether a transaction falls under a qualified, mid-qualified, or non-qualified tier. Since these tiers are designed to ensure that the processor makes a profit from each transaction regardless of the underlying interchange rate, you won’t see any decrease in processing costs by using Level III data for B2B transactions. In fact, your processor will get to keep whatever savings result from using Level III data. While we strongly recommend against tiered plans for all merchants, it’s doubly important to avoid them if your business processes a lot of B2B transactions.

B2B Software Applications

As we’ve discussed above, you can save a significant amount of money on processing B2B transactions by including Level III data and ensuring that you have the proper MCC code identifying you as a B2B merchant. However, a standard merchant account designed for business-to-consumer transactions won’t include these features. You’ll have to pay extra for them, and every merchant services provider approaches the problem of serving B2B merchants differently.

While including Level III data can be as simple as installing a special software load on your credit card terminal, merchant services providers are increasingly turning to computer- and web-based software to help B2B merchants get the lower rates to which they’re entitled. A notable trend we’re seeing in the merchant services industry is the switch to integrated processing software that allows merchants to process both retail and online transactions using the same platform. With an integrated payments platform, it’s easy to include B2B processing capability as an option for merchants who need it.

One of the better-integrated services we’ve seen is the MX Merchant platform offered by Dharma Merchant Services (see our review), one of our favorite providers. By adding the optional MX B2B app, B2B merchants can have Level III data automatically populated whenever they submit a B2B transaction. While the app costs an additional $20.00 per month, it can more than pay for itself if you process even a single large-ticket B2B transaction at the lower interchange rates.

Most other merchant services providers will also charge you an additional monthly fee for submitting Level II or III data. While these fees vary, $20.00 per month seems to be the industry average. If you only rarely process B2B transactions and they aren’t for large amounts, this extra service might not be cost-effective. On the other hand, any merchant who processes a significant amount of B2B transactions – particularly large-ticket ones – should realize a net savings by including this feature in their merchant account.

Final Thoughts

If you’ve ever tried to input Level III data on a countertop terminal manually, you’ve probably gotten frustrated and given up on inputting all the required data needed to qualify for a lower interchange rate. You’ve probably also overpaid for processing that transaction. Yes, the world of B2B processing can seem very confusing at first. However, it’s really not all that complicated. Your merchant services provider can help ensure you’re properly coded as a B2B merchant and that your payment processing systems (i.e., terminals, POS systems, virtual terminals, and payment gateways) are set up to include Level III processing data. Whether you want to invest the money into additional B2B services will depend on your overall B2B transaction volume.

For merchants who only see a B2B transaction on rare occasions, it might not be worth the extra monthly fee for a service you’re rarely going to use. In such cases, using a payment gateway or virtual terminal will make it much easier to enter the required Level III data manually. Merchants who process a significant amount of B2B transactions, on the other hand, will save far more money in lower interchange rates than the cost of the additional B2B software. If you can save more than the usual $20 monthly fee for B2B services, we highly recommend that you include this feature when setting up your merchant account. Your merchant services provider should be able to help you get this option set up and running smoothly.

The post The Complete Guide to B2B Payment Processing appeared first on Merchant Maverick.

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The Best Credit Card Machines And Terminals

When you scan or insert your debit or credit card at the mall or your local convenience store, you probably don’t put a lot of thought into what type of machine is reading and processing your payment. And really, why should you? To consumers, they’re all pretty much the same (except for maybe those machines that angrily beep at you to remove your card. Why is that sound so aggressive?) That said, if you’re a retailer and you’re not paying attention to what type of credit card machine you’re using, it could cost you. An unreliable or even just a slow machine can impact your bottom line. It’s imperative to know what you want and need from a credit card machine when you’re purchasing your hardware.

Let’s start out by defining some terms. This post will specifically talk about credit card machines and terminals as opposed to credit card readers. A credit card machine is a device that connects directly to or is integrated with your point of sale system, whereas a reader is a smaller, mobile device that generally connects to phones and tablets and can be used with an app.

While many terminals look similar (big buttons, a place to slide or insert your card etc…) there are a number of other features you should be looking for when you make your purchase.

Credit Card Machine Features

First off, you’ll need to make sure your machine is compatible with your processor. Some companies sell hardware that can only be used with their own processing plans. However, there are many universal options available that will sync up with any processor and will give you more flexibility. Some credit card processors will charge reprogramming fees for hardware not purchased directly, so keep this in mind. 

Your level of connectivity is also crucial as any downtime or lag that impedes your ability to process payments is going to have a significantly negative impact on your business. Most newer machines have both a phone and an internet connection and many are now equipped with wireless capabilities in case your landline connection fails or you are in a place where only WiFi is available.

You’ll also want to assess the type of payments you’ll be accepting. In this day and age, you will almost certainly need to process debit card payments, in which case you’ll want a PIN pad (either separately or built-in) for customers to type in their number. Depending on your industry, you may also need a device that handles EBT (electronic benefits transfer). If you’re accepting checks, you’ll want a device that can process them electronically — the same goes for gift cards if that’s an option your business offers. A more modern way to accept payment, like a tap terminal that allows customers to pay via their phone with a service like Google Pay, may also be advisable.

