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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Best Choice For Small-ticket, Canada, Mobile, eCommerce  All businesses, Mobile, Retail eCommerce, Mobile Canada, Restaurants Large-ticket, All-in-one, Recurring billing

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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.

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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!

The post Stripe Payments Competitors And Alternatives appeared first on Merchant Maverick.

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How To Accept Credit Card Payments For Your Small Business

Whether you’ve been in business for a while or are just starting out, you know how important it is to be able to accept credit and debit cards as payment from your customers. Credit card usage has soared over the past twenty years or so, while the use of traditional payment methods such as cash and paper checks has dwindled. Put simply, accepting credit cards will lead to increased sales and happier customers.

Unfortunately, adding credit card acceptance to your suite of business tools is neither easy nor inexpensive. The credit card associations (i.e., MasterCard, Visa, etc.) charge a fee known as interchange every time their cards are used, and you’ll need to sign up with a credit card processor to process your transactions and pay those fees for you. Your processor will, in turn, add a markup to your processing charges to cover their costs, and – in most cases – also charge you a bewildering variety of fees for maintaining your account.

In this article, we’ll provide a brief overview of the requirements you’ll need to meet to set up credit and debit card processing for your small business. There are a huge number of providers out there on the market, all offering different variations on the same basic services that most companies need. We’ll give you a quick and dirty explanation of how credit card processing works, what a merchant account is, and whether you need one to accept credit or debit cards. We’ll explain the various options for taking card payments, including the required hardware and software you’ll need to get started. Finally, we’ll give you some tips to help you avoid having your account suddenly frozen or terminated – a situation you can and should avoid.

If you’re looking for the best credit card processing companies for your business, you should take a look at our favorite payment processor shortlist to get you headed in the right direction.

How Credit Card Processing Works

You don’t need to be familiar with all the intimate details of processing a credit card transaction, but it’s a good idea to have a basic understanding of the steps involved and how they go together. A little knowledge of how processing works can help you avoid some of the common problems that can result when a transaction doesn’t go smoothly.

First, you’re going to need a way to accept your customer’s card data. This can be accomplished using either a traditional credit card terminal or a payment gateway in the case of online transactions. Another option is a software service known as a virtual terminal, which turns your computer into a credit card terminal and allows you to either input the card data manually or read it using a compatible card reader.

Once you’ve input your customer’s card data, it’s sent to your provider’s processing system for approval. Your provider’s network will check with the cardholder’s issuing bank to confirm that funds are available to cover the transaction. For debit cards, this is a simple check of the remaining balance on the banking account linked to the card. Credit cards require that the cardholder won’t exceed their available credit if the transaction is approved. The processing networks will also run a few anti-fraud checks to (hopefully) detect a suspicious transaction. If sufficient funds are available and there aren’t any clear indications of fraud, the transaction is approved, and you can complete the sale.

At the end of the day, you’ll upload all completed credit/debit transactions to your processor’s network for processing. This usually occurs automatically if you’re using a payment gateway or a modern credit card terminal. For each transaction, your processor will deduct both the applicable interchange (which is then forwarded to the cardholder’s issuing bank) and their markup. You’ll receive whatever is left over after these fees have been deducted. It usually takes another two to three days for these funds to be transferred back to your bank account.

From our payment processing infographic:

Do You Need A Merchant Account To Accept Credit Cards?

For many years, the only way to accept credit cards was to open a merchant account. At its most basic, a merchant account is simply an account to deposit funds into from processed credit/debit card transactions. Of course, maintaining a merchant account also requires transaction processing services, equipment and software to process the transactions, security features, and numerous other services, depending on the needs of your business. Traditional merchant accounts tend to end up being rather expensive, and merchant services providers often require that you agree to a long-term contract with a hefty early termination fee in case you close your account before the contract expires. As a result, traditional merchant accounts tend to be expensive, especially for a small business that’s trying to minimize their expenses.

In recent years, an alternative has become available that lowers costs for small businesses while still providing most of the essential features available with a full-service merchant account. Payment service providers (PSPs) allow you to accept credit and debit card transactions without a traditional merchant account. PSPs such as Square (see our review) and PayPal (see our review) have revolutionized the processing industry by offering simple, flat-rate pricing, no fees for basic services, and month-to-month billing that eliminates long-term contracts. They’re able to do this by aggregating accounts together, so you won’t have a unique merchant identification number for your business. PSP accounts are easier to set up, but they’re also vulnerable to sudden account freezes or terminations which can make them a risky proposition for businesses that depend on being able to accept cards without interruption.

Cheapest & Easiest Ways To Accept Credit Cards Without A Merchant Account

There are now quite a few well-known PSPs on the market, each one specializing in providing credit card processing services to particular segments of the business community. Here’s a brief overview of each of the most popular options:

Square:

This is the best all-in-one solution for low-volume users, especially those in the retail sector. Square also supports eCommerce businesses, but doesn’t have quite as many features for online enterprises as its competitors. Square features a mobile processing system that uses a new, EMV-compliant card reader, no monthly fees, month-to-month billing, and a simple flat-rate pricing system that’s more affordable for a small business than a traditional merchant account. See our review for complete details.

Shopify:

This is the best option for eCommerce merchants looking to easily set up a fully-featured webstore. While Shopify has better eCommerce tools than Square, it’s also more expensive. Pricing starts at $29.00 per month for the Basic Shopify Plan, with a flat-rate processing fee of 2.9% + $0.30 per online transaction. Billing is month-to-month, but you can receive a discount if you pay for a year (or two) in advance. See our review for more specifics.

 

PayPal:

Easily the oldest and best-known option for online credit card acceptance, PayPal is now available for retail merchants also. While a standard PayPal account comes with no monthly fee, you’ll have to pay $30.00 per month for the PayPal Payments Pro Plan. This upgraded plan includes a virtual terminal and a hosted payments page. PayPal uses a flat-rate pricing plan for processing fees that’s nearly identical to what Square charges. See our review for details about PayPal’s services.

Stripe Payments:

Stripe logo

Very tech-oriented, Stripe only supports eCommerce businesses. They don’t charge any monthly fees and have no long-term contracts. All transactions are processed at a fixed rate of 2.9% + $0.30 per transaction. Stripe offers a huge library of APIs that allow you to customize your eCommerce website just about any way you like. However, utilizing these features will require either extensive coding experience or the services of a developer. Check out our full review for more details about what Stripe has to offer.

Braintree Payment Solutions:

Braintree Payment Solutions logo

Another eCommerce-only provider, Braintree is very similar to Stripe in terms of features and pricing. The primary distinction is that, unlike Stripe, Braintree is a direct processor. This translates to increased account stability, which is very important for an online business where credit and debit cards are just about the only forms of payment you can accept. Braintree charges 2.9% + $0.30 per transaction, but doesn’t require a monthly fee or a long-term contract. They also offer a variety of developer tools to help you customize your website any way you like. For more details, check out our complete review.

When & How To Set Up A Merchant Account

With so many low-cost alternatives available, you may be wondering why you would ever consider the added expense and complication of a full-service merchant account. The primary reason that merchant accounts are still alive and well today is that for many businesses the overall cost of a merchant account is actually lower – sometimes much lower – than using a payment services provider. How is this possible? It primarily comes down to processing rates and how your monthly volume and average ticket size affect them. With a full-service merchant account, you can obtain interchange-plus processing rates that are significantly lower than the flat rates charged by PSPs. Providers such as Square (see our review) have to charge an inflated processing rate to pay for all the ancillary services they aren’t charging you for with a monthly fee. A traditional merchant account provider bills for those services separately, so they can afford to offer a lower per-transaction markup.

Unfortunately, there’s no easy way to determine the point at which it’s more cost-effective to upgrade to a full-service merchant account. The primary factor you’ll want to look at is your monthly processing volume. Your average ticket size is also important, but to a lesser extent. We’ve seen providers recommend merchant accounts for businesses processing anywhere from $1500 to $10,000 per month at a minimum, and sometimes even more. Where to draw the line will ultimately depend on the unique needs of your business, and what options for upgrading are available to you. You’ll want to compare your current processing costs with an estimate based on a quote from a merchant account provider to see which option is cheaper. Be sure to factor in all the hidden costs that come with merchant accounts. You can usually uncover these in the fine print of your proposed contract.

For more, see our complete guide to credit card processing rates and fees.

Account stability is also an important factor. With a PSP, a single unusually high transaction can be enough to have your account suspended or even terminated. For some businesses, particularly eCommerce merchants, this can be catastrophic. While this situation can still happen with a traditional merchant account also, it’s far less likely and you’ll have better access to customer service to get your account working again if it does occur.

Setting up an account with a PSP is usually very easy. Most PSPs have online application forms that you can fill out and submit without ever having to talk to a sales agent. If you need a card reader, your PSP will mail it to you. Account activation is usually also accomplished online.

Traditional merchant accounts are more complicated to set up. You’ll need to contact the sales team at the provider you’re interested in and negotiate the terms of your agreement. There’s also a lot more paperwork, although some providers now offer you the opportunity to complete your merchant application online. Beware that automation can sometimes work against you when setting up a merchant account, as some sales agents are now using tablet devices to get your electronic signature. This practice often locks you into a long-term contract before you’ve had any chance to review your contract terms and conditions. Insist on a paper copy of all contract documents and study them very carefully before you sign anything. For some suggestions on making this process go more smoothly, please see our article How to Negotiate the Perfect Credit Card Processing Deal.

How To Accept In-Store Credit Card Payments

For retail merchants, you’re going to need at least one credit card machine per location. These days, you have a choice between a traditional countertop credit card terminal and a point of sale (POS) system. Countertop terminals can process transactions, but most models offer little or no other functionality. A POS system, on the other hand, can handle things like inventory management, employee scheduling, and a host of other features to help you run your business. Naturally, POS systems cost more than most countertop terminals, although tablet-based systems such as ShopKeep (see our review) are more affordable (and mobile) than a standalone POS terminal.

Whatever type of equipment you decide to purchase, make sure it’s EMV-compatible. EMV (Europay, MasterCard, and Visa) is now the standard method for accepting credit and debit cards in the United States, and since the EMV liability shift in October 2015, you can be held responsible for a fraudulent transaction if you accept an EMV-enabled card using the magstripe instead of the chip. EMV-compatible terminals are widely available and less expensive than ever. With most customers now carrying EMV cards, there’s really no good reason to continue using a magstripe-only card reader.

If you want the latest and greatest in card acceptance technology, it’s pretty easy to find a terminal or POS system that accepts NFC-based payment methods. NFC stands for near-field communications, and it’s found on payment systems such as Apple Pay, Google Pay, and Samsung Pay. NFC technology is built into most modern smartphones, tablets, and even smartwatches. While it hasn’t seen widespread adoption by the general public yet, it’s gaining in use as more people become aware of its availability and convenience.

Regardless of what type of terminal or POS system you decide to get for your business, we highly encourage you to buy your equipment outright rather than signing up for a lease. Equipment leasing is still being pushed by sales agents, who cite misleading arguments about the low up-front cost and the possibility of writing off the lease payments on your taxes. While these arguments are technically true, they mask the reality that leasing a terminal or POS system will cost you far more in the long run than buying. Equipment leases typically come with four-year contracts that are completely noncancelable. The monthly lease payments will, over the term of the lease, far exceed the cost to simply buy the equipment. Adding insult to injury, you won’t even own your equipment when the lease finally expires. Instead, you’ll either have to continue making monthly lease payments or buy the equipment (often at an inflated price). For more details on why leasing is such a bad idea, see our article Why You Shouldn’t Lease A Credit Card Machine.

How To Accept Credit Card Payments Online

If your business is eCommerce-only, you’ll have it a little easier because you won’t need a credit card terminal or POS system. However, you will need either a payment gateway or at least a virtual terminal to accept payments from your customers. A virtual terminal is simply a software application that turns your computer into a credit card terminal. Mail order and telephone order businesses use them to enter their customers’ credit card data manually. They can also be combined with a card reader (usually USB-connected) to accept card-present transactions. For retail merchants, a virtual terminal can replace a dedicated countertop terminal if you add a card reader. Unfortunately, we haven’t seen many EMV-capable card readers that are compatible with virtual terminals yet.

A payment gateway is a web-based software service that connects your eCommerce website with your processor’s payment networks. Payment gateways allow customers to enter credit card data from wherever they are, as long as they have access to the internet. Most merchant services providers charge a monthly fee (usually around $25.00) for the use of a payment gateway. You might also have to pay an additional $0.05 – $0.10 per transaction for the use of the gateway in some cases. Authorize.Net (see our review) is one of the most popular payment gateway providers, but there are many others today as well. Many of the larger processors now offer their own proprietary gateways that include the same security and ease-of-use features that you’d find in a more well-known gateway. For more information on payment gateways, see our article The Complete Guide to Online Credit Card Processing With a Payment Gateway.

Depending on how many products you sell on your website and the options you want to give your customers, you may or may not need to use an online shopping cart in conjunction with your payment gateway. Shopping carts allow you to feature products, conduct secure transactions online, and perform a variety of other functions related to running your business. You’ll want to ensure that your chosen shopping cart is compatible with your payment gateway before you set up your site. Most of the popular shopping carts today are compatible with almost all of the more well-known payment gateways. For more information on online shopping carts, see our article Shopping Carts 101: How to Choose a Shopping Cart for Your Business.

