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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What Is Payment Processing?

What Is Payment Processing?

Running your own business always works much better when your customers actually pay you for the products and services you provide for them. Paying for purchases has become a lot more complicated in the modern world than it used to be. It wasn’t all that long ago that cash and paper checks were the preferred payment methods, but now consumers increasingly prefer credit or debit cards. Online payments, while commonplace today, have only been available for a little over twenty years. The recent introduction of NFC-based payments, which allow a consumer to make a payment with their smartphone (or smartwatch), adds yet another way for your customers to complete a purchase.

Each of these payment methods requires specific hardware (and, in some cases, software) that you’ll need if you want to support them. The days of just having a cash drawer in your shop are long gone. In this article, we’ll review the various payment methods you’ll want to be able to accept, as well as explain how those payment methods are processed so you can receive your money.

Payment Methods

Customers have a lot more options for paying for purchases today than they did just a few years ago. While cash is still the simplest payment method, it’s fallen out of favor as the use of credit and debit cards has risen. Merchants, of course, prefer to be paid in cash because they don’t need a merchant account to process these transactions, and they receive 100% of the sale price immediately. Paper checks are almost as good, although they require a trip to the bank and there is a significant risk of fraud or having the check “bounce” due to insufficient funds. While some customers prefer to pay in cash or by paper check, they’re a dwindling minority. Most customers today will want to use a credit or debit card, which requires a merchant account and a processor to ensure you receive your payment.

Credit Card Processing

While credit cards have been around for over 100 years, their use has skyrocketed within the past few decades. Although this has also led to a nationwide crisis in consumer credit card debt, it’s also created headaches for merchants who have to set up a merchant account and pay for processing costs. Nonetheless, credit card use has become so prevalent that for most merchants, the additional sales more than make up for the cost of maintaining a merchant account.

While most credit cards are issued by banks, they’re also sponsored by a small number of credit card associations, such as Visa, MasterCard, Discover, and American Express. These entities charge a variety of fees whenever a purchase is made with one of their cards. These fees are collectively known as interchange. When a transaction is processed, the processor will charge you both the interchange and a markup in exchange for its processing service. Unfortunately, interchange rates vary widely based on the type of card used and other factors, and this has made it easier for processors to rake in higher profits by offering merchants “simplified” processing rate plans such as flat-rate or tiered pricing. For this reason, we recommend interchange-plus pricing for most established businesses. This pricing method adds a fixed markup to each transaction, regardless of types. Example: interchange + 0.30% + $0.15 per transaction. While the interchange variable will vary widely with each transaction, the markup that you pay to your processor will always be the same.

In addition to paying processing rates for each transaction, maintaining a merchant account also usually requires the payment of a variety of account fees. These fees are different for every processor, and sometimes even among merchants using the same processor. For a more in-depth discussion of merchant account fees, please see our Complete Guide to Credit Card Processing Rates and Fees.

The advent of interconnected banking and credit card processing networks has drastically sped up the process of purchasing with a credit card. While the transaction approval process is rather complicated, it can be completed within just a few seconds in most cases. Here’s a very simplified explanation: The consumer’s credit card data is submitted to the processing network, which contacts the issuing bank to ensure that sufficient credit is available on the consumer’s account to cover the cost of the purchase. Several anti-fraud checks are also completed, and if no red flags are raised, the transaction is approved. The processor then processes the transaction, paying the interchange to the issuing bank and credit card associations, and keeping the remainder of the processing charge. Only then are funds released to the business owner’s merchant account. Unfortunately, this part of the process takes much longer, as most merchants submit their transactions in a batch at the end of the day. It can take up to several days before funds are deposited into your account.

Debit Card Processing

Paying with a debit card is also increasingly popular with consumers, particularly for small, day-to-day purchases such as groceries and automobile fuel. These transactions are also much easier to process, as the issuing bank doesn’t have to decide as to whether to issue a credit to the consumer to cover the cost of the purchase. As long as there are sufficient funds in the consumer’s bank account, the transaction will usually be approved.