If you’re buying a new machine or terminal, you’ll almost certainly want to make sure that your system can accept EMV chip cards. These cards are becoming the standard in the industry (as of 2015) for their superior level of security; any quality processing machine should be compliant at this point.

What Do Credit Card Terminals Cost?

Now let’s get into what everyone is really interested in: the cost. Credit card machines are generally a bit more expensive than your standard credit card readers which simply hook up to a phone or mobile device. But, with that added expense, you’re also getting added security. To put it in broad terms, machines can run from anywhere between $50 for a bare bones terminal that simply takes card payments, to upwards of $500 depending on what features you want or need.

Each added feature will typically send the price a little higher. If you want to be capable of accepting mobile payments, like Apple Pay or Google Pay, expect a slightly higher cost. If you need a built-in printer for receipts, expect to pay a little more. If wireless capability is a must, that will also result in a slightly higher cost alongside the expense of a data plan. However, many companies offer payment plans and, depending on what services you’re signing up for, some companies run promotions where you can get hardware thrown in for free or at a discount.

Credit Card Hardware Options

When you’re shopping around for a credit card machine, you won’t be hurting for options. However, there are a handful of companies that you will want to check out.

Ingenico and Verifone have long been the gold standard in the credit card terminal industry, and for good reason. They both offer a wide variety of products that are reliable, durable, and competitively priced.

  • Ingenico: Chances are good you’ve used multiple Ingenico products, perhaps in just the past week. It’s difficult to recommend a specific item as they range from very basic readers with built-in PIN pads to others that accept virtually all forms of payment and can print directly all from a device small enough to fit in your hand. Ingenico’s products thrive on their user-friendliness, from set-up to the customer experience, and they have a highly-rated customer service department. Ingenico is also an international company with products that can function all over the world.
  • Verifone: Verifone is equally user-friendly and has an exceptionally sleek and modern interface in many of its credit card machines. Like Ingenico, they offer a wide range of products from a fully integrated POS to mobile and desktop devices. Verifone prides itself on the speed of its transactions and its versatility. The VX520 has been one of its most popular models and should be able to handle most small business needs for under $300. Verifone packs a lot into its devices and they are highly durable and built to handle large numbers of transactions.
  • Pax: Another company to keep an eye on in the credit card terminal game is Pax. While not as ubiquitous as Ingenico or Verifone, Pax is a cost-effective solution with many of the same features. Pax’s products are brightly colored and aesthetically pleasing. The S80 CounterTop terminal has an inbuilt contactless processor and can handle multiple payment types. Pax’s products offer speed and strong memory capabilities while featuring state of the art security measures. They also offer a wide variety of PIN pad options.

A current trend in the world of processing is fully integrated systems. These systems are ultra-modern with the ability to accept nearly any form of payment. They can connect to existing hardware but they’re also on the more costly side.

  • Poynt: Poynt has become a major player in the past few years. It currently offers a two-screen desktop system and a mobile device that allows customers to make payments from anywhere in your store. Poynt accepts gift cards, EBT, and mobile payments — among others — and has features like signature encryption, EMV, and a receipt printer built in. The system is incredibly simple to use and lets the customer see exactly what is happening with his or her transaction.
  • Clover: A similar product to Poynt is Clover Station, which also features a dual screen model. Clover has been extremely popular since its release. With Clover, you are locked into First Data processing, a fact that is still holding Clover’s devices back in our ratings here at Merchant Maverick. However, there’s still a lot to like with this hardware. The ability to customize your experience with Clover is a huge benefit and Station comes with 20 preloaded apps. There is also fingerprint log-in for employees to increase security. Clover accepts EMV cards and comes with an optional NFC printer, 4 GBs of memory, and access to the Clover app store.
  • Square: One of the newest integrated processing products on the market is Square Register. Square’s reputation and popularity speaks for itself and this rollout doesn’t disappoint. With the same dual-screen format as Poynt and Clover, customers can make payments seamlessly with a recognizable and simple interface. Square offers a simple and consistent plan for processing fees and pairs with existing hardware in seconds. You can literally be up and running in a matter of minutes once you’re registered with Square and it comes with a two-year limited warranty.

It’s likely that you’ll find multiple credit card machines that can offer you the functions and features you’ll need to successfully run your business. That’s why it’s important to go with a trusted company and a product that’s proven to be reliable. Having a credit card machine that processes payments quickly and runs smoothly is one less thing a busy merchant needs to worry about.

Final Thoughts

Make sure that you’re always staying on top of current payment trends. Hardware companies constantly update to make sure that their clients always have access to the latest technology. New ways to give and accept payment are constantly hitting the marketplace, and whether it’s a new app for making payments or the ability to accept crypto-currency, credit card terminals are adapting quickly and many low-cost credit card readers are now on the market as well. Hopefully, this post has made your credit card processing hardware search just a little easier. 

Want more information? Read our Complete Guide To Credit Card Machines and Terminals.

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Complete Guide To Credit Card Machines And Terminals

We don’t typically think about what happens in the moments after we swipe our debit and/or credit cards. More often than not, we simply run or insert our card into the credit card machine and hope that the cashier doesn’t use the next few moments to initiate small talk. The number in our checking account decreases or the number on our credit card bill increases, and that’s all we care about.