How To Accept Credit Card Payments With Your Mobile Phone

When Square (see our review) first introduced their original card reader in 2009, it was revolutionary. For the first time, merchants could accept credit or debit cards using their smartphones or tablets. Square was (and still is) a great choice for very small businesses, startups, and merchants who operate seasonally. Naturally, they’ve spawned a lot of competitors, and today almost all merchant services providers offer some type of mobile payment system.

Visit Square

These systems inevitably include both an app for your smart device and a card reader. Unfortunately, many of the apps are very basic and don’t offer the depth of features that Square does. Card readers have lagged behind current technology, with many providers still offering magstripe-only readers. The current trend among smartphone manufacturers to remove the headphone jack has also caused problems, as most mobile card readers use a plug that fits into the jack to connect to the device. Today, Square and a few other providers now offer upgraded card readers that feature both EMV compatibility and Bluetooth connectivity. These card readers are significantly more expensive than the older models, but they’re still cheaper than a traditional countertop terminal. For businesses that need to accept transactions out in the field, they’re lighter and far less costly than wireless terminals, which usually run at least twice as much as their wired brethren and require a separate wireless data plan. For more information on mobile payment systems, please see our article on why accepting credit cards with your phone is the easiest option.

Can You Accept Credit Card Payments For Free?

Whether you ultimately use a PSP or a traditional merchant account, you’re still going to pay several percent from every sale to cover your processing costs. While there are many ways to get this percentage down to a reasonable level and avoid overpaying, at some point you’re going to ask yourself why you have to pay for processing instead of your customers. After all, they’re the ones who consciously choose to pay with credit and debit cards rather than cash or a paper check. Wouldn’t it be nice if there was a way to transfer this expense to your customers rather than having it come out of your profits?

In fact, there is a way to do this. Transferring the cost of processing onto your customers, also known as surcharging, is allowed in 41 states. However, the practice is currently going through a series of legal challenges that will ultimately either lead to it being banned or expanded into all jurisdictions. With surcharging, your processor will calculate the processing charge when a transaction is submitted for approval and add it to your customer’s bill.

Needless to say, your customers aren’t going to like unexpectedly having a few percentage points added to their bill just for using a credit card. For this reason, surcharging isn’t popular with most merchants, and you’ll usually only encounter it in certain industries where it’s become an accepted practice, such as taxi cabs and busses. For most merchants, it’s much easier to “adjust” your prices to cover your anticipated processing costs rather than passing those costs directly onto your customers. For a more in-depth look at surcharging, check out our article The Truth Behind Free Credit Card Processing.

How To Avoid Account Terminations & Funding Holds

Once you’ve got your merchant account up and running, you’ll naturally want it to be available and fully functional every day. While this isn’t normally a problem, account holds, freezes, and terminations sometimes occur. You’ll want to understand how this happens, and what you can do to prevent it from happening to you.

An account hold usually occurs when a single transaction is held up, and you don’t receive the funds you were expecting. In most cases, your processor’s risk department has flagged the transaction as suspicious, and you won’t get your funds until they can investigate and confirm that the transaction is legitimate. A single transaction that’s for much more money than your average ticket size is most likely to trigger a hold. Fortunately, you should still be able to process other transactions while the matter is being resolved.

This isn’t the case with an account freeze, unfortunately. Your processor can and will freeze your account – preventing you from getting paid for previous transactions or processing new ones – if fraud is suspected that would affect your entire account. While the wait can be excruciating, account freezes are usually temporary unless your processor decides to terminate your account.

As the name implies, an account termination is final. Your account is shut down, and you won’t be able to reopen it. The risk of an account termination is higher with a PSP than a traditional merchant account. Account terminations usually occur when your processor determines that you’ve misrepresented your business and the type of goods you’re selling. It doesn’t matter if this was intentional or just an honest mistake on your part. If your business type is one that usually falls into the high-risk category, save yourself the aggravation and get a high-risk merchant account from a provider who specializes in these kinds of accounts. It will cost you more, but you’ll have a much more stable account. For more information on the various hiccups that can affect your merchant account, please see our article How to Avoid Merchant Account Holds, Freezes, and Terminations.

Final Thoughts

If you’ve read this far, you’re probably thinking that merchant accounts and credit card processing are pretty complicated. You’re right! There’s a lot to know, and unfortunately, there’s also a lot of misinformation out there. The credit card processing industry has a lousy reputation for misleading sales practices, high costs, hidden charges, and long-term contracts that are very difficult to get out of. The main reason that PSPs like Square (see our review) have become so popular is that they offer a simpler, more transparent alternative to traditional merchant account providers, both in terms of costs and contract requirements.

For many businesses, however, Square can actually be more expensive than signing up for a traditional merchant account, even when factoring in the various account fees and the cost of buying processing equipment. While we heartily recommend Square for very small businesses and startups, realize that if your business grows large enough, you’ll eventually want to switch to a full-service merchant account. You’ll enjoy lower costs, improved account stability and (hopefully) better customer support. PayPal is also a great choice for eCommerce businesses that are just starting out. Again, if your business grows large enough, a full-service merchant account with a fully-featured payment gateway will be a better choice.

Note that this article only provides a relatively brief overview of the significant factors that affect credit card processing for small businesses. For more information, please take a look at the other articles we’ve linked to above for a deeper dive into subjects you aren’t already familiar with. For an overview of several highly recommended providers, please see our article The 5 Best Small Business Credit Card Processing Companies. You can also compare several excellent providers side-by-side using our Merchant Account Comparison Chart.

The post How To Accept Credit Card Payments For Your Small Business appeared first on Merchant Maverick.

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Stripe VS Braintree

Stripe VS Braintree
✓ Products & Services ✓
Fees & Rates ✓
✓ Sales & Advertising Transparency ✓
✓ Contract Length & Cancellation ✓
Customer Service & Technical Support ✓
Negative Reviews & Complaints ✓
✓ Positive Reviews & Testimonials ✓
Final Verdict  Winner
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Overview

If you need a tech-driven platform to power payments for your business, Braintree Payment Solutions (read our review) and Stripe (read our review) should be at the very top of the list. In addition to very strong developer tools with support for multiple programming languages, both companies are global service that can reach customers all over the world. But does one company excel more than the other? In the Stripe vs. Braintree debate, which company comes out on top?

Here’s the good news: Because their core offerings are so similarly aligned, it’s really easy to draw direct, apples-to-apples comparisons. And in most regards, Stripe and Braintree are very similarly matched. They both cater to some very large and/or very innovative businesses with industry-leading tools for online and mobile commerce, global business, and subscription/billing management.

Before committing to either of these platforms, it’s important to understand that to make the most of them you need advanced coding knowledge or a developer. You can go it alone with minimal knowledge, but you’ll be unable to harness the full potential of Stripe and Braintree. If you’re not tech savvy, another solution may be a better fit.

Braintree differs from Stripe primarily in that it issues merchants with their own merchant accounts, whereas Stripe is a third-party processor that aggregates payments. That means Braintree has much greater account stability than Stripe. Braintree also provides its tools at no additional cost beyond its flat-rate processing, whereas Stripe will assess small fees for the use of select services. So Braintree could very easily become the more cost-effective solution.

However, Stripe has made a name for itself with industry-leading tools, and you’re particularly interested in marketplace or subscription tools, Stripe is the standout option.

Normally, a merchant account is suited to merchants processing more than $10k/month (though some work with merchants with volumes as small as $5k/month). Braintree has no minimum and no monthly fee and says that it works with businesses of all sizes. That’s quite a bit different. With its similar pricing, Braintree is just as attractive an option as Stripe for new and small-but-growing enterprises.

The best solution for a business isn’t immediately clear here. You’ll need to look at what features are must-haves; you’ll need to consider costs. And if you are leaning toward Stripe, it’s worth considering the tradeoffs that you’ll make regarding account stability. Ultimately, it’ll be down to you and your developer to decide whether Stripe or Braintree is right for your business.

Read on for a more in-depth analysis of these two online payment gateways! Got questions? Comments? We’d love to hear from you, so leave us a comment!

Products & Services

Winner: Tie

First things first: both of these companies support all kinds of payments, from directly on a website to inside mobile apps. They both off a choice of pre-built and completely customizable payment forms. They also offer tools for businesses that operate on marketplace or subscription models. Differences between the two platforms really come down more to the nitty-gritty details. You can also find out more about each company and its offerings by checking out our complete Braintree Payments and Stripe reviews.

Braintree Payments

 

Braintree’s payment processing and gateway services support merchants in more than 45 countries, versus 25 for Braintree. However, merchants can reach customers all across the globe with support for 130+ currencies. One of the biggest draws is Braintree’s PayPal integration. Because Braintree is a PayPal owned company, it makes sense that the integration between the two would be seamless.

Braintree’s SDKs support both Android and iOS for mobile developers, as well as six other languages. And you’ll find support for major payment methods across the globe, as well.

Braintree Supported Programming Languages

  • Android/iOS
  • Java
  • .NET
  • Node.js
  • PHP
  • Python
  • Ruby

Braintree Supported Payment Types

  • ACH Direct Debit
  • Credit Cards
  • PayPal
  • Venmo
  • Apple Pay
  • Google Pay
  • Amex Express Checkout
  • MasterPass
  • Visa Checkout
  • UnionPay

Braintree Core Features 

Braintree categorizes its core offerings into four services. I like the way they are grouped because it helps better explain what Braintree is capable of doing for different kinds of businesses.

  • Braintree Direct: If you want to sell directly on your own website, this is the solution for you. Direct includes subscription tools (see below for more information).
  • Braintree Marketplace: Braintree’s marketplace tools allow you to create your own platform and manage the sellers and payouts with automation.
  • Braintree Auth: “Auth” (assuming that’s short for Authorization) is Braintree’s platform for other service companies to integrate the Braintree gateway into their solutions. This allows these companies to securely access their merchants’ data and take certain authorized actions on their behalf. For example, an invoicing company could use Auth to create an integration with their platform and allow Braintree merchants to connect their accounts and populate invoices based on data from the customer vault. Auth is also the tool that lets businesses make it possible to onboard merchants and accept payments natively.
  • Braintree Extend: Formerly called contextual commerce, Braintree has expanded its offerings here. The merchant hosts the payment checkout and transaction data, but is able to share the transaction data with partners. This creates a seamless, frictionless commerce experience for customers and keeps them on your site. Extend would be the appropriate platform for booking sites (hotels, airlines, event tickets, etc.) and other businesses that want to empower merchants/partners to sell through their website or app.

Additional Braintree Features

  • Fraud Management Tools: Braintree separates its fraud management tools into two tiers: Basic, which includes control over AVS and CVV checks, as well as risk threshold analysis. Advanced fraud tools require more work to enable, but include a partnership with Kount, a fraud management service. Kount Standard is offered at no charge, but if you want more control over transactions and your risk management policies, you can implement Kount Custom. You must meet Braintree’s requirements and it will cost more. In addition to all of that, Braintree also supports 3D Secure for additional verification.
  • Multi-Currency Displays And Conversions: Braintree allows merchants to display prices in local currency rather than just the merchant’s default currency, which can help entice international sales. Braintree even automatically converts the currency for you. Global businesses with bases of operation in several countries can connect multiple bank accounts and help reduce processing costs by eliminating the need for conversion.
  • Recurring Billing And Subscription Tools: Braintree has some powerful recurring billing and subscription tools whether you sell software or physical goods. However, you will notice a shortage of some specific features, such as invoicing. Stripe’s suite of tools is more advanced in this regard. However, if invoicing is a concern, don’t forget that Braintree integrates pretty seamlessly with PayPal and so you can use PayPal or another integration as an extension.
  • Account Auto-Updater: Reduce failed transactions and canceled subscriptions with Braintree’s Account Auto-Update feature. Expired and re-issued cards from certain institutions will automatically update with new card data to ensure continuity.
  • Reporting: Braintree offers a smattering of default reports in its control panel, including transaction-level reporting. However, even the company admits that you’ll probably outgrow the standard reports. Braintree’s Reports API allows you to generate custom reporting based on criteria you set. And unlike Stripe, this feature costs nothing at all.
  • Integrations: Braintree does support a variety of integrations, including eCommerce shopping cart software. You can browse available integrations on Braintree’s site.

I certainly think Braintree has everything most merchants will need. It does lack a few features that Stripe offers, but it’s a hugely capable system. And the seamless Payal integration could be a major draw from some merchants who have loyal PayPal customer bases.

Stripe Payments

Stripe is available to merchants in 25 countries at the time of writing this, including some betas. You can check out Stripe’s Global page for a complete list. However, regardless of merchant location, you can accept payments from all over the globe. Stripe actually supports 135+ currencies.

In addition, Stripe’s SDKs include support for Android/iIOS and seven other programming languages. Accepted payment methods depend on the merchant’s location, but Stripe supports many popular local payment methods in the EU and China in particular.