Because there is no need to issue a credit, the overall risk associated with debit card use is significantly lower than it is with credit cards. For this reason, the interchange rates for debit card use are substantially lower as well. One of the reasons we encourage you to avoid tiered pricing plans is that many of the processors that offer these plans charge the same rates for debit card use as they do for credit cards. This can result in you paying significantly more for debit card processing than you should. This issue is also a shortcoming with flat-rate pricing plans offered by providers like Square (see our review). However, the lack of account fees usually associated with these types of processors often outweighs this consideration, especially for small or seasonal businesses.

eCheck (ACH) Payment Processing

Although it’s becoming less common, some consumers still prefer to pay by check whenever possible. Merchants can accept paper checks without the need for an eCheck processing service, and you’ll receive 100% of the sale price. However, you’ll have to make a trip to the bank to cash the check, and it might be rejected due to insufficient funds. There’s also the possibility of losing a paper check.

eCheck processing services eliminate all these problems, but they’re not free. Because not all merchants need them, most providers offer eCheck processing as an optional service, and charge a monthly fee for it (usually $20.00 – $30.00). You’ll also have to pay a small transaction fee for each processed check, but it’s much less than most credit or debit card transactions.

Most eCheck processing services require the use of a check scanner, which scans an electronic copy of the check and submits it to the customer’s bank to confirm the availability of funds. As long as the check won’t bounce, the transaction is approved immediately. Because of the monthly fees associated with most eCheck processing services, we recommend them only to businesses that accept a high volume of paper checks from their customers.

Digital Wallet Acceptance

We’re using the term “digital wallet” here to include payment methods that rely on near-field communication (NFC) technology. NFC-based payment methods utilize small, very short-range radios in both the consumer’s payment device (typically a smartphone or smartwatch) and the merchant’s credit card terminal. Apple Pay and Google Pay are currently the most popular forms of NFC-based payments. This technology has only been on the market for a few years and acceptance has been slow. The use of this payment method is growing, however, and merchants should consider adding it to meet the increasing demand. NFC payment methods are, of course, ultimately tied to the user’s credit or debit card, and these transactions are processed as a regular card transaction without any additional fees or markup. While they’re generally not available to independent merchants, other forms of digital wallet payment, such as Walmart’s proprietary Walmart Pay, use the smartphone’s camera and a QR code scanner to accept payments.

Payment Processing Methods

Credit and debit card transactions will be processed either through a traditional, full-service merchant account or a third-party payment processor like Square (see our review). While eCheck payments also go through your merchant account, they are processed under an Automated Clearing House (ACH) system that’s separate from the one used to process credit/debit cards.

Merchant Account and Payment Gateway

Merchant accounts can be used to accept both card-present and card-not-present transactions. Processing rates for card-not-present transactions are usually higher due to the higher level of risk associated with not having the cardholder’s magstripe or EMV data available. While card-present transactions require a magstripe or EMV terminal, card-not-present transactions can be keyed in manually or processed online using a payment gateway. While eCommerce-only merchants require a gateway to accept payments, retailers don’t need them. However, they’re becoming increasingly popular with retail merchants who want to add an online sales channel or take advantage of their integration with cloud-based reporting or inventory management applications.

Third-Party Payment Processor

Third-party payment processors (also known as payment service providers (PSPs)) offer credit/debit card processing services without a full-service merchant account. These types of payment processors are also known as aggregators, as they combine their merchant’s accounts rather than issue each business a unique merchant identification number. This arrangement eliminates most of the account fees associated with traditional merchant accounts, but also results in an increased risk of account freezes or terminations. Third-party processors generally charge using a simplified flat-rate pricing plan with rates that are higher than those available under interchange-plus pricing. The most well-known PSPs include Square (see our review) and PayPal (see our review).

ACH Payment Processor

As we’ve noted above, eCheck payments go through a separate processing method than credit/debit cards. While it’s possible to have an eCheck-only service without the need for a merchant account, this arrangement won’t be practical for most businesses. eCheck processing is usually offered as an optional service (at additional cost) due to the decreasing use of paper checks by consumers.

Final Thoughts

With so many payment methods to choose from, you’ll have to decide which ones are important to your business. While there are still a handful of cash-only businesses out there, today most retail merchants accept credit and debit cards due to the increased sales generated by offering this payment option. Whether you need a full-service merchant account or a third-party payment processor will depend on the size and nature of your business. Merchants operating seasonally or processing only a few thousand dollars per month can usually save money by signing up with a third-party payment processor. Most other businesses will require a full-service merchant account due to the lower processing costs and increased account security. For a brief overview of our highest-rated merchant account providers, check out our Merchant Account Comparison Chart.