But, to the business owner, credit card processing is exceptionally important and it can play a huge role in your bottom line. There’s a lot of information to take in if you’re a novice when it comes to credit card processing, and you’ll need to decide what elements are most important to your business. Do you need mobility when accepting payments? Will you be accepting transactions online or over the phone? What security measures should you be taking to protect both your business and your customers? What companies are highly rated or come heavily recommended?

We’ll try and answer the bulk of your questions about credit card machines and terminals below.

Credit Card Machines

Credit card technology has evolved rapidly over the years. It doesn’t seem like that long ago when the process involved a terminal with just the option for credit. Then came debit cards. As the internet became the world’s go to for conducting business, the processing game had to change as well. Now, merchants can take payments with readers connected to their phones or tablets — they can even accept payments remotely without the physical card present. This has created a need for increased security which has led to encryption technology and the relatively recent advent of the EMV chip card.

Before we get into that, however, let’s start with some basics about credit card transactions. You have, no doubt, used hundreds of different types of card readers throughout your illustrious tenure as a consumer. But what happens once your card’s magnetic strip has been read? In simple terms, there are three phases involved in actual processing:

  • Authorization: Once your card is scanned, its information is sent over with a request to be processed. The processing request is then sent to the company of the cardholder (VISA, Mastercard etc…). The company sends the request on to the issuing bank. If there are enough funds in the account, and if the card is registered as valid, the purchase is approved. All of this takes place in a matter of seconds, generally speaking.
  • Settling: After a transaction has been approved, it is forwarded on to be cleared via an interchange. When the request is received, a credit is given to the merchant for the amount of the sale. The bank will then issue a statement to the customer in that amount which the customer must then pay off.
  • Funding: So far in the transaction, no actual money has changed hands. After the card has been authorized and the credit is issued, the payment company then makes a deposit into the merchant’s checking account. These funds can generally be accessed in just a few days.

In order to accept these forms of payment, you will need some type of card reader. Your options here have also evolved rapidly in the past couple of decades. The most common type of credit card machine is still the stationary card terminal. This is a machine that needs a physical connection either to a phone line or to the internet in order to process physical cards.

The next type of machine, and one that is rapidly gaining in popularity, is the wireless processor. These often look very similar to a stationary device, using a magnetic strip or chip reader to take a customer’s card information. However, these devices only require a wireless connection, making them far more versatile and mobile for merchants (albeit with slightly higher security concerns).

Finally, you can also accept payments via a virtual terminal, something we’ll get into more thoroughly a little bit later. In short, virtual terminals allow you to take a customer’s card information without that card being physically present.

Of course, within these different machines, you’ll have some other hardware choices to make. One item you may want to look into is a PIN pad. With this device, customers can manually type in their debit card password to process a payment. Debit cards with either a VISA or Mastercard logo can be processed almost identically to credit cards. However, with a PIN pad, a transaction that is specifically run as debit usually costs the merchant a smaller fee. This ends up saving you a lot of money in the long run, particularly on large transactions.

Some point of sale systems have this technology built-in, allowing customers to enter their PIN numbers on a touchscreen. PIN pads encrypt a customer’s information, giving an inherent level of security on those transactions. As previously mentioned, you don’t need a PIN pad to run these types of transactions. A signature debit card is processed just like a credit card, but the money comes directly from a customer’s checking account. However, in most instances, the merchant is still charged the same rate as if the transaction was run as credit.

One of the more recent changes in the world of credit card processing has been the introduction of the chip card. EMV (which stands for Europay, Mastercard, VISA) is a method of payment based on a standard for cards and machines that is meant to dramatically reduce the possibility for fraud when it comes to credit card payments. EMV cards store data in a chip within the card that is scanned when it is “dipped” or inserted into a card reader or payment machine. Companies have been steadily trying to meet EMV standards and the majority of processors and point of sale companies are now EMV compliant or claim to be in the process of becoming compliant in the near future. VISA and Mastercard have also issued standards for card-not-present transactions as a way to increase security measures in the world of eCommerce.

It’s difficult to predict what the future will look like when it comes to payment processing, but one trend that seems like a near sure bet is that consumers will continue to seek out convenience. This means that services like Apple and Android Pay will probably continue to spike in popularity. Given society’s increased dependence on iPhones for everything from communication to driving directions, the ability to pay with one’s phone is something all companies will want to make sure they can handle — sooner rather than later.

Looking for a credit card machine for your business? Buy, don’t lease! 

Virtual Terminals

What is a virtual terminal? Let’s delve in deeper to get a sense of whether or not it’s a solution your business needs. Virtual terminals are online applications that allow customers to input credit card information directly online to then be processed electronically. These terminals allow for transactions to be processed even when a credit card is not physically present. This can be an ideal solution for any business that is highly mobile or conducting transactions remotely with clients.

Many companies, including PayPal and Helcim, offer the ability to use a virtual terminal for payments. The implementation process is exceedingly simple. Generally, for a small, monthly fee, your processor can give you the ability to enter payment information from pretty much anywhere with an internet connection. Most companies will offer a percentage rate and a flat fee for virtual terminal transactions. This fee is often slightly higher than it would be for a typical transaction as card-not-present transactions have a slightly higher risk of fraud.