Stripe Supported Programming Languages

  • Android/iOS
  • Go
  • Java
  • .NET
  • Node.js
  • PHP
  • Python
  • Ruby

Stripe Supported Payment Methods 

Stripe’s supported payment methods can be broken down into universal methods and local payment methods. Whereas Braintree focuses on universal payment types, Braintree has worked hard to add support for payment types common in markets such as the EU and China. Let’s start with universal payment types:

  • Alipay
  • Apple Pay
  • Google Pay
  • Microsoft Pay
  • Amex Express Checkout
  • Masterpass by Mastercard
  • Visa Checkout
  • WeChat Pay

Local Payment Methods are only available in their regions where they are most popular, generally speaking:

  • ACH
  • Bancontact
  • EPS BETA
  • Giropay
  • iDEAL
  • P24 BETA
  • SEPA Direct Debit
  • SOFORT
  • WeChat Pay

Stripe Core Features

Stripe claims to offer more than 100 features, though it’s not exactly clear how it defines a “feature.” Still, you can do an awful lot with this company. Here’s a quick primer on what you can expect:

  • Payments: Stripe Checkout is a prebuilt form you can just drop into your site. But if you need something more customizable, Stripe Elements will let you design a form that suits your needs. You can build payments into your site or your mobile app.
  • Connect: Stripe’s Marketplace tools are definitely some of the most robust out there. Build and manage your own platform, including automated payouts to your merchants. Connect also facilitates connecting Stripe to other services (such as building native payments into eCommerce software) in the same way as Braintree Auth.
  • Billing: “Billing” now encompasses all of Stripe’s subscription, invoice, and recurring billing tools. Stripe’s subscription tools have always been powerful, but with the addition of invoice capabilities and the option for metered billing, it’s safe to say that you really can’t beat what Stripe has to offer.

Despite the differences in how these companies market and present their tools, the reality is, Stripe still has many of the same functions as Braintree. They’re just framed and presented in a different way.

Additional Stripe Features:

  • Sigma: Stripe offers an assortment of standard reporting tools in its dashboard. However, if you want more advanced reports, then you’ll need Sigma. For an additional monthly fee (based on volume, see the pricing section below for more details) you can generate custom reports based on SQL queries.
  • Radar: Stripe’s fraud monitoring tools include machine learning to identify and flag suspicious transactions. Merchants can review and override transactions they know to be legitimate, or set up custom rules for fraud transactions, all with far less fuss than you’ll see with Braintree. If you’re very comfortable with fraud management, this is definitely an advantage.
  • Multi-Currency Displays And Conversions: Stripe has spent a LOT of time billing itself as the platform of choice for global businesses. It should come as no surprise then that Stripe allows merchants to display pricing in local currencies and automatically handles the currency conversion. You can connect multiple bank accounts to save money on conversion costs, too.
  • Account Auto-Updater: Keep recurring transactions from failing when customers get new cards. Stripe will automatically update card data in your vault to ensure continuity of subscriptions.
  • Integrations: Stripe has more than 300 integrations with all kinds of other software and services a business might need. The sheer number of supported integrations could be a significant advantage for some merchants. You can browse integrations by categories on Stripe’s “Works With” page.

If everything is starting to sound really similar, it’s because these two companies really are evenly matched in most regards. it comes down to little details — like the fact that Stripe is a third-party processor while Braintree issues traditional merchant accounts. Or the fact that Stripe has far more ready-to-go integrations than Braintree.

Braintree has an advantage in that it’s available to merchants in 15 more countries, but both companies are evenly matched in the number of currencies accepted and their multi-currency displays. Also, Braintree’s pricing model (see below) is also far more straightforward and will save merchants money versus Stripe, which now charges merchants for access to many of its advanced tools.

My overall impression is that for the most part, Stripe is willing to give you more freedom with less oversight. The tradeoff, of course, is account stability.  For example, you have complete control over your fraud monitoring tools and which transactions are approved, but it’s quite possible to make a mistake and find yourself in hot water. Braintree offers a comparable set of features, but there will be a couple more hoops to jump through if you want the same degree of control over fraud management as you get with Stripe.

You’ll also find that Stripe’s subscription tools are far more advanced than Braintree’s. However, an integration (though more costly) could but Braintree on a more even keel here.

All in all, Braintree and Stripe are pretty evenly matched, and it’s hard to call one superior to the other. So much depends on what features you need and what payment methods you want to accept.

Rates & Fees

Winner: Braintree

Baseline pricing for Square and Stripe is pretty simple, and similar. However, because Stripe has started charging for access to some of its features, merchants will find themselves paying more with Stripe than they will with Braintree.

Let’s start with transaction rates:

  • Card Transactions: 2.9% + $0.30 per card transaction for both Stripe and Braintree
  • ACH Processing: 0.75% for Braintree, 0.8% for Stripe (both capped at $5)

If you’re wondering, the $5 cap for ACH transactions would kick in at $625 for Braintree, and about $665 for Stripe transactions. However, Stripe says the $5 cap starts at $625. However, I imagine for many merchants the wibbly-wobbly space between $625 a $665 won’t be much of an issue.

It’s also worth mentioning that with Braintree, you can accept PayPal and PayPal Credit transactions. Those process at the rates determined by your PayPal account, but for the most part, you can expect them to be 2.9% + $0.30.

Both Braintree and Stripe allow you to accept cards from outside your home country. Those will cost an additional 1% per transaction; if the transaction is processed in one currency and settled in another, another 1% fee also applies for both companies.

Discounts and Alternative Payment Plans

I want to point out that Braintree does offer alternative payment plans for some merchants:

  • Interchange-Plus Pricing: Available in Europe as well as to high-volume merchants (more than $80,000/month) in the US.
  • Nonprofit Discount Rate: 2.2% + $0.30  (Amex processed at 3.25% + $0.30)

Braintree doesn’t offer its own micropayments plans, but you can integrate Braintree with PayPal and use PayPal’s micropayments plan (5% + $0.05) instead.

Stripe also offers discounts as well:

  • Volume Discounts: Stripe doesn’t specify the threshold for enterprise pricing/custom discounts. It also doesn’t indicate anywhere easily found whether those custom discounts include interchange-plus pricing.
  • Nonprofit Discounts: Stripe mentions that 501(c)(3) nonprofits may be eligible for custom discounts. It doesn’t disclose what those rates are. In addition, the wording used on Stripe’s website sounds more like “we’ll see if we can work something out,” so it’s safe to assume not all nonprofits will qualify.
  • Microtransactions: Stripe says its sales team will work with merchants who want to implement micropayments, but it doesn’t specify what the cost is.

You’ll notice a trend here, I hope: a lack of disclosure. All of these pricing features are available, but Stripe fails to mention them. This likely indicates that the pricing isn’t consistent from one business to the next (usually volume and industry are two of the biggest contributing factors). It’s not a red flag, but it’s disappointing when you look at Braintree with its disclosures.

Additional Fees

Both Stripe and Braintree assess a $15 fee per chargeback incident, which is industry standard.

Braintree will refund your processing costs in the event you issue a full refund to a customer (it will not return fees on partial refunds, however). This is very nice, and it isn’t universal across all processors. PayPal, for example, keeps the $0.30 per-transaction fee but will refund the percentage fee.

Stripe does not refund processing fees for refunded transactions. This is (somewhat surprisingly) stated very clearly at the bottom of Stripe’s pricing page.

Generally speaking, Braintree charges absolutely nothing for access to all its features and tools. However, you may incur additional charges for using 3D Secure depending on your rate plan. Using Kount Custom as part of your advanced fraud monitoring will also incur additional costs.

Stripe has modified its pricing to include additional fees for its subscription, marketplace, and reporting tools.

Stripe Billing (including all of the formerly free subscription tools) now assess a small percentage charge. Pricing is lumped into two tiers:

  • Starter: Free for first $1 million in transactions; afterward, 0.4% in addition to processing costs
  • Scale: 0.7% in addition to processing costs; includes additional features and discounted processing costs.

If you used Stripe’s subscription tools before April 5, 2018, you are grandfathered out of these costs and can use Stripe Billing at no additional charge. That’s actually quite nice — and somewhat unexpected.

Sigma, Stripe’s reporting tool, is priced on a sliding scale based on volume. I’ll admit this is a fair way of pricing a service like this — it’s better than tiered packages that are divided by the amount of info available or the number of queries you could generate. This way small businesses get a very fair price for advanced business info.

  • <500 Transactions: $0.02/charge plus $10 infrastructure fee
  • 501-1,000 Transactions: $0.018/charge plus $25 infrastructure fee
  • 1,001-5,000 Transactions: $0.016/charge plus $50 infrastructure fee
  • 5,000-50,000 Transactions: $0.014/charge plus $100 infrastructure fee

Beyond that point, your business moves into enterprise-level pricing and you’ll get a custom quote. You can test out the pricing tool for yourself on the Stripe website.

Costs for using Connect, Stripe’s marketplace tools, are laid out on the website pretty clearly, which is nice to see given how little other information is out there.

Also, merchants who are on a custom payment plan will pay an additional $0.04 per transaction

One final point of consideration: With Stripe, you can’t access the gateway separate from the company’s processing services. But you can do that with Braintree, for $49/month + $0.10 per transaction. That’s a bit pricey for a gateway fee, but it could easily be worth the cost to access to all of Braintree’s tools.

All in all, Braintree is the winner here simply because it offers most of its features at no additional charge beyond processing costs, and that translates to savings for merchants.

Contract Length & Cancellation

Winner: Tie

With both Stripe and Braintree, merchants have no multi-year contracts. Everything is pay-as-you-go, so if you find a better service you are free to leave at any time. This is always good to see. But what’s even better is that both companies will help you migrate your data (customer database and card vault) securely to ensure seamless continuity. And that’s not just good, it’s awesome.

Sales & Advertising Transparency

Winner: Tie

I’m always happy to say when any processor is fair, honest, and transparent. In this case, I am extra happy to say both companies fit the mark. You won’t find any deceptive sales tactics, misleading quotes, or pushy sales reps here.

You’ll pay exactly what you’re quoted with both Stripe and Braintree, which is awesome. I like that both companies use flat-rate pricing by default. It’s hard to compare that number to interchange-plus models, which are usually the most cost-effective; however, you know exactly what you’ll pay for every transaction regardless of card brand. Flat-rate pricing is far more transparent than tiered pricing models, too.

You’ll find both companies are great at pushing out information about new features and how to use them, as well, and they’re upfront about matters such as customer service channels, integrations, and more.

Perhaps the only mark against Stripe is that while its terms of service spell out that an account can be terminated at any time for any or no reason, plenty of merchants seem to gloss over this or forget it entirely…until it happens to them. Stripe is a third-party payments provider, which means that the company doesn’t do extensive underwriting or investigation into your company when you apply for an account. The tradeoff to getting your account set up quickly is that you will face more intense scrutiny after the fact. Stripe has been known to terminate merchants with no warning, whether it’s for too many chargebacks or the company’s risk assessment team identifying a pattern of high-risk transactions. When this happens, there’s no appeals process to reinstate an account. You just need to move on and find a new processor.

To be fair, Braintree seems to exhibit some of this same behavior, despite the fact that it isn’t a third-party processor. When you sign up with Braintree, you do get a traditional merchant account. However, while I have seen complaints about this behavior, the overall volume is incredibly low, especially for a company as large as Braintree. So my honest assessment is that while it can happen, it happens only rarely with Braintree users. Account terminations are more common with Stripe because of its third-party processing model — but again, an account termination is an exception to the rule, rather than the norm. Most importantly, you should be aware that this is a possibility but you can take steps to protect yourself.

First, make sure you check out Stripe’s Prohibited Businesses list and then also look at Braintree’s Acceptable Use Policy. Both of these documents outline what kinds of merchants they won’t work with, so make sure your business isn’t on the list.

You can also check out our resources, including our guide on how to avoid holds, freezes, and account terminations.

Customer Service & Technical Support

Winner: Braintree

One of the most difficult parts of assessing customer support is that experiences vary so much from one merchant to the next. With some notable exceptions, it’s fairly common to see at least one negative review focusing on customer support for every good review that praises a company’s customer support. So as a reviewer, I look for patterns that can clue me into what, if anything is going on. But it’s also important to look at what support channels are offered and how they serve merchants. Being able to talk to a real, live person in real time is such an important aspect of good service for many merchants.

Braintree is a clear winner in this category. It likes to tout its “white glove service”; even ignoring the marketing buzz, when you take a look at the options and availability, it becomes clear that Braintree has worked hard to cater to merchants’ needs.

Braintree Support Options

  • Email: Email support is available from 5 AM to 12 AM US Central Time, Monday-Thursday and 5 AM to 8 PM, Friday. It’s nice to see the extended weekday hours, but the lack of any sort of weekend hours is a bit disappointing.
  • Knowledgebase & Documentation: In my experience, Braintree makes it much easier to find information about particular features and how to use them than Stripe does. The self-service knowledgebase includes extensive guides so that even merchants who aren’t technically inclined can make sense of Braintree’s features without having to wade through the documentation. And generally speaking, developers seem to approve of Braintree’s documentation and the available resources. The company seems to have made some major strides forward and is up there along with Stripe in terms of documentation quality.
  • Phone support: Hours for Braintree’s phone support are 8 AM to 7 PM US Central Time, Monday-Thursday and 8 AM to 5 PM, Friday. Again, I think the lack of weekend support hours is disappointing, but it’s nice to see extended weekday hours.

I do want to point out that Braintree does make one additional promise about its customer support:

Of course, we offer emergency support via email 24x7x365, and have support reps and engineers on-call at all times.

So it’s nice to know that in an emergency you’ll at least know someone is there to answer your questions and help your business running again. But I have no data about whether this emergency support is effective (or even necessary).

Stripe Support Options

  • Knowledgebase and Documentation: I personally haven’t found Stripe’s self-service knowledgebase to be very informative. It’s quite basic, and if you want to learn more about all of Stripe’s features or understand how they fit together, you’ll need to look at the documentation. However, I will say this: Stripe’s documentation is the gold standard. So developers will have no trouble here.
  • Email: Stripe doesn’t offer a turnaround time for emails, just that the company will “get back to you as soon as we can.”
  • Freenode IRC Chat: Stripe’s developers apparently spend their time in the #stripe channel if you need technical assistance. Unsurprisingly, most developers seem to like this aspect of support.