With PayPal, for example, all you need is a phone, tablet or computer and you can quickly log in to your account and go to the virtual terminal setting. This leads you to a screen similar to one you would see if you were entering your own information online for a purchase. Once the information is entered, you’ll receive confirmation. 

This simplicity and flexibility has made the virtual terminal an increasingly popular way for businesses of all types — not just mail order or eCommerce businesses — to accept payments. An increasing number of companies are now also offering USB card readers that connect directly to your terminal. These automatically take the card information and run it through your virtual terminal, keeping your transactions in the same location but charging you a lower rate since the card is present at the time. Some of these same companies offer pads which can collect customer signatures in the same way. Even with an external card reader, virtual terminals are usually not designed to accept advanced payment types, like contactless payments, from mobile wallets such as ApplePay. If you want to accept contactless payments, you’re better off getting a standard NFC-enabled credit card machine or credit card reader.

Virtual terminals can also take automated clearinghouse (ACH) payments for one-time or recurring transactions. These payments are processed in bunches, meaning the payment is usually received a little later. However, you aren’t subject to interchange fees for these payments.

Obviously, when making or accepting payments where credit card information is simply entered online, security is going to be of the utmost importance. It is highly recommended that you choose a payment provider that encrypts credit card data; this both reduces the risk of theft and the scope of the Payment Card Industry (PCI) compliance.

From there, you will generally have two options.

You can choose a non-validated solution which can cut down the risk of having data stolen. This is an affordable option that is offered by most processing companies, though these solutions are not defined as secure by the PCI. In other words, there is an increased chance that hackers could gain access to encryption keys which could eventually lead to a data breach.

The other option is a PCI point-to-point (P2PE) provider which meets all of the PCI standards and includes secure hardware. Processors that provide this level of protection must accept Merchant P2PE Implementation Responsibilities. Because of this added security, a much smaller number of processors offer this service (although that list is growing). If you are set on providing increased security, you will need to make sure you have hardware that meets these standards — you will also have to submit to regular security check-ups.

Merchant Services

When we talk about merchant services, what exactly do we mean? In simple terms, ‘merchant services’ is a broad term to describe the hardware and software products that make it possible to accept credit and debit card transactions. These companies and services help to connect the issuing bank (the bank that gave your customers their credit cards) and the merchant bank (the bank that is behind your merchant account). In the last couple of decades, this term has expanded to include much more than just your standard terminal scanner. The internet has opened the door for payments to be made online and those purchases can be tracked and managed from your computer or mobile device.

Merchant services providers are any businesses which accept payments (aside from just cash and checks). These can include credit and debit card processors, point of sale terminals, analytic software etc. There are a handful of different kinds of merchant services providers, including:

  • Merchant Account Providers: These providers can set you up with a merchant account and services that allow you to collect your money following a debit or credit card transaction. Some larger companies also come with direct processing services.
  • Payment Service Providers: Even though it’s advisable, it’s not essential to have a merchant account to process payments. Payment service providers, like the ubiquitous PayPal, don’t give you an ID number and are popular because they generally do not come with account fees or long-term contracts. These accounts can be frozen, sometimes without notice, and customer service can be sketchy. However, for smaller or seasonal businesses, payment service providers are a popular choice.
  • Payment Gateway Providers: Payment gateway providers represent a service provider that has emerged with increased popularity of eCommerce. These providers may or may not come with a merchant account. Some give you a choice of using their own merchant account or using a gateway with an existing account. Others only offer a gateway service, meaning you’ll have to have a merchant account from a third party.

When you’re looking at various card processors, there are a few things that you should keep an eye on. Perhaps most importantly you’ll want to research the company’s reputation. Processing payments is a crucial aspect of your business and an unreliable company can give you a lot of headaches (and affect your bottom line).

You’ll also want to compare the costs and potential fees that various processors implement. Square, for example, charges no monthly fee, which is yet another appeal for smaller or mid-sized companies. However, they also implement a 2.75% fee on transactions — if your business takes off and you’re suddenly processing a high number of transactions, those fees will add up and quickly wipe out any savings you’re receiving from not paying a monthly fee.

You’ll also want to doublecheck the compatibility of your processor. If, for instance, you’ve found a point of sale system that you are comfortable with, you’ll want to make sure that the processor integrates seamlessly without additional costs. If you’re forced to set up an aforementioned gateway, you could end up paying a large monthly fee.

To enable transactions, merchants will have to fill out an application. If you’re opening a merchant account, this process can take a little longer than going through a third-party processor. One of the reasons smaller and mid-sized merchants lean towards a third-processing account like Square is that you can be up and ready to take payments almost immediately. The price for that instant gratification, however, is an increased likelihood for potential account freezes later on.