Stripe doesn’t offer phone support, and it doesn’t offer any information as to when its team is on call to respond to questions, all of which is a bit disappointing. But it’s the quality that counts, right? Except, reports suggest Stripe’s customer support isn’t always awesome, either. Check out the next section, “Negative Reviews & Complaints,” for more information.

Negative Reviews & Complaints

Winner: Braintree

The overall quantity of complaints is only one factor we use to evaluate a merchant because you also need to consider the overall size of the business.

Braintree doesn’t publish current numbers for its merchants, and Stripe is vague about it. All we know is that the number exceeds 100,000, which is a good number for any merchant services provider. But we do know that both Stripe and Braintree are enormous companies that handle billions of dollars each year. Part of that is because they both serve some very large, high-profile clients. But you’ll certainly find plenty of smaller businesses and startups using these platforms, too.

On the whole, Stripe has far more complaints floating around than Braintree does. This isn’t too surprising because third-party processors, including Stripe, tend to have a high number of complaints overall, usually for 1 major reason:

  • Holds and Terminations: Third-party processors or aggregators can’t offer the same sort of stability that you get with a traditional merchant account because the onboarding process for new merchants doesn’t include the traditional in-depth analysis of the business and underwriting. That means accounts are more likely to face termination for suspicious behavior after they get up and running. This is absolutely the pattern we’ve seen with Stripe and it is one of the two biggest complaints about the company.

The other major complaint about Stripe is:

  • Poor Customer Service: One of the biggest gripes in the customer service department is the lack of phone service. When something is not right, merchants want to talk to a real, live person. When companies that provide core services like payment process don’t offer that, it leaves merchants upset. That’s what I’ve seen with Braintree. However, other customer service complaints say that support is unresponsive and unhelpful. This is particularly true in the account of funding holds or terminations. I don’t see many complaints about the quality of support for everyday sort of issues.

And then there’s Braintree. Braintree overall has far fewer complaints scattered across the web. (Considering this is a PayPal-owned company, I continue to be absolutely flabbergasted by this fact.) However, you will see some similarities to Stripe complaints:

  • Account Terminations: I want to make it clear that references to merchants who have had their accounts terminated are few and far between. They aren’t the majority of Braintree complaints, and even if they were, they would still be uncommon. From what I can tell, an account termination usually occurs when a business is deemed high risk. Whether this is a flaw in the screening process or a determination made by analyzing processing history or particular transactions, I don’t know.
  • Poor Customer Support: Complaints in this category seem to center on slow response times for email support, as well as inconsistent answers from support reps. However, I do see other merchants praising Braintree for the quality of its customer support, too.
  • Long Setup Times for Accounts: Some complaints focus on the fact that it can take a while to establish an account with Braintree. I know we live in the age of instant gratification, but sometimes vetting can take time.

All in all, it’s easy to call Braintree the winner in this regard. You’ll likely deal with fewer headaches and hassles with Braintree, and you’ll certainly see far greater account stability.

Positive Reviews & Testimonials

Winner: Tie

Stripe is a media darling, for sure. There’s no shortage of articles about the company’s co-founders, the Collison brothers, or about how massive the company is, the way it disrupts payments technology, etc.

Braintree doesn’t get quite as much press, but its parent company, PayPal does.

But press coverage doesn’t really tell the whole story.

Most of Stripe and Braintree’s big success stories come from household names. Big companies that you’ve probably heard about. You can see a shortlist of logos from prominent Braintree clients on its homepage; you can find a longer list on the Merchant Stories page.

However, what I like best is that Braintree actually has case studies for how these different companies have used Braintree to build successful businesses and process payments. These case studies aren’t exactly common, so it’s nice to see them — and so many, at that.

Stripe’s client list is no less impressive than Braintree’s though. You can find a shortlist on the homepage as well, but a more in-depth list on the Customers page. It offers only brief snippets instead of case studies, but the page does showcase the ways you can use Stripe.

But what do everyday merchants have to say? What do developers say?

Both Stripe and Braintree are popular with developers, and the consensus is that they both offer good documentation, extensive libraries, and powerful features.

Braintree’s merchants also praise the company’s customer support — at least, the customers who don’t have a problem with the customer service praise it. It appears the customer service excels on both the technical/developer side and the merchant side.

I also see Stripe get a lot of compliments for its well-designed website and the intuitive user interface in the dashboard.

Let’s call this one a draw.

Final Verdict

When two options are as similar in appearance as Stripe and Braintree, it can be tempting to say “Eeny Meeny Miney Mo!” and point to one and roll with it. But I hope you’ve got a slightly better understanding of where Stripe and Braintree align and where they are very different.

Obviously, the stability of a merchant account can be a major draw, and some businesses won’t want to sacrifice that even if it means spending a bit more on integrations to get features they need.  On the other hand, Stripe has several best-in-class tools that some businesses may find absolutely essential, such as its Billing tools. The risk of an account termination is relatively small so long as your business model is sound, you’re not on the list of prohibited business types, and you take appropriate measures to mitigate the risk of fraudulent transactions and chargebacks.

Both of these companies integrate with some major shopping cart software options, so if you’re looking primarily for an easy way to take payments, you can certainly go that route. But having a developer will really make it possible to harness the full capabilities of both companies.

It’s important that you sit down, make a list of must-have features and a list of “Would be nice” features. If you can’t make a choice based on those criteria, have a discussion about the account stability issue and decide how much risk you’re willing to tolerate. Also consider the customer support that each company offers and the fact that you may end up having to pay more for using some of Stripe’s best features.

Don’t forget to check out our complete Braintree review, as well as our Stripe review, for good measure.

Thanks for reading! I always love to hear from readers, so if you have questions or comments, please leave them below! We’ll be happy to help you!

The post Stripe VS Braintree appeared first on Merchant Maverick.

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Stripe VS Square

Stripe VS Square
✓ Products and Services ✓
✓ Compatible Hardware ✓
✓ Fees and Rates ✓
✓ Sales and Advertising Transparency ✓
Customer Service and Technical Support ✓
✓ Negative Reviews and Complaints ✓
✓ Positive Reviews and Testimonials ✓
Tie Final Verdict  Tie
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Overview

Spend a little bit of time reading up on Stripe (read our review) and Square (read our review) and you’ll start to see the similarities. They’re both giants in the payment industry, media darlings that have transformed the way people pay for things and the way merchants accept payments. They’re both on the leading edge of technology and rely heavily on machine learning to drive their payment processing systems.

Most importantly, both Square and Stripe offer huge assortments of commerce tools that make it easy for merchants to run their businesses. With the various APIs and integrations available, there are almost limitless possibilities for creating a custom system with everything from invoicing to email marketing and more.

But that’s where I stop pointing out the similarities. Once you get past that point, it becomes harder to draw apples-to-apples comparisons because Square’s offerings are much more varied. Square really is an all-in-one processor that can handle in-person and eCommerce payments, as well as inventory management, customer databases, and more. Stripe is more limited to eCommerce, both for websites and for mobile apps, but it has powerful tools for global enterprises, subscription-based businesses, and other online companies.

To keep things fair and within a manageable scope, we’re going to limit the scope of this comparison to each companies’ online and mobile commerce tools. That means, for the most part, we’re not going to look at mPOS apps, POS integrations, appointment booking, or email marketing…except to say if you need them, Square is the better choice.That also means we’ll be ignoring Stripe Atlas, the company’s service for helping international merchants establish themselves in the US.

If you want to sell online and Square and Stripe have made your shortlist, you should start by asking yourself some questions:

  • What features do you absolutely need? Which features aren’t essential, but would be very nice to have?
  • What percentage of your transactions are from outside the US?
  • Do you have a developer or advanced coding knowledge yourself?
  • Do you have limited tech knowledge and need an easy solution?
  • Are you looking for specific integrations?
  • What industry is your business part of?
  • How advanced are your subscription tool needs?

Once you have the answers to these questions, you can sit down and look at each company in more detail. Read on for our comparison of Stripe vs. Square!

Products & Services

Winner: Tie

It’s so important to have a list of must-have features before you set about choosing any sort of payments or eCommerce software because you don’t want to make the decision and then find out that you’re missing a very important function. But it’s also important to think about where you want your business to go and what tools you want to invest in as your business scales up. If you pick the right service, it could mean you never need to switch. But if you don’t think about growth, you may wind up having to make a complicated switchover later in the future once you’ve outgrown a solution.

The good news is that for the most part, Stripe and Square are both very good solutions that scale up as a business grows. It just comes down to in which direction a business wants to grow.

Square Tools and Services for Online Merchants

Square initially stood out among mobile competitors by offering a free webstore to its merchants. Since then, the company has branched out considerably to include eCommerce integrations as well as developer tools. For a more in-depth review of all of Square’s offerings, check out our full review.

  • Online Store: Square’s free online store is very basic. There are only four templates to choose from, and you can only customize portions of the site (such as filling in your business name and address in the footer) in addition to loading your products. This is not a good solution for anyone with a large and diverse inventory, especially if your shipping costs vary significantly or if you’re looking for a particular visual aesthetic.
  • eCommerce Integrations: When you first take a look at Square’s eCommerce offerings, you’ll see that Square very conveniently groups everything by a merchant’s level of technical expertise. I think this is a really helpful approach.

    The easiest integrations are listed on the site and Square lets you know that you can choose from an assortment of templates.

    The intermediate level includes eCommerce integrations that require a bit more work and technical knowledge to get set up.
    Square’s list of integrations includes some of the best shopping cart options, and the list keeps growing. That makes me happy, but if your preferred integration isn’t on the list yet and you do have the technical knowledge (or an eager developer on your payroll), there are more tools at your disposal. You can check out the list of Square integrations in the app marketplace.
  • Developer Tools: Square’s dev tools make it possible for you to create almost any custom integration you could need. For eCommerce, there are two APIs, Checkout and Transactions.  Square Checkout is a premade form that can be dropped into a site with minimal fuss. Using Checkout means merchants are eligible for some perks, like next-day deposits and chargeback protection. The Transaction API, combined with Square’s payment form, is more customizable. Square has other APIs to handle other aspects of commerce, but you’ll find that Square doesn’t readily support in-app payments.
  • Dashboard Reporting: Square’s reporting tools are fairly advanced, especially for a company that started as an mPOS. They’re very popular with merchants who want to know what’s selling and how much they’re processing and need standard business data. The dashboard is actually quite intuitive, as well. However, Square doesn’t allow for a huge amount of customization in reports unless you get into the Reporting API, which allows you to create real-time notifications using webhooks.

Additionally, Square offers the following tools:

  • Advanced Inventory: Square will reconcile online and in-person sales and give you an up-to-date count on your inventory, including low-stock alerts when you hit a specified threshold. Plus, you can bulk upload products and generate SKUs, create variants, and more.
  • Fraud Protection Tools: Square uses machine learning to analyze transactions and identify and flag possible fraudulent transactions.
  • Customer Database: Save customers’ contact information and build a database with records of their purchases so that you can market to them later.
  • Invoicing: Create invoices from within the Square dashboard or from within the mPOS app. Square also allows customers to store their cards to automatically pay invoices (using this Card on File will cost you a bit more). You can also create recurring invoices. However, if you want extensive subscription management tools, you’ll need an integration with a service like Chargify, which will add to your costs.
  • Free Virtual Terminal: If you want to process payments over the phone or you don’t have access to the mPOS, you can use Square’s virtual terminal. Transactions will be processed at the manual entry rate (3.5% + $0.15) rather than the eCommerce rate, but the solution is PCI compliant and is designed for regular use.

All in all, while it’s worth noting that Square really is an omnichannel solution for merchants who want to sell anywhere without needing to build a complicated system of integrations. But it has some shortcomings, especially for digital merchants. Subscription tools are nearly nonexistent, and fraud protection doesn’t compare to the tools Stripe offers. If you want advanced, custom reports, you’ll be better served by Stripe. However, Square’s tools and overall design are incredibly easy to use, especially for business owners who don’t have a lot of technical expertise or a large budget to hire someone. And it has very strong tools for merchants who sell physical products in particular.

Stripe Tools and Services for Online Merchants

Stripe has earned its name as a developer-friendly option, but you can also integrate with a host of third-party apps to accept payments with ease. The company focuses on internet and mobile commerce, but developers have extended Square’s power to include mobile payments and more. Just take note, there’s no free storefront option here. For a more detailed look at different features, check out our complete Stripe review.

  • eCommerce Integrations & Plug-Ins: Stripe outclasses Square in terms of shopping cart integrations by virtue of sheer numbers. In addition to integrations with major eCommerce software providers, developers have created an assortment of plug-ins for businesses operating on WordPress, Magento, and other websites. If you’re not really sure where you start, you might end up doing a lot of research to decide the best course of action, but you can at least take heart in knowing that there’ll be something that will meet your needs. You can check out the full list of eCommerce integrations on Stripe’s “Works With” page.
  • Developer Tools: Stripe is much loved by developers for its flexibility, its extensive documentation and its support for multiple programming languages. Its APIs allow you to create invoices and subscriptions along with many other features.

    Stripe Elements will let you create an entirely custom form with pre-built components; Stripe Checkout generates a pre-built form you can just drop into the site with a few lines of JavaScript. With Stripe, it’s very easy to accept payments on a desktop computer, a mobile site, or within a mobile app. Stripe now even supports 1-touch payments on mobile
  • Stripe Sigma: Stripe offers your standard user dashboard with some general sales reports at no charge. But if your business is heavily data-driven, Sigma’s customizable reporting is the perfect solution for you: you can generate reports based on SQL queries. This is pretty cool, and it’s a great way to make sure that anyone on your team can get the reports they need without creating an information bottleneck. Pricing is based on a sliding scale rather than a set additional monthly see.