When you’re in the process of picking out a processor, you’ll also want to pay close attention to transaction fees. The best merchant account providers usually offer what is referred to as interchange-plus pricing. This means that the provider takes the wholesale cost of the transaction and tacks on a small, standardized markup. This ensures an affordable and transparent pricing plan. It also means a slightly higher rate for transactions when a card isn’t physically present since those transactions have a higher frequency of fraud. Third-party processors sometimes provide a flat rate for all transactions — this is convenient and offers a simple way to quickly figure out your fees. However, it may not be the most cost-efficient in the grand scheme of things. A company like Square, which offers a flat rate for swiped and dipped transactions, also charges a slightly higher rate for key-in and eCommerce transactions.

There are a few other things you’ll want to watch out for when finalizing your decision about a merchant accounts provider. Along with the potential for account freezes or funding holds, keep an eye on how businesses handle chargebacks (where customers dispute a charge) and fraudulent charges in general. There are ways to mitigate these dangers, of course. You can use fraud management tools, including things like address verification services. Using a chip card terminal also dramatically cuts back on fraudulent charges.

Here are a few of our most highly recommended processing companies:

  • Fattmerchant: Fattmerchant is one of the best companies for eCommerce transactions. Its pricing is transparent without undisclosed fees. There is also a 0% markup, meaning you pay only the wholesale cost plus the monthly fee and a small authorization fee. Fattmerchant also has terrific customer service.
  • Dharma: Dharma provides a full array of processing services and also has a simple, affordable pricing structure without hidden fees. They exclusively use the interchange-plus format and are a particularly good choice for non-profits, as they offer a discount to those companies.
  • Helcim: For slightly large companies, Helcim is a very strong option. While offering a wide range of services, they have extremely competitive rates for companies that process more than $2500 a month. They also have very strong customer service and their fee structure is transparent and easy to understand.
  • Square: For companies that don’t provide a full-service merchant account, Square is the standard bearer. There is no monthly account fee and they offer free or low-cost readers. Square also doesn’t force you to sign up for a long-term contract or charge you for early termination.

Your POS System

Another way to process payments is through your POS or point of sale system. Point of sale systems have come a long way, especially in the past decade. Today, you can virtually run your entire business from one, simple device. With the influx of cloud-based systems, you can make snap decisions and check the status of your operation from anywhere with a wireless connection.

With so many options available, and with point of sale systems offering more and more features all the time, choosing the correct system to meet your needs is an important decision. The first thing you’ll need to decide is whether you want a system that is cloud-based or locally installed. Most companies have been moving toward cloud-based options for numerous reasons. First and foremost, it’s incredibly convenient. All of your data is automatically stored off-premise, so if something happens to your store or to your system, all of your payment, customer, and inventory information is still accessible. These systems are often extremely user-friendly as well, designed to be intuitive with very little training time needed. They tend to be sleek, modern, and visually appealing both to your customers and employees.

Many cloud-based systems also perform routine updates automatically, fixing bugs and adding new features so that you always have the most current software at your fingertips. Along these same lines, the best POS systems sync seamlessly to any number of integrations that can help your business in ways you may not have even considered before.

When you’re looking at purchasing a POS system, there are a number of factors to keep in mind. First and foremost, it’s likely that the cost of the POS hardware and software is going to play a large role. Some systems allow you to purchase your system and all necessary hardware upfront for a flat rate, allowing you to own the software. But if dropping a few thousand dollars isn’t something you’re comfortable with, the majority of point of sale companies offer monthly rates. A few companies, such as Square, offer a free version of their software that is generally suited for small operations, though most other POS software systems run anywhere from $39 to $99 a month for basic services while often offering advanced packages with additional features.

Let’s talk about some features you can expect to find in pretty much any good, modern point of sale system:

  • Inventory Management: Not only can you view all of your stock on hand, you can set your POS to alert you when certain products are running low or, even more conveniently, you can set the system to automatically reorder products when they hit a certain level. This can be an enormous time saver and, in most systems, inventory management can be accessed remotely. You can set up quick transfers across multiple locations and, in many cases, create and print your own purchase orders.
  • Employee Management: Likewise, your staff is easy to track and manage from your centralized POS station. You can set permissions and create alerts for suspicious transactions to cut down on fraud. Employees can be given unique codes when they log into the system and can view their hours and current schedules.
  • Customer Management: Many point of sale systems come with their own built-in loyalty programs or integrate with other companies for a small monthly fee. But these days, your POS can help with so much more when it comes to analytics and marketing. Most systems allow for customer data to be stored and easily searched. Customers can look up their own loyalty points and control their own profiles in some cases. More useful for business owners, however, is the ability for the system to analyze what items are being purchased by certain customers, assessing buying habits and creating personalized marketing campaigns that can be implemented with ease, helping to maximize profits. The same can be done with coupons, targeting customers to boost repeat business.

You will also want to do your research to see what systems specifically cater to your particular business. For example, if you’re opening a pizza shop, you may want to look for a system with built-in features that makes online ordering simple, or functions that allows customers to create a custom order which is then automatically sent to the kitchen, freeing up your employees. There are also niche POS systems for specific types of businesses. Quetzal, one of our highest-rated systems here at Merchant Maverick, is built for the retail industry with a significant bent towards shoe stores.

Many POS software systems have their own app store, like Clover, or integrate with scores of apps that might help your business out tremendously. If you’re technically savvy, most POS providers also give you access to an open API, meaning that you or a developer can create your own apps within the software.