Stripe’s additional tools include:

  • Stripe Billing: Stripe’s subscription tools are industry-leading, with the ability to charge clients based on a recurring quantity or metered usage, to set free trial periods, and much more. You can also create invoices or set up recurring billing tools. However, new businesses will pay a small additional charge per transaction to use these tools.
  • Stripe Radar: Stripe makes a big deal of its fraud monitoring tools, bundled under the very-apt name Radar. The system uses machine learning and a host of criteria to analyze every transaction and decide whether it is legitimate or possibly fraudulent. Radar also lets merchants set custom criteria for rejecting transactions and review flagged transactions to decide whether to accept or reject them.
  • Marketplace Tools: Merchants who want to operate a marketplace can use Stripe to build the platform. Stripe’s marketplace tools are grouped under the moniker “Stripe Connect.”
  • Multiple Currency Displays & Dynamic Currency Conversion: These tools are a major reason why Stripe is such a powerful tool for global businesses. Whereas Stripe will automatically convert transactions to USD (usually at the cost of a fee to the cardholder), Stripe will allow you to display prices in local currencies based on where the customer is located. Stripe then automatically converts them for the merchant, charging a small markup over the exchange rate. This makes a business more appealing to international customers.

There’s no doubt that Stripe is very powerful. It can handle all sorts of payments, from digital subscriptions to retail goods. It’s one of the best solutions for global businesses with its currency tools. But it does have some limitations. If you plan to sell across multiple channels, there’s no option for in-person payments unless you have an integration like Flint Mobile (read our review), but it’s still more costly than other mPOS options. There’s no virtual terminal, either. While Stripe does allow you to manually enter a transaction if all else fails, it’s a last resort rather than a tool to be used on the regular because of PCI compliance issues.

Stripe’s inventory tools aren’t on the level of Square. They’re powerful, but if you want advanced inventory management, you’ll need to tack on an integration. I also don’t think that Stripe’s inventory tools are even half as intuitive as Square’s. But I think part of that is Stripe’s focus on online payments and tools for digital merchants, compared to Square’s omnichannel approach.

All in all, it’s really hard to say one of these companies is inherently better than the other. Both have a good assortment of integrations for shopping carts and other tools, though Stripe has a greater number of supported integrations. If you want ease of use, especially if you sell physical goods,  Square is the standout option. But if you need flexibility, robust tools, and advanced data, Stripe is the better choice. So it ultimately comes down to your business’ needs.

Fees & Rates

Winner: Tie

I am happy to say that pricing for both Square and Stripe is mostly straightforward:

  • 2.9% + $0.30 per online card transaction

There are no monthly fees, no monthly minimums, no statement fees. That’s very nice to see.

I do want to point out that Square charges different rates for its card-present and keyed transactions (2.7% and 3.5% + $0.15, respectively). However, invoices process at the same rate as eCommerce transactions unless you’re using Card on File, which process at the keyed transaction rate.

Square also has no chargeback fees, which is very unusual. Not only that, but the company has rolled out Chargeback Protection, which will cover the actual chargeback costs on qualifying disputes up to $250 per month. This doesn’t apply to merchants who use the Transactions API, but it is available for those who use Stripe Checkout.

You can get volume discounts if you process above $250k per year AND have an average ticket size exceeding $15. That’s a mark in Square’s favor for large businesses. However, nonprofits don’t get any sort of special discount, which you can often find with other processors.

Stripe’s pricing has become a tiny bit more complicated. In addition to card transactions processed at 2.9% + $0.30, you can also accept ACH transactions for 0.8%, capped at $5 maximum.

The base fee per transaction is simple. And for each chargeback, Stripe will assess a $15 fee, unless the chargeback is decided in your favor. In that case, you’ll pay absolutely nothing.

Stripe’s subscription tools, lumped under the name “Stripe Billing” along with invoicing, will cost you a small percentage fee (between 0.04% and 0.07%) on top of your transaction.

Existing Stripe merchants are grandfathered out of this new pricing. Large businesses will actually pay the higher 0.7% markup, but it seems Stripe has compromised by offering lower transaction fees.

You’ll also pay a monthly fee for access to Stripe Sigma. The cost is a sliding scale based on the number of transactions you process each month, which is a great way for very small businesses to still get crucial data. But for a company that built its reputation on not charging any fees beyond transaction processing, it’s a little bit disappointing to see that model disappearing. You can estimate your cost with Stripe’s tool.

Stripe does offer enterprise pricing for very large businesses, and some nonprofits may be eligible for a special rate. Stripe doesn’t make any promises about nonprofit pricing apart from “let us know and we’ll see what we can do.” So you shouldn’t assume it’s guaranteed.

With Stripe, you may also be able to negotiate for micro-transaction rates. Whereas per-transaction fees like the $0.30 Stripe and Square charge can eat up fees from small transactions (less than $10 in particular), micro-transaction rates typically include a higher percentage and a lower per-transaction fee that can save merchants money. This is ideal for anyone who sells digital goods and other low-cost items.

Because it’s something offered as part of a custom package, Stripe may not offer this deal to everyone. If you’re unable to get a micro-transaction plan from Stripe, it might be worth looking at a third option — PayPal (read our review) — instead. The 5% + $0.05 fee could save you quite a bit of money in the long run.

All in all, Stripe and Square are fairly evenly matched in pricing. Some merchants might enjoy the lack of chargeback fees and included chargeback protection that Square offers. But Stripe might be a bigger draw for other companies, despite the additional charges for using its subscription tools or Sigma reporting.

Contract Length & Cancellation

Winner: Tie 

Both Stripe and Square offer pay-as-you-go processing with no locked-in contracts or early termination fees. It really is that simple. Stripe will even help you transfer your customer data to another processor in a PCI compliant way.

If you’re using any of Square’s monthly services in addition to eCommerce processing, you can get a free 30-day trial, and then if you choose to continue with the service, you can cancel at any time. Square doesn’t bill annually for those services the way many SaaS providers do. (Conversely, you also don’t get any discounts for paying annually, either.)

Sales & Advertising Transparency

Winner: Tie 

One of the reasons I like pay-as-you-go processors is that they are, on the whole, very upfront and transparent. They tend to not have extensive sales teams, and if they do have a sales team, they’re all in-house. They’re very clear about their pricing and terms, and they’re applied fairly to all merchants.

Square and Stripe both fit this pattern to a T. You won’t see reports of misleading sales pitches or rates not as promised here, which is always nice to see. You can find Stripe’s terms of service on the site, both the general user agreement and the Stripe Payments agreement. Like Stripe, Square has separate agreements applying to general use, payments, and other services. I do recommend you be cautious and check that your business doesn’t fall on either list of “prohibited businesses,” because that’s an easy path to account termination.

Overall, I’m really happy with both companies in this category, and you shouldn’t have any worries about whether you’re being told the truth or whether you’ll pay what you were quoted.

Customer Service & Technical Support

Winner: Square

I think it’s fairly clear that Square outshines Stripe in terms of its customer support — both in quality and in the number of channels available.

Square offers merchants phone and email support, as well as an extensive knowledgebase. That’s pretty typical of any processor, but on top of that, Square operates the Seller Community, a community forum about all-things Square.

 

You can get answers from other Square merchants as well as from Square support reps. It’s a pretty powerful tool. But on top of that, Square’s team monitors Stack Overflow for questions about Square products and responds to them.

And that’s not even talking about Square’s dedicated Twitter support handle (@SqSupport), or the developer portal and documentation.

I can’t say that Square customer support is all sunshine and rainbows, because I do see customer complaints about the quality. However, without a doubt the biggest complaint about the quality of customer support comes from merchants whose accounts have been terminated. In that case, Square cuts off access to phone support and will only communicate via email. This is unfortunate and I don’t know if it’s actually a good solution. But I am sure part of the reason to reduce the odds of a customer support rep saying something they shouldn’t, and to prevent support resources from being tied up dealing with complaints from terminated merchants whose accounts won’t be reinstated.

Stripe is more limited in its support options. Its primary support channel is email. However, Stripe also operates an IRC Freenode chat (#Stripe) that developers may find useful. There’s no dedicated social media support with Stripe, but you can follow the general @Stripe twitter feed.

Stripe also maintains a self-service knowledgebase, though I don’t think it’s as extensive or detailed as Square’s. But I will say that Stripe’s documentation is pretty legendary, and so it’s going to be one of the best resources you can get.  You can also find questions about Stripe on Stack Overflow, but I am not able to ascertain whether Stripe’s team is active on the forum at all the way that Square is.

I do see comments from merchants that the support is pretty good. But I also see a lot of complaints from frustrated merchants about the lack of phone support. That complaint has actually become one of the biggest marks against Stripe. I’ve seen one mention that Stripe might be rolling out phone support to “select merchants” (presumably high-value clients). However, take this with a grain of salt. I wasn’t able to verify it through any sort of authoritative source.

Negative Reviews & Complaints

Winner: Tie

As far as complaints go, the single biggest issue for both Square and Stripe is a common one:

  • Account Holds And Terminations: This is unsurprising (understatement of the year, right there) because it’s a common issue with any third-party processor. Because these payment systems are usually open to almost anyone right away and they are all lumped into one large merchant account, there’s a greater risk that some of those accounts will be terminated for risky behavior. There’s very little scrutiny done before a sub-account with one of these processors is approved, which stands in contrast to merchant accounts, where the processing company will do a lot of underwriting and investigation before approving your application. Both Square and Stripe use a lot of machine learning to analyze transactions and flag suspicious behaviors. This potential for account holds or terminations is universal — you will encounter it with any third-party processor. If you want to avoid it, your only alternative is to seek out a traditional merchant account.

The other big complaint that I see with both is also a pretty common one:

  • Poor Customer Support: If I’m honest, reports about the quality of customer service conflict. But because of how common the complaints are, I’m listing it here. With Stripe, the most common issues are the lack of phone support and slow response times for email. With Square, a lot of the complaints about poor customer service come from terminated merchants, but I’ve seen a few complaints about slow or unhelpful email responses.

Additional frequent complaints about Stripe include:

  • Lack Of Fraud Protection: I want to be clear: Stripe does have fraud management tools and a system to help merchants fight chargebacks. But I have seen complaints from merchants who don’t think these are adequate. Chargebacks are not settled by Stripe, so there’s not much the company can do beyond pass the requested documents on. But for fraud prevention, merchants need to make sure they have the appropriate tools enabled.
  • Not User-Friendly: There’s a lot of testimonials from users (especially developers) who really like Stripe and find it simple to set up. There are plenty of others who disagree with that idea. I’m inclined to think most people with a decent technical backing will get along fine with Stripe, but for some people, especially those with less technical knowledge, it’s not going to be a good choice.

For Square, there is one other common complaint:

  • Lack of advanced features: It’s not that Square doesn’t have enough features, or that it’s missing anything important. The complaints about Square often focus on the lack of very particular advanced features that you typically find in full-scale POS systems. In this case, I think Square’s lack of extensive subscription tools would fit the bill. Some merchants have been upset for quite a while over the lack of Cost of Goods Sold (COGS) reporting. Square added this feature with its Square for Retail app, but not for online sales or its free POS. Square has some very powerful reporting tools, but in the end, they won’t hold a candle to Stripe’s Sigma offering.

I think, yet again, that the two companies are pretty evenly matched in this category. The largest complaints are identical, and that’s because they’re the same complaints we see with third-party processors. To be entirely honest, poor customer service is a common complaint across the entire payments industry. It’s frustrating, for sure. But you can take steps to better inform yourself — read our article on how to prevent holds, freezes, and account terminations. And please take reports of poor customer service with a grain of salt, because I see conflicting accounts there.

Positive Reviews & Testimonials

Winner: Tie

As media darlings, both Stripe and Square have gotten lots of press. They’re both lauded for the way they’ve transformed payments.

I usually feel a little bit silly comparing two businesses in this category because it almost feels like a bit of a popularity contest. But in this case, we’re dealing with two companies who have both gotten a LOT of positive press over the years, not to mention high-profile clients. And the bits of each service that merchants love most are pretty similar, too.

Square merchants love how easy the service is to use. And I tend to agree — Square is one of the most intuitive options out there as far as payments and using the dashboard. Merchants also really like the predictable pricing and lack of fees. Other than that, the integrated invoicing feature and the seamless omnichannel commerce experience are big draws.

Stripe also wins merchants over with its pricing, and its tools are very much loved by developers. While if you don’t have a lot of technical knowledge, Stripe may feel foreign to you, developers say it’s incredibly easy to use. Also on the dev side of things, it seems like the quality of customer service is great, even if business owners don’t always like the lack of phone support. And unsurprisingly, merchants really seem to love Stripe’s robust subscription tools. The predictable pricing and lack of monthly fees are also appealing.

Final Verdict

Winner: Tie

Stripe and Square have some very important core similarities: they’re both third-party processors with an assortment of tools that allow merchants to sell online. Neither one is suited to high-risk industries, and there’s a lengthy list of businesses neither company can work with. But despite that, both Stripe and Square offer tools that cater to a huge assortment of industries. They’ll both grow with your business, making it easy to scale up.

But despite their similarities in terms of business model, it’s also pretty clear that what each company does best is completely different.