When you’re doing your research there are a number of other features you’ll want to keep an eye on. Definitely check to see what features come in the form of add-ons which will increase your monthly fee. You will also want to make sure you have appropriate, compatible POS hardware. Several companies offer hardware packages that can be purchased directly through their websites.

A robust reporting feature should be available in most highly-rated systems and many offer their own eCommerce platforms, making it easy to set up your own website and sell online, all from your POS device.

Another key factor to research is what credit card processors are compatible with your system. While some offer a wide range of choices, integrating with most major companies, others lock you into a limited number of options or offer their own processing services for credit card payments, for better or worse.

You’ll also want to see what your system has in terms of an offline mode. Most point of sale systems have evolved to now offer at least some offline functionality, but what you can actually do in the case of an outage can vary. Many systems still function as normal, allowing you to process credit cards, encrypt transactions, and store the data to be run once the internet is restored.

It’s difficult to make a decision, but at Merchant Maverick, we’ve come across a number of point of sale systems that we would happily recommend depending on your business.

  • Shopkeep: Shopkeep is routinely on the top of our lists. This simple and reasonably priced system features everything you would expect in a point of sale system. It’s well suited for small to mid-sized retail shops and restaurants with a sleek design, excellent reporting and management tools, and terrific customer service.
  • Revel: For slightly larger restaurants or retail establishments, we often recommend Revel, a product that can manage multiple locations and large amounts of inventory with ease. Revel is intuitive and extremely robust with a top-notch kiosk function and Kitchen Display System.
  • Lightspeed: Lightspeed is another highly rated company and offers both a Retail and Restaurant product. Lightspeed has great customer service and is easy to set up while also providing intuitive front end and back end features. It also has an excellent and simple to use eCommerce platform.
  • ERPLY: ERPLY is one of the top retail point of sale systems that we’ve reviewed. One of its biggest features is the ability to integrate with most major credit card processors. It also has terrific shipping integrations and excellent customer management tools, particularly when it comes to loyalty.

Final Thoughts

There is obviously a lot to process when it comes to… well… credit card terminals and payment processing. If you’ve made it this far, hopefully you’re feeling a little more confident about your knowledge of credit card processing machines, virtual terminals, merchant services, point of sale systems, and what you should be looking for from the various companies that provide this technology. Make sure you have a good grasp on what each company charges for different transactions and what might be the best option for your type and size of business. Also don’t overlook things like a company’s customer service reputation. It’s a competitive market and you have the ability to make sure you end up with a credit card terminal and processing system that can best help your business thrive.

Interested in learning more? Download our free Beginner’s Guide To Payment Processing.

The post Complete Guide To Credit Card Machines And Terminals appeared first on Merchant Maverick.

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Stripe Payments Competitors And Alternatives

It’s safe to say, Stripe (read our review) has done a lot to change the way people pay online, and it’s opened up the potential for merchants all over the world to sell online and reach customers almost anywhere. The company has grown massively over the years, to the point that Stripe says there’s an 80% chance any given credit/debit card has been used on the Stripe network previously.

In addition to pre-built and customizable checkout forms that you can drop into a website, Stripe integrates into mobile app payments. Square’s documentation has become the gold standard by which all other documentation is judged. Developers love it for ease of use and the extensive support for programming languages.

Merchants also get access to advanced subscription and billing tools, including invoicing. Not only that, but the Stripe Connect platform allows you to create a marketplace for other merchants to sell and easily manage all their payments. However, it’s worth noting that Stripe will charge you additional fees on top of processing costs for using these services.

Plus, Stripe offers more than 300 ready-to-go integrations from eCommerce to invoicing and much more, which can simplify the process of building your business’ back end. Check out Stripe’s Works With page for the full list.

But Stripe isn’t for everyone, and it does have some serious drawbacks. The first among them is its third-party processing model that leads to account holds and terminations for unqualified merchants. The second is the dubious customer service, which includes a lack of phone support.

If you’ve had a bad experience with Stripe in the past, or you’re not sure if Stripe is actually right for you, have no fear! There are some great alternatives to Stripe out there, that offer comparable pricing, similar tools and features, and quality customer support. Let’s take a look at six of the most promising Stripe competitors and see how they stack up for merchants.

Stripe Key Facts 

  • Merchant Account Or Third-Party: Third-Party
  • Pricing Model: Flat-Rate Pricing
  • Processing Costs: 2.9% + $0.30
  • Suitable For Low Volume: Yes
  • Suitable For High-Risk Businesses: No

Alternative #1: Braintree Payment Solutions

Braintree (read our review) is, hands down, the most direct and obvious alternative to Stripe. Its product offerings are nearly identical, documentation is quite good, and pricing is comparable. That means you get access to a pre-built payment form, a customizable form, subscription and recurring billing tools, marketplace tools, an API for custom reporting, and more. Braintree actually outperforms Stripe in terms of global reach for merchants, with more supported countries. However, like Stripe, there is no easy in-person payments option.

You also get access to a huge assortment of supported payment methods. It’s worth noting Braintree is owned by PayPal, so that does mean you can incorporate PayPal and Venmo acceptance, as well. But whereas Stripe will charge you for access to features such as Billing and Radar, Braintree charges absolutely nothing beyond processing costs to use its services.

Braintree doesn’t quite compare to Stripe as far as integrations, but there are some very good options on the list. Check out Braintree’s list of supported third-party integrations for more information there.

In addition, Braintree offers each merchant their own merchant account, which translates to much greater account stability than you get with Stripe. And despite being a PayPal company, reports indicate that Braintree is a little bit better about working with higher-risk businesses. Decisions are made on a case-by-case basis and you may be required to implement a reserve fund, but Braintree is certainly an option if you’ve had trouble with other processors. Braintree also promises “white glove” support, and with a few exceptions the merchant experiences support this claim.

Check out our Stripe vs. Braintree article for an in-depth comparison of the two services.

  • Merchant Account or Third-Party: Merchant Account
  • Pricing Model: Flat-rate
  • Processing Costs: 2.9% + $0.30
  • Suitable For Low Volume: Yes
  • Suitable For High-Risk Businesses: Yes (in some circumstances)

Alternative #2: Adyen

Adyen (read our review) isn’t exactly a big name. In fact, it only has about 5,000 merchants. But despite the small customer base, it had a payment volume of $50 billion in 2015, comparable to Braintree, which has quite a few more merchants. And that’s because Adyen’s built its business by chasing after the big fish. For example, Adyen powers payments for the crafting marketplace Etsy, and it recently wooed eBay away from PayPal.  However, now that it’s established itself, the company is started to court smaller businesses.

Despite providing merchant accounts (which historically translates to better stability), Adyen has one stipulation that makes it very unsuitable for high-risk businesses: a chargeback threshold. The industry standard is 1% (and that includes Stripe) but Adyen will terminate an account or implement holds if it exceeds a 0.5% chargeback rate. Adyen is also unsuitable for low-volume businesses because of its monthly minimum of 1,000 transactions or $120 per month in processing fees.

However, when you get past those concerns, you’ll find that Adyen is most similar to Stripe in its global reach and support for localized payment methods across Europe, the Asia-Pacific region, and North and South America. Adyen even accepts PayPal transactions, which is something rarely available from companies not owned by PayPal. There’s also a decent list of supported partners and integrations.

Adyen has very powerful marketplace tools (it would have to, given the big marketplaces it’s landed as clients), but also a secure, customizable checkout form. It also has advanced tools to reduce chargebacks, increase success rates of transactions, and analyze your business data, all at no additional charge. Plus, Adyen has incorporated support for in-person payments into its package, making it an all-in-one solution. All of that makes it a powerful contender for growing businesses that need advanced technology to power their payments system.

  • Merchant Account or Third-Party: Merchant Account
  • Pricing Model: Blended (interchange-plus for Visa, MasterCard, Discover; flat-rate for Amex)
  • Processing Costs: 0.6% + $0.12 markup for Visa, MasterCard and Discover; 3.95% + $0.12 for Amex; $0.25 + $0.12 (totaling $0.37) for ACH Direct Debit
  • Suitable For Low Volume: Yes
  • Suitable For High-Risk Businesses: No

Alternative #3: PayJunction

PayJunction (read our review) is one of the most developer-friendly merchant account options. While its business model and product offerings aren’t exactly innovative, Payjunction does offer interchange-plus pricing with no additional fees if you process more than $10,000 per month. (Below that threshold, a $35 monthly fee applies).  The markup is a little high, but with no per-transaction fee and no other fees, it balances out and can still yield savings. And then consider that you get access to all of PayJunction’s developer tools and extra features at no additional cost.

One of the more interesting features PayJunction offers is the ability to capture signatures on emailed receipts. Customers need only open the email and they can sign the receipt on almost any device. This is a great option especially for businesses that accept orders via phone, social media, and other nontraditional channels. But more than that, you also get a virtual terminal with invoicing and recurring billing capabilities. PayJunction’s gateway, Trinity, integrates with a huge assortment of shopping carts as well as POS systems to give you an all-in-one setup.

PayJunction isn’t clear about its stance on high-risk businesses, but if you’re not qualified you’ll be told up front instead of after you’ve already set up your account and started accepting orders. In addition, the whole system is not quite as full featured as you get with Stripe, but it can handle all the essentials. Really, the account stability and pricing are the biggest perks of processing with PayJunction. It certainly doesn’t hurt that the company has an excellent reputation for customer service, either.

  • Merchant Account or Third-Party: Merchant account
  • Pricing Model: Interchange-plus
  • Processing Costs: Interchange + 0.75%
  • Suitable For Low Volume: No
  • Suitable For High-Risk Businesses: Not Stated

Alternative #4: Square

Probably the least-expected entry on this list is Square (read our review). What’s a mobile card reader and POS doing in an article about online gateways and developer platforms? But Square has expanded its platform to include eCommerce integrations and a developer platform for ecommerce, point of sale, and much more. It offers seamless advanced inventory management at no additional charge, plus online order management, a customer database, and very solid reporting tools.

Square doesn’t support in-app payments the way Stripe does, and its supported payment types are more limited; however, the biggest drawback is that Square is only available to merchants in a handful of countries whereas Stripe (and many of the other options on this list) have a much more global reach. In addition, Square is a third-party processor just like Stripe, meaning merchants can get set up quickly, but face a potential for funding holds and account terminations.