Square is a spectacular all-in-one processor. You can sell in a store, on the go, and online and get all of your information and payments and orders collected in one simply, intuitive dashboard. There’s a huge array of add-on products that allow you consolidate a host of business functions under one name, and they’re guaranteed to work together perfect. eCommerce support is really the newest branch of Square’s offerings, and it’s a work in progress as the company establishes more partnerships and integrations with other major players.

If you have limited technical knowledge, Square is going to be much easier to get started with and to navigate through the different features. It’s free advanced inventory tools are also very well suited to retailers and other businesses that sell primarily physical goods.

Stripe focuses only on Internet payments (both on the web and in-app), but its tools make it possible for businesses to cater to customers all over the globe. The international appeal — from the local currency displays to the sheer breadth of payment methods accepted — make it clear that Stripe is already a global player.Not only that, but with Stripe’s APIs and documentation, a savvy developer could create all kinds of payments platforms for a business. Business owners who don’t have a developer on staff, and who don’t have a lot of technical knowledge themselves, might struggle with understanding how to use Stripe, especially if you want to do anything more than integrate it with some sort of shopping cart software.

You also get a far more limited scope of features. There’s no native support for omnichannel commerce. No mPOS app, no POS integration to support card-present pricing, no invoicing. If you need more than online payments on a regular basis, Stripe isn’t a suitable choice. But if that’s all you need, Stripe isn’t just a good option — it’s one of the best out there, period. If your business has a global reach, again you’ll find that Stripe once again tops the lists of best solutions.

I’m not comfortable saying that one of these solutions is better than the other because it really comes down to what your priorities are. Do you need something easy to use? Do you want to embrace multiple sales channels? Or are you limited to online sales and want best-in-class tools to reach a global audience, manage subscriptions, and even drive mobile commerce? Square can get the job done, and it’ll be the easier solution, but Stripe offers far more tools.

Sit down, think about what features are absolutely mandatory for you to have — and then look at which ones you’d like to have, but aren’t necessarily required. From there, it should be fairly clear which solution is right for you! Don’t forget to check out our complete reviews of Stripe and Square for more insights into how they function.

Have questions? Leave us a comment and we’ll help! Have experience using either of these tools? We’d love to hear from you.

As always, thanks for reading!

The post Stripe VS Square appeared first on Merchant Maverick.

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Payment Processing Companies And Services For Small Businesses

Payment Processing Services And Companies For Small Businesses

Navigating the world of payment processing services can be confusing for a small business owner, and it’s easy to make a mistake that can have a negative impact on your bottom line. With fast-talking sales agents lurking around every corner, waiting to sign you up for a lengthy, expensive contract, you need a good understanding of the basics of processing services, as well as specific things to watch out for.

While most merchant services providers offer a full range of products and services for every business, most of them are geared toward the needs of larger, established companies rather than small businesses and startups. Which services you need to run your business will depend primarily on the where and how you sell your products. For example, retailers and eCommerce businesses have very different requirements, although there are also some services (such as basic credit card processing) that are universally required.

In this article, we’ll provide you with a quick overview of the primary merchant services that you’ll need to accept credit card, debit card, and electronic check payments. We’ll also briefly review several of the best all-around merchant services providers for small businesses. All of them offer easy-to-use solutions at a fairly low cost compared to what the major credit card processors usually charge.

Payment Processing Services

It’s important to give your customers as many possible ways of paying for their purchases as you can, as this naturally leads to increased sales. At the same time, you don’t want to invest extra money into supporting payment methods that few, if any, of your customers actually use. Here’s a brief overview of the primary payment methods available and the services you’ll need to support them:

Credit Card Payment Processing

Providing credit card processing services is one of the most basic merchant services, and all providers will offer this feature. To accept credit cards, you’ll need either a full-service merchant account or an account with a payment service provider (PSP) such as Square (see our review). While every provider will allow you to accept major credit cards such as Visa and MasterCard, you’ll want to check carefully if you need support for less popular cards such as Discover, JCB, or Diner’s Club. American Express is also treated differently, as they function as both the issuing bank and the credit card association. Fortunately, Amex offers their OptBlue program, which simplifies the process of accepting their cards.

Debit Card Payment Processing

Virtually all merchant services providers support debit card transactions. In setting up your account, however, be aware that the interchange rates for debit transactions are usually much lower than it typically is for credit card transactions. The reason for this is simple: banks don’t have to issue a credit when the card is used like they do with credit cards. If the customer has sufficient funds in their bank account to cover the cost of the purchase, the transaction is usually approved, and funds are withdrawn immediately. Unfortunately, some merchant services providers set their processing rates without taking this distinction into account, which means you’ll end up paying much more for debit card transactions than you should. Tiered pricing plans and flat-rate plans are the usual culprits here, so look carefully at your proposed rate quote before signing up. You won’t have this problem with interchange-plus pricing, as the actual interchange rate is passed on to you, and the processor’s markup is the same for every transaction.

ACH Payment Processing

eCheck (ACH) payment processing operates on a different network from those used to process credit and debit cards. For this reason, most providers will require you to sign up for a separate ACH processing service as an optional feature when setting up your account. Adding eCheck processing to your account will allow you to accept bank transfers (i.e., eChecks) and paper checks with optional check scanning hardware. Processing rates for eChecks are very low because the money is coming directly out of the customer’s bank account. However, most providers will charge you a separate fee (usually around $20.00 – $30.00 per month) to add an eCheck processing service to your account. For small businesses, this might not be economical unless you have a significant number of customers who prefer to pay by check.

NFC Mobile Wallet Payment Acceptance

NFC-based payment methods such as Apple Pay and Google Pay have only been on the market for several years, and consumers have been slow to adopt them. However, they are becoming more popular over time, and it’s a good idea to offer them to your customers if you can. Most, but not all, modern credit card terminals and point-of-sale (POS) systems can accept these payment methods, but you’ll want to check the specific requirements for each particular NFC-based method you want to be able to accept. While NFC-based payment methods are ultimately tied to the user’s credit or debit card, they offer superior security and protection from fraud over traditional magstripe and even EMV card reading methods.

Mobile Payment Processing

Traditionally, mobile payment acceptance required a bulky wireless terminal. Not only were the terminals expensive by themselves, but they also needed a separate data plan (usually around $20.00 per month) to transmit the payment processing data. Then smartphones came along, and it wasn’t long before companies figured out that you could create an app that would effectively turn your phone into a credit card terminal. Coupled with an inexpensive card reader that plugged into the phone’s headphone jack, you had a simple mobile payment system that was far lighter and less expensive than the old wireless terminals.

While Square was the first company to pioneer this system, almost all other processors have followed suit, and today it’s hard to find a provider that doesn’t offer a similar mobile processing solution. Unfortunately, most of those competing systems fall far short of what Square has to offer. The apps themselves are very basic, and we’ve seen plenty of complaints about poor reliability, poor handling of tips, and a general lack of features. Magstripe-only card readers, while still offered for free or very low cost, are essentially obsolete liability traps with the switch to EMV-based chip cards. The gradual disappearance of the headphone jack from late-model smartphones further complicates matters. While this situation is bound to improve, today only Square and a small number of other merchant services providers offer both a fully-featured app and an EMV-compliant, Bluetooth-connected card reader.

eCommerce Payment Processing

To accept payments over the internet, you’ll need a software service called a payment gateway. Gateways can send transaction data to your provider for processing, and they also offer a number of other features you’ll need to run an online business. While features vary from one provider to another, most gateways offer support for recurring billing, online invoicing, and a secure customer information database to store your customer’s payment method data. Security features are also very important, with most providers offering some form of encryption or tokenization of data to keep it from falling into the wrong hands. Most merchant services providers offer either their own proprietary gateway or a third-party product such as Authorize.Net (see our review).

Online Reporting

Online dashboards are very popular these days, and almost all merchant services providers offer them. With these web-based dashboards, you can monitor the state of your business and track your transactions in real-time. They’re particularly valuable for eCommerce businesses and retailers who have more than one location.

Canadian Payment Processing

Unfortunately, most US-based providers do not offer accounts to businesses located in Canada. However, there are a few choices available north of the border that provide excellent service and fair prices. Helcim (see our review), one of our favorite providers, is based in Calgary and operates throughout both Canada and the United States.

Nonprofit Payment Processing

If you’re in the nonprofit sector, you’ll want to reduce your costs wherever possible. While you can sign up with any merchant services provider, it’s usually a better idea to go with one that offers reduced processing rates for nonprofits. Dharma Merchant Services (see our review), one of our highest-rated providers, specializes in helping nonprofits get set up with merchant services.

High-Risk Payment Processing

If your business falls into the high-risk category, your options for finding a provider will be more limited than they are for other merchants. The majority of merchant services providers, including most of those profiled below, do not accept high-risk merchants and will terminate your account if they later determine that you’re in the high-risk category. While there are many providers on the market that specialize in serving high-risk merchants, beware that many of them will charge you very inflated processing rates and account fees while providing poor customer service. For a look at the more reputable high-risk providers, check out our guide to the best high-risk merchant account providers.

Low-Volume Payment Processing

If your business only processes a few thousand dollars per month in credit/debit card transactions, or you’ve just launched, you’ll want to find a low-cost provider that won’t eat up your profits through high processing rates and hidden fees. Businesses at this end of the spectrum often don’t need a full-service merchant account and are better off going with a payment services provider (PSP). While you’ll pay somewhat higher processing rates, you’ll save money overall because most of these providers don’t charge any monthly fees. They also don’t require long-term contracts or charge early termination fees (ETFs), so you’ll be free to switch to a full-service merchant account with a different provider when your business is large enough to need one. For low-volume retailers, Square (see our review) is an excellent choice. The quickest and easiest option for eCommerce merchants is PayPal (see our review).

Payment Processing Companies

Below are short overviews of some of the best merchant services providers we’ve found for small businesses. Be sure to check out our full reviews for companies that you think might be a good fit for your business.

Square

Square Logo

Possibly the most popular provider for small businesses, Square offers simple flat-rate processing with month-to-month billing and no early termination fee. With Square, you can accept all major credit and debit cards. However, their processing rates don’t offer any discounts for debit card processing. Rates are fixed at 2.75% for swiped (or dipped) transactions, 2.9% + $0.30 per transaction for online payments, and 3.5% + $0.15 per transaction for keyed-in transactions.

Square offers a mobile-only processing solution with their Square Reader, which is now available in an EMV-compliant, Bluetooth-enabled product. While it’s not free like the old magstripe-only reader, it’s a great investment and much less expensive than competing products from other providers. The new reader also accepts NFC-based payment methods, future-proofing your system (at least for the time being).

Square also offers eCommerce payment processing, as well as a host of other features for both retail and eCommerce merchants. While it’s also available in Canada, high-risk merchants are not supported. There’s also no discount for nonprofit businesses. Square specializes in meeting the needs of low-volume merchants, and we recommend them for businesses processing less than $5,000 per month. For more details, see our complete review.

CDGcommerce

Another excellent choice for low-volume businesses, CDGcommerce offers a full-service merchant account for a low monthly fee of just $10.00 per month. That’s about as low as it gets for an actual merchant account, although you’ll want to seriously consider adding the optional cdg360 security package for an additional $15.00 per month. The company also offers true month-to-month billing with no early termination fee, which is a great feature for small businesses that don’t want to get trapped in a long-term contract.

In addition to basic credit/debit card processing, eCheck (ACH) processing is available for an additional fee. For eCommerce merchants, CDGcommerce offers a choice between their proprietary Quantum gateway and Authorize.Net (see our review). Either option is completely free, with no monthly gateway fees or additional per-transaction charges. For retailers, your account includes a “free” Verifone Vx520 EMV-compliant terminal. While there’s no charge for the terminal, you’ll have to pay a $79 per year maintenance fee, which is fully disclosed. You can also include a free mobile card reader with your account, but it’s magstripe-only at this time.

For businesses processing less than $10,000 per month, the company offers a simplified interchange-plus pricing plan. Rates are interchange + 0.25% + $0.10 per transaction for card-present transactions and interchange + 0.30% + $0.15 per transaction for online transactions. Discounted rates are also available for qualified nonprofit businesses.

CDGcommerce is not available in Canada and does not support high-risk merchants. For all others, it’s a great choice for a small business that wants a true merchant account with a minimum of expense or commitment. If the company sounds like a good fit for your business, check out our complete review.

Helcim

Helcim logo

With offices in both Canada and the United States, Helcim is another excellent provider that’s geared toward the needs of small business owners. Their Retail pricing plan costs only $15.00 per month and features interchange-plus rates starting at interchange + 0.25% + $0.08 per transaction. You’ll have to supply your own terminal, but the company offers them for sale at very competitive prices and doesn’t use overpriced terminal leases.

For eCommerce merchants, Helcim’s eCommerce pricing plan costs $35.00 per month and comes with the fully-featured Helcim Payment Gateway. Processing rates are all interchange-plus, and start at interchange + 0.45% + $0.25 per transaction. As with the Retail Plan, these are the highest rates available, with lower rates available if you meet their monthly processing volume requirements. Merchants who sell both online and from a storefront can get a combined Retail + eCommerce plan for $50.00 per month. Discounted rates are available for nonprofit businesses.

Helcim offers eCheck (ACH) processing as an optional add-on for $25.00 per month and $0.25 per check. Their mobile processing solution is free and included with all retail accounts. However, they currently only offer a magstripe-only card reader. To keep costs low, the company does not accept high-risk merchants. One caveat: Helcim freely discloses that their pricing structure will not be cost-effective for low-volume businesses processing less than $1500 per month. Read our full review for more details.

Dharma Merchant Services

Dharma Merchant Services review

You’d be hard-pressed to find a merchant services provider that’s more ethical and transparent than Dharma Merchant Services. They offer true month-to-month billing with no early termination fees, interchange-plus pricing, and low account fees – all of which are fully disclosed on their website. Account fees are only $10.00 per month for basic credit and debit card processing. eCheck (ACH) processing is available through one of several optional programs.

Dharma has special pricing plans for storefront, restaurant, and virtual (eCommerce) businesses. Processing rates range from interchange + 0.20% + $0.07 per transaction to interchange + 0.35% + $0.10 per transaction depending on your business type. Recurring and incidental fees are all disclosed on their website, including a $7.95 per month PCI compliance fee. The company also offers special discounted rates for nonprofits.

Mobile processing is supported through First Data’s Clover Go card reader and app. This service costs an additional $10.00 per month, plus $99 for the Clover Go Basic Reader (or $139 for the Clover Go Contactless reader). Dharma is only available to US-based merchants and can only support certain limited categories of high-risk businesses. The company’s fee structure is only suitable for businesses processing at least $10,000 per month, something which they also fully disclose on their website. For a more in-depth look at Dharma Merchant Services, please see our complete review.

Payline Data

Payline Data high risk merchant accounts

Another great option for small or new businesses is Payline Data. They offer a number of simplified pricing plans, all featuring interchange-plus pricing. Their Payline Start plan, designed specifically for new businesses, has no monthly fee and features a single processing rate of interchange + 0.50% + $0.10 per transaction. There’s also a $99.00 per year PCI compliance fee and a $25.00 monthly minimum, but that’s about it for recurring fees. Lower rates are available under the Payline Shop plan, which costs $9.95 per month. For eCommerce merchants, Payline Connect charges somewhat higher rates, but includes a payment gateway and virtual terminal for $10.00 per month.

While all accounts include basic credit/debit card processing, eCheck (ACH) processing is a separate service. Payline doesn’t disclose the cost of this option. They also offer Payline Mobile, their proprietary mobile processing solution. It costs $7.50 per month for merchants on the Payline Start plan, and features the Ingenico RP457c card reader, which can accept magstripe, EMV, and NFC-based payment methods and connects to your smartphone (or tablet) via either the headphone jack or Bluetooth.

Payline Data offers discounted rates to nonprofit businesses and can also support some high-risk merchants. It doesn’t advertise this capability, however, so you’ll have to ask your sales representative about it. The company’s services are only available to businesses in the United States. For a more detailed look at Payline Data, check out our complete review.

Fattmerchant

For a unique take on merchant account pricing, take a look at Fattmerchant and their subscription-based pricing. Their standard account pricing plan for both retail and eCommerce merchants includes a $99.00 per month subscription fee, but offers processing rates of interchange + $0.08 per transaction (for retail sales) or interchange + $0.15 per transaction (for online sales). These low rates eliminate the standard percentage markup that most other providers charge, as those charges are included as part of your monthly subscription fee. Almost all other account fees are also included in your subscription price, although you’ll have to pay an extra $7.95 per month if you need a payment gateway.

Fattmerchant can also process eCheck (ACH) payments, although they don’t disclose pricing for this option. Mobile processing is supported via the Fattmerchant Payments Mobile app, which is currently only available for iOS. The Fattmerchant Mobile Card Reader can accept either magstripe or EMV transactions and is included with your account.

Fattmerchant doesn’t advertise any discounted rates for nonprofits, and they don’t accept high-risk businesses. They’re also only available to US-based merchants. While their subscription-based pricing can result in significant savings for businesses with a sufficiently high processing volume, they’re not ideal for very low-volume merchants or businesses that are just starting out. If you’re regularly processing over several thousand dollars per month, however, we encourage you to compare their pricing with what you’re currently paying. You might be able to save a lot of money overall despite the relatively high subscription fee. For a more in-depth look at Fattmerchant, please see our complete review.

Final Thoughts

Selecting a merchant services provider should be approached with great caution. You need to really do your homework in evaluating the numerous plans and options each provider has to offer, as well as coming up with the most accurate estimate of total costs that you can. While a basic account for credit or debit card processing can be had for relatively little money, additional services will add to your costs quickly. Credit card terminals, a payment gateway, or an eCheck processing service will usually cost you more, although they will obviously be worth the price if your business needs them.

The six merchant services providers we’ve profiled here represent the best choices for a small business or one that’s just starting out. If you’re just opening your business and don’t have an established processing history or any idea of how much your processing volume will be, Square is probably your best bet. The up-front cost to start processing is exceptionally low, and the pay-as-you-go nature of their service will help you avoid monthly fees if you don’t need to process transactions every month.

When your business is large enough that you need the stability and additional features of a true merchant account, CDGcommerce, Helcim, and Payline Data are great choices. You’ll get a full-service merchant account for a very low price and will have the flexibility to switch providers without incurring a penalty. Once your business gets a little larger and more stable, Dharma Merchant Services and Fattmerchant can really save you money on your overall processing costs. To compare our top-rated providers side-by-side, check out our Merchant Account Comparison Chart.

The post Payment Processing Companies And Services For Small Businesses appeared first on Merchant Maverick.

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The Best Credit Card Reader For Your Small Business

So you want to use your cell phone or tablet to start accepting payments for your business. Whether this is your first time around or you’re just wondering if it’s time to update that old credit card reader you’ve had for four years, there’s certainly a lot to consider. What kind of technology is out there? How much does a cell phone credit card reader cost? Should I get a credit card machine and POS instead? Which are the best credit card readers?

I’ve seen a lot of mobile card readers in my time. And the first thing to understand is that the card reader is tied to the mobile processing app (mobile point of sale, or mPOS for short). Sadly, we can’t just mix and match one card reader with another app. So before anything, you need to look at the software and make sure it’s a good fit for your needs. You should also check the processing rates and the cost of the hardware.

Apart from aesthetics, the reality is there aren’t a lot of differences between one card reader and the next. They all have the same core features, and they all use the same sort of security. Reliability is as much a product of the app design as it is the hardware design, sometimes moreso. So while you do want a good, affordably priced credit card reader, you should first narrow down the list of potentials using the software as your main criteria. Once that’s done, you can take a closer look at all the hardware.

If you are curious about what your hardware options are, read on! I’ve compiled a list of the most popular credit card readers and their specs. Make sure you read our reviews for each mobile app so that you understand the drawbacks and shortcomings of each as well as all the advantages.

But first, let’s set the record straight.

Credit Card Reader vs. Credit Card Machine: Know Your Terms

So what’s the difference between a credit card reader and a credit card machine? While it’s certainly possible that you might encounter some people who use the terms interchangeably, “credit card reader” is generally the term for small mobile devices that connect to smartphones and tablets and process transactions through a mobile app. This connection can be physical or wireless. However, the smartphone or tablet typically has to also have either cellular signal or a Wi-Fi connection.

A credit card machine (also called a credit card terminal) is larger, not mobile, and generally connects to a full-fledged POS. They may or may not have an integrated receipt printer or a PIN pad device for customers. Credit card machines require a connection to either a phone line or the Internet to function. Some machines are capable of wireless Internet connections, but they do add to the cost.

The biggest difference between a credit card reader and a credit card machine is price, though. A mobile card reader can cost anything from $10 to about $80, whereas the typical entry-level price for a machine is about $120. However, depending on what features are included, a credit card terminal can cost $600 or more.

Types of Credit Card Readers for Phone & Tablet

When categorizing credit card readers, you need to consider two criteria: how the device connects to your phone or tablet, and which payment methods the device accepts (we’re not talking about manual entry options just yet).

Phone Connection Options:

  • 3.5mm/Headphone Jack: Most of your entry-level credit card readers will connect to a phone or tablet via the 3.5mm headphone jack. However, it’s worth noting that this design is slowly fading out. Part of the driving force is Apple’s removal of the headphone jack from its iPhones, but I think it’s also a result of our overall shift toward wireless. It’s worth pointing out that both Square and PayPal have Lighting to 3.5mm headphone jack adapters that will allow you to continue to use their magstripe readers.
  • Bluetooth: Bluetooth readers are becoming increasingly common. They’re compatible with both iOS systems, they’re secure, and they allow for some sophisticated card reader designs. The one downside to Bluetooth readers is that they can run low on power quickly if they’re always connected without a “sleep” mode.

Generally speaking, credit card readers for smartphones and tablets support one of these connection methods, but not both. There’s always an exception to the rule, however. With Apple moving toward Lightning ports for everything, it’s worth getting a Bluetooth device, which will ensure that no matter what smartphone or tablet you get in the future, the card reader will be able to connect.

Supported Payment Methods

  • Magstripe: Until 2015, magstripe transactions were the only form of credit card payment commonly accepted in the US. Magstripe transactions (also referred to as swipe transactions because they are made by swiping the card through a terminal or card reader) are still supported, but becoming superfluous as other, more secure payment methods become available.
  • EMV: In October 2015, a major liability shift occurred, shifting responsibility for fraudulent swipe transactions onto merchants, if that card had an EMV chip and the merchant did not have an EMV-enabled credit card reader. As a result, you probably saw a surge of chip cards appear, and payment processors rushed to introduced new hardware capable of processing chip card transactions. Chip cards are more secure and can help reduce in-person fraudulent transactions.
  • NFC/Contactless: Apple Pay, Android Pay, Samsung Pay, and all of the other “Pay” apps you’ve seen rely on NFC (near-field communication) technology. Transactions are often called contactless or “tap” transactions.

All mobile card readers on the market accept some combination of these three payment methods. As a merchant, it’s important that you are able to process EMV transactions to protect yourself against liability for fraudulent transactions.

Card Readers for iOS vs. Card Readers for Android: Is There a Difference?

Generally speaking, mPOS apps tend to offer more features to tablet users, especially iPads. But apart from enhanced features for tablets, there usually isn’t much difference between apps for iOS vs. apps for Android.

The same goes for mobile card readers. Unless the app itself is built to function only on one operating system, a card reader for iPhone or iPad works with an Android phone or tablet. So if your business has a mix of Android and iOS devices, you can use your hardware on both. You’ll just have to worry about pairing and re-pairing any Bluetooth devices as needed.

Now that we’ve identified the defining traits of credit card readers, let’s look at the mobile card readers from the most popular mPOS systems: Square and PayPal.

Square Credit Card Readers

Square (read our review) is definitely a leader in the mPOS industry, both for its software and hardware. It was one of the first mobile systems to embrace chip cards and it seems to put a high priority on keeping its hardware affordable.

The one piece of Square hardware that we haven’t included here is the Square Register, which is more of a full-fledged POS than a mobile system. Check out our full review of Square Register for a closer look at the system.

Square Magstripe Reader

If I wanted to be extremely hyperbolic, I would say that Square’s magstripe reader is synonymous with mobile processing. Instead, I’ll just say that the white and boxy device certainly is iconic. The overall design hasn’t changed in years. Available for free if you order directly from Square or $9.99 at retail stores such as Staples (Square will reimburse you later), this entry-level device connects via the headphone jack, and as the name says, handles magstripe transactions only.

  • Cost: Free ($9.99 reimbursed if bought at a retail location)
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe

Square Chip Card Reader

If you just glance at the Square Chip Card Reader (read our unboxing review), you might not notice any immediate differences between the magstripe reader and the chip card reader. That’s because Square didn’t exactly reinvent the wheel. The Chip Card Reader is slightly thicker than the original, with an extra slot for inserting the chip end of a credit or debit card. Unlike the magstripe reader, you need to periodically charge this model. Square sells the Chip Card reader for $29, which is, all considered, a pretty good price for a device that can handle magstripe and EMV transactions.

  • Cost: $29
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe, EMV

Square Contactless & Chip Card Reader

The Contactless and Chip Card Reader from Square doesn’t exactly break the mold as far as design: White, boxy, with Square’s logo set into it. What’s that expression? If it isn’t broke, don’t fix it?

Unlike the previous two card readers, the contactless and chip card reader relies on a Bluetooth connection to process transactions. And it doesn’t support magstripe cards at all. To get around this, Square includes a magstripe reader in the package as well.

The contactless and chip reader sells for a very reasonable $49, but if the upfront investment makes you cringe a bit, Square also offers an installment plan that will allow you to pay off a portion of the cost each week. Expect to pay a little bit more in the long term as a trade-off for the convenience of the installment plan, but it’s nowhere near as bad a hardware lease program from a traditional merchant account.

The contactless and chip reader is a slim, slick little device and you can certainly use it in a handheld mobile situation. But Square also sells a clever little dock to charge the device and still allow you to use it. The dock goes for $29 on its own, but it is optional.

  • Cost: $49 (dock available for additional $29)
  • Connection: Bluetooth
  • Payment Types Supported: EMV, NFC/Contactless (separate magstripe reader included)

Square Stand

The Square Stand isn’t really a card reader — it’s an iPad stand with an integrated magstripe reader. But it was one of the devices that helped make Square so popular with merchants. These days Square sells the stand with a contactless and chip card reader plus the dock. But it merits a mention here because it shows that mobile card readers can also be used in countertop/retail setups. Square even sells bundles and kits with everything you need to get set up.

The Square Stand plus the card readers will run you $169, which is less than you’d pay for all the individual components — the stand ($99 originally). The contactless and chip card reader ($49), and the dock ($29). Bundles that include a cash drawer and receipt printer start upwards of $500, not including the iPad.

  • Cost: $169
  • Connection: Bluetooth
  • Payment Types Supported: EMV, NFC, Magstripe (integrated into tablet stand)

PayPal Credit Card Readers

The other major name in the mPOS space (and commerce in general) is PayPal. The company’s mobile processing app, PayPal Here (read our review), isn’t quite as full-featured as Square, but you’ll find a lot of similarities between the two, especially as far as business model.