However, Square’s documentation and APIs allow you to build a system that can easily accommodate online and in-person sales, reporting, inventory, and more, using Square’s already robust tools. Square doesn’t match Stripe for number of integrations, but it does have many options and they span a huge assortment of merchant needs. Check out the app marketplace for a complete list.

It’s not exactly common to find service providers who work seamlessly with online and in-person sales. Square is one of the few that does it exceptionally well, especially when you consider the extras that get thrown in at no charge. The lack of iOS/Android support is disappointing, but not necessarily a deal breaker if you don’t have a native app.

  • Merchant Account or Third-Party: Third-Party
  • Pricing Model: Flat-Rate
  • Processing Costs: 2.9% + $0.30 for online transactions, 2.7% for swiped/dipped/tapped transactions
  • Suitable For Low Volume: Yes
  • Suitable For High-Risk Businesses: No

Alternative #5: PayPal

PayPal (read our review) probably comes to mind when most people think of online payments. The commerce giant has made itself a trusted household name among consumers. But the fact that online transactions redirect and are completed on PayPal’s site isn’t a great solution for every merchant in 2018. PayPal does offer hosted payment pages but they come at a cost of $30/month in addition to payment processing. Recurring billing also comes at a cost of $10/month.

PayPal does offer a suite of developer tools for businesses interested in a custom setup. In addition to providing access to Express Checkout and the Braintree SDK, PayPal’s APIs include tools for invoicing, mass payouts, and marketplaces. However, despite being the parent company of Braintree, it seems that PayPal and its infrastructure haven’t quite kept pace. For starters, PayPal’s marketplace tools are fairly new (introduced in 2017) and they are only available after you go through an application and vetting process. And while the developer tools exist, most of the chatter says they don’t match Stripe for quality.

On the plus side, PayPal also supports a wide assortment of integrations for merchants, including POS integrations. It’s easy to create an all-in-one setup that addresses in-person and online payments. However, the default structure is a little bit cumbersome and getting access to features such as a hosted checkout page will cost quite a bit, compared to other providers who offer them at no additional cost.

In addition, like Stripe and Square, PayPal is a third-party processor and some merchants do run a greater risk of encountering a funding hold or account termination. PayPal certainly has most of the tools merchants need and a widely recognized name. It probably isn’t the best solution if you have extremely specialized needs, but if you want an all-in-one payments experience with some great add-ons thrown in, PayPal could be a good choice.

  • Merchant Account or Third-Party: Third-Party
  • Pricing Model: Flat-rate
  • Processing Costs: 2.9% + $0.30 for online transactions; 2.7% for swiped/dipped/tapped transactions
  • Suitable For Low Volume: Yes
  • Suitable For High-Risk Businesses: No

 

Alternative #6: WePay

We Pay (read our review) isn’t built for merchants who want to accept payments online. It’s actually a payments service for platforms that want to build native payments into their apps or services. That means shopping carts that want to offer a seamless payment processing option, along with crowdfunding, event management, and SaaS products, as well as marketplaces. Even though merchants can’t sign up for processing directly, WePay makes the cut because platform payments is one of Stripe’s core offerings, too.

WePay supports both web-based and in-app payments for iOS and Android, and in addition to cards and ACH transactions, you can implement Android and Apple Pay for the Web, so you have more options for payment methods. You can also use WePay to create a white label mobile POS with the option for a branded card reader.

As with Stripe, WePay is a third-party aggregator, which means that not all merchants who are onboarded via one of these platforms will be approved and they may face sudden account holds or terminations. Also, pricing isn’t disclosed and it’s up to the platform builder to decide what sort of rates it wants to charge and whether it wants to take a cut of the processing costs.

  • Merchant Account or Third-Party: Third-Party
  • Pricing Model: Not Stated
  • Processing Costs: Not Stated
  • Suitable For Low Volume: No
  • Suitable For High-Risk Businesses: No

Final Thoughts

Stripe is a great option for many businesses. The fact that there are no monthly minimums makes it great for startups, and the number of supported countries, supported payment options and supported currencies make it a serious contender for global businesses in particular. The various features make Stripe especially well suited to high-tech businesses that aren’t satisfied with the standard fare in a payments processor.

But the other companies we’ve looked at are all great options, too. And in the end, they all have their benefits and their drawbacks. Stripe, PayPal, Square, and WePay are all third-party processors that put merchants at risk of account freezes and terminations. What’s right for one business may not be right for another.

That’s why you need to have a really good idea of which features are absolute must-haves. You don’t want to start the process of establishing an account and creating an integration only to find out that a processor lacks a key feature and there’s no workaround. You should also consult your developer, as they have hands-on that can help you make a decision.

And finally, you should consider what features you might need in the future as your business grows. Do you plan to expand your sales channels? Do you want to launch additional products or service plans? Think about where you want your business to grow in the future. If you find a processor that can handle everything you want now and in the future, you won’t need to worry about the hassle of switching processors.

As always, thanks for reading! Have questions? Experience using these processors? We’d love to hear from you so leave us a comment and weigh in with your thoughts!

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