PayPal Mobile Card Reader

PayPal’s mobile card reader is a standard magstripe reader with a headphone jack connector. While the color has changed from PayPal blues to black, the overall shape hasn’t: it’s still a simple and quite stable triangle that connects via a headphone jack. There’s no frills or fuss here.

PayPal used to offer the mobile card reader for free through its website, but that’s no longer the case. It’ll cost you $14.99 to get started, though it’s worth the extra money to upgrade to at least an EMV reader.

  • Cost: $14.99
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe

PayPal Chip & Swipe Reader

PayPal’s Chip and Swipe reader is a step up from its Mobile Card Reader, with a sleek rectangular design. It’s about the size of a credit card and slim at just half an inch thick. Plus, $24.99 for a Bluetooth device that accepts both EMV and magstripe, makes it one of the more affordable options for card readers, especially if all you need is mobile support.

  • Cost: $24.99
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

PayPal Chip & Tap Reader

If you want more than just magstripe and EMV support, PayPal also sells a Chip and Tap reader that allows you to accept Apple Pay, Android Pay, and other contactless methods. The Chip and Tap reader looks quite a bit different from the Chip and Swipe reader. Though it’s still black, it’s boxy and measures 0.75 inches in depth.

I actually hate to say this, but the PayPal reader reminds me a bit of Clover Go’s all-in-one reader, just more refined. And unlike the Chip and Swipe reader, this design is meant for both mobile and countertop use — and PayPal offers a charging dock for those who are interested in a countertop setup.

Alone, the reader sells for $59.99, but a bundled kit with the reader and dock sells for $80 (PayPal indicates that’s a markdown from $89.99 on its website). I don’t see the dock listed for sale separately, but I would assume it would sell for $30 on its own.

  • Cost: $59.99 (bundle available for $79.99)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

PayPal Chip Card Reader

PayPal’s Chip Card Reader was actually the first EMV-enabled reader the company offered, and it wasn’t PayPal’s own design. The reader is actually a branded Miura M010, which has also previously been offered by Square, and is still available from Shopify as well.

The Chip Card Reader is a handy little mobile reader, but you can get a dock for it and mount it in a countertop setup (at least, until PayPal possibly phases this device out of its lineup). Despite its rather bland name, this reader accepts magstripe, EMV, and NFC/contactless payments. However, it comes at a steep price $79, which is still less than the original $150 it sold for. It’s worth noting that despite the PIN pad, it doesn’t support PIN entry because PayPal Here doesn’t support debit transactions.

  • Cost: $79
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Alternatives to Square & PayPal Readers

While Square and PayPal are certainly two of the biggest names, they’re not the only options if you need a mobile credit card reader. Let’s take a look at some of the other processors and what hardware they offer.

Shopify

Shopify is mostly associated with eCommerce, but it’s moved toward an all-in-one approach that includes a POS (read our review). The full-fledged POS package is designed for a countertop setup and syncs with your Shopify store. However, for a very reasonable $9/month, you can get the Shopify Lite plan, which supports sales through social media and a buy button on your own website, as well as access to the mobile POS. Keep in mind that this is designed almost exclusively for retail environments. For mobile users, though, Shopify offers two readers.

Shopify Tap, Chip & Swipe Reader 

I mentioned before that PayPal’s Chip Card Reader is actually made by another company and is called the Miura M010. Shopify licenses the same device and calls it the Tap, Chip and Swipe reader.

Again, you have a Bluetooth connection with support for magstripe, EMV, and contactless transactions. Shopify sells the reader for $89, which is on the higher end of things. The dock sells for $39. However, the reader is well designed and very functional, and if you want to accept Apple Pay and other “Pay” apps with Shopify, it’s the only option.

  • Cost: $89 (dock available for $39)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Shopify Chip and Swipe Reader 

Shopify’s Chip and Swipe Reader is a sleek white device. As the name implies, the reader can handle both magstripe and EMV transactions, but not contactless/NFC. I like that it comes with a dock charging dock by default, instead of as a pricey add-on.

The retail price for the reader is listed as $29, but as I am writing this, Shopify is offering it for free. The Chip and Swipe Reader is easily one of the more beautiful card readers I’ve seen, as well as innovative and well priced.

  • Cost: $29
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

Payline Mobile

Payline Data is a traditional merchant account processor, but its Payline Mobile app (read our review) is actually a viable standalone processing option even for low-volume and seasonal merchants. The company offers a standard magstripe reader (the Ingenico G5X) that isn’t particularly interesting. Its other mobile reader, though, is the Ingenico RP457c, and it is definitely one of the more innovative card reader designs I’ve ever seen.

For starters, the RP457c can connect to cell phones and tablets through the headphone jack or Bluetooth, which is very uncommon. It also supports magstripe, EMV, and NFC transactions all in one. The device is designed to clamp onto phones or rest in a dock for use as a wireless reader.

Payline doesn’t disclose its current pricing for the RP457c, in part because some merchants may be eligible for a free device. However, I was able to confirm that the reader retails for $150, which is quite expensive.

  • Cost: $150
  • Connection: 3.5mm, Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

SumUp

SumUp (read our review) is a European company that opened up processing for US merchants in 2017. While it’s not as comprehensive as other mPOS options, it does everything most merchants will need to do. It’s also worth pointing out that the SumUp mobile card reader, called the SumUp Air, actually won an award for its innovative design.

The SumUp Air shows its European sophistication with its sleek white minimalist design. It relies on a Bluetooth connection to process magstripe, EMV, and contactless transactions. If you want more information, check out our unboxing review of the SumUp card reader.

  • Cost: $69
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Clover Go

Clover Go (read our review) is the mobile extension to the Clover family of POS products developed by First Data. It functions best as an extension of Clover, but it can be a standalone POS option. However, pricing for the hardware as well as payment processing can vary significantly depending on which reseller you go through, and you should be wary of sales gimmicks and possible contracts with early termination fees.  However, don’t forget that anyone selling Clover products is just reselling First Data’s processing services.

Clover Go Reader 

Clover’s basic “entry level” reader is a headphone jack reader that supports magstripe and EMV transactions. The design is overall larger than most comparable devices, but Clover does include a clamp to help stabilize the card reader while attached to a phone or tablet.

Pricing for the Clover Go reader will depend on resellers. Some may even offer it for free. Unlike its all-in-one sibling, you can’t get this reader through the Apple Store and if you sign up with First Data directly you’ll probably be offered the All-In-One Reader first and foremost.

  • Cost: Varies according to reseller
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe, EMV

Clover All-In-One Reader

I said earlier that the PayPal Chip and Tap Reader reminded me of Clover Go. That’s because Clover Go is also a square, boxy device with very similar dimensions. However, whereas PayPal’s is black, Clover Go’s is white.

You’ll also find the All-In-One Reader comes with a dock. It’s not the most elegant design, but it will allow you to charge the device or keep it on a countertop while still processing card transactions.

Unfortunately, pricing for this card reader varies depending on which company a merchant chooses to sign up with. You can get it direct from First Data (or the Apple Store) for $39.95, not counting the dock, which sells for $34.  

  • Cost: $39.95 (through First Data or Apple Store; other prices vary according to reseller)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Intuit/QuickBooks GoPayment

Intuit’s mobile payment solution, QuickBooks GoPayment (read our review) appeals mostly to a small but viable niche — QuickBooks Online customers who need an easy way to take payments in person. While the app isn’t loaded with advanced features, it will work pretty well for merchants with simple needs. Intuit offers two readers to address merchant needs.

Chip and Magstripe Reader

Intuit’s Chip and Magstripe reader is a small, gray, unassuming device. It doesn’t have quite the sophistication of some other readers (I might even call it bland), but the design is overall good. The curves have a sort of friendliness about them rather and prevent it from looking boxy like other devices. As the name implies, this card reader supports magstripe and EMV transactions. It connects to a phone or tablet via Bluetooth.

The Chip and Magstripe Reader goes for $19 normally, but Intuit is offering the reader free for new merchants. That puts it at the lower price end, especially for a Bluetooth enabled device with EMV. You can also connect the device to computers running QuickBooks Desktop Pro 2018 and future versions of the software.

  • Cost: $19 (free with signup for new merchants)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

All-In-One Card Reader

Intuit’s newer card reader is an all-in-one device that connects via Bluetooth. But unlike its sibling, this device supports magstripe, chip card, and contactless transactions. By default, it’s meant to nest in a charging dock.

Intuit sells the all-in-one reader for $49, which is not a bad price at all considering that the dock/cradle is included at no extra charge. It has the same sort of nondescript gray finish, but Intuit has embraced a curvy aesthetic that is easy on the eyes.

  • Cost: $49 (including dock)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

PayAnywhere

Last on the list is PayAnywhere (read our review). While the name isn’t as recognizable as some of the alternatives, PayAnywhere’s mPOS does have some good features and interesting hardware. Its biggest shortcoming is simply the quality of customer service and some practices involving its Storefront plan.

PayAnywhere offers merchants a choice of two readers for merchants, though they still leave me a bit perplexed in terms of design.

PayAnywhere 2-In-1 Reader

PayAnywhere’s entry-level reader is a 2-in-1 device with magstripe and EMV support and Bluetooth connectivity. It looks pretty simple, and it actually reminds me of PayPal’s Chip and Tap reader with its shape and coloring.

There’s not much more to say about this little device except that PayAnywhere offers it free for new merchants. Additional 2-in-1 readers run for $30.

  • Cost: $29.95 (free for new merchants)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

PayAnywhere 3-In-1 Reader

I think the most interesting thing about PayAnywhere’s 3-In-1 Reader is that it’s the only mobile card reader I’ve seen that supports NFC and connects via a headphone jack. (The Ingenico RP457c can connect via headphone jack OR Bluetooth, so I don’t count it in the same category.) It looks shiny and futuristic with its black finish and lights, which is ironic for a device that uses a dying connection method.

PayAnywhere offers its 3-in-1 device for $40, but on the website you’ll also see an offer for free processing on your first $5,000 in Apple Pay transactions (valued at $135). However, an offer like that should not be the deciding factor in choosing a processor.

  • Cost: $39.95
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Is a Mobile Credit Card Reader Absolutely Necessary?

You don’t actually have to have a mobile credit card reader to process payments with a mobile POS system.

Flint Mobile, a mobile processor that works through Stripe, has no credit card readers at all. Instead, the app relies on a device’s camera to scan cards. The camera doesn’t actually snap a photo of the card, which would be a huge security issue. But the app is able to open the camera and scan a card the same way QR code readers are able to access the camera to open QR code links. Flint has a couple of filters it applies to the camera for added security.

That said, Flint isn’t the only mobile option with this ability. PayPal Here and Intuit GoPayment also include the camera scanning feature.

Not only that, but most mPOS apps also include a feature that allows you to manually key in transactions. These process at a higher rate that swiped/dipped/tapped transactions because they’re processed as card-not-present, like ecommerce transactions. But it’s a useful alternative when the card reader is being glitchy or the card is very worn. The notable exception to all this is SumUp, a company that started in Europe and doesn’t support manual entry for cards except through its virtual terminal.

Of course, if you don’t want to pay extra for manually entering transactions, it might be best to spend a little extra money and buy a backup card reader or two in case one starts to misbehave.

Are Free Credit Card Readers Worth It?

Several mobile POS options (including Square) provide an incentive for potential customers in the form of a free credit card reader. This can certainly make it more tempting to try out a payment processing service, but it shouldn’t be the deciding factor.

For one, free card readers tend to be pretty basic. Some have EMV support, but none of the free card readers on this list support contactless payments. Contactless support may not be mandatory for everyone, but EMV support should be a mandatory feature for every merchant. A reader with a Bluetooth connection will also ensure it’s future-proof no matter what phone or tablet you upgrade to later on.

Two, a free mobile card reader will absolutely not offset a processor’s shortcomings, such as poor customer service or missing features. It’s smarter for merchants to make a decision based on the quality of the mobile app, its features, and the processor’s customer support.

So while the ability to try some mPOS options without any upfront investment is nice, please don’t let a free credit card reader be the reason you pick one processor over another. Make sure you explore all of your options.

Don’t let a free reader be the determining factor in choosing an mPOS.

Final Thoughts

I’m not going to try and convince you that mobile credit card readers are the world’s most fascinating subject (even if I could probably talk your ear off for a couple of hours about all the different designs and features and how they embody the philosophies of the companies that sell them).

But if nothing else, you should take away a few key ideas that will prepare you to choose a mobile point of sale app and a credit card reader:

  • Software is more important than the hardware. Make sure the app has what features you need before you set your heart on a device.
  • Make sure the card reader you choose has EMV support. In 2018, there’s no reason why you shouldn’t be taking such a basic step to protect yourself and your business.
  • Prices for credit card readers range from totally free to upwards of $75. How much you want to spend is entirely up to you, but you will generally pay more for Bluetooth connectivity and for NFC support. Don’t be suckered in by the offer of a free reader, because there are lots of other criteria you should consider first.
  • You don’t technically need a mobile reader to take payments on a phone or tablet. However, you will pay more to process manually entered transactions in your mPOS app, so it’s a good idea to get one anyway.

Thanks for reading! If you’re ready to choose an mPOS app, a great place to start is our mobile processing comparison chart! Otherwise, if you have questions, feel free to leave us a comment!

The post The Best Credit Card Reader For Your Small Business appeared first on Merchant Maverick.

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