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What Is A Merchant Services Provider?

What is a merchant services provider?

If you’ve just started your own business or you’re looking to add credit and debit cards as payment methods, you’re going to be bombarded by a bewildering variety of new terms and concepts that you’ve never encountered before. One very basic term you’ll want to familiarize yourself with is the type of business entity known as a merchant services provider.

To understand what a merchant services provider is and what it can do for your business, you’ll first need to understand the concept of merchant services. This term describes the range of services and hardware and software products that allow merchants to accept and process credit or debit card transactions. Before the internet came along, things were pretty simple. Merchant services consisted of countertop terminals to input card payments, processing services to approve the transaction, and merchant accounts to deposit the money in after the sale. Today, it’s a much more complicated landscape, with eCommerce opening up far more opportunities for selling products remotely than just mail and telephone ordering. Software products such as payment gateways allow customers to pay for purchases directly over the internet, while inventory management and online reporting services give you the power to track virtually every aspect of your business on your computer.

Merchant services providers are sometimes also referred to as acquirers, processors, or merchant account providers. Here at Merchant Maverick, we use the term merchant services providers as a catch-all to cover entities such as merchant account providers, payment services providers (PSPs), payment gateway providers, and any other type of business that allows you to accept payment methods other than cash or paper checks.

Types of Merchant Services Providers

Not all merchant services providers offer the same features, but most fall into one of several categories that help to differentiate them a little from their competitors. The most common types of merchant services providers include the following:

Merchant Account Providers

These entities are the most commonly encountered merchant services providers. A merchant account provider can, at a minimum, provide you with a merchant account and processing services to ensure that you receive your money when a customer pays by credit or debit card. While all merchant account providers can set you up with a merchant account, only a few of the largest companies can also offer processing services to process your transactions. These companies are called direct processors, and include industry leaders such as First Data (see our review), Elavon (see our review), and TSYS Merchant Solutions (see our review). Most other merchant account providers rely on one of these direct processors to process their merchants’ transactions.

Payment Services Providers (PSPs)

While having a merchant account is a good idea for all but the smallest of businesses, you don’t absolutely need one to accept credit or debit card payments. A payment services provider (PSP), such as Square (see our review) or PayPal (see our review) can give your business the ability to accept these kinds of payment methods without a dedicated merchant account. Instead, your account will be aggregated with those of other merchants, and you won’t have a unique merchant ID number. This arrangement has the advantage of virtually eliminating the account fees and lengthy contract terms that often come with a traditional merchant account. However, these accounts are more prone to being frozen or terminated without notice, and customer service options aren’t as robust as they are with a full-service merchant account. PSPs are an excellent choice for businesses that only process a few thousand dollars a month in credit/debit card transactions or only operate on a seasonal basis.

Payment Gateway Providers

With the advent of eCommerce, a new kind of provider has come on the scene: the payment gateway provider. These companies can offer you a payment gateway, which you’ll need to accept online payments. However, they may or may not also offer you a merchant account to go with it. Authorize.Net (see our review), one of the largest and oldest gateway providers, gives you a choice between one of their merchant accounts or using their gateway with your existing merchant account. Other providers, such as PayTrace (see our review), offer a gateway-only service. You’ll have to get your own merchant account from a third-party provider.

Types of Merchant Services

Most merchant services providers offer a wide variety of products and services to allow merchants to accept credit and debit card payments, as well as manage their inventory and track other aspects of their business. Your needs as a merchant will depend on the nature and type of your business. While all businesses will need either a merchant account or a payment service account (if you’re signed up with a PSP), other features will only be useful for certain types of businesses. For example, if your business doesn’t sell anything online, you won’t need a payment gateway. Here’s a brief overview of the most common types of merchant services:

Merchant Accounts

Every business that wants to accept credit or debit cards as a form of payment will need a merchant account. While most merchant account providers offer full-service merchant accounts, those from PSPs like Square (see our review) lack a unique merchant ID number. Merchant ID numbers make your business easier to properly identify to payment processing systems, giving you some protection from fraud and adding stability to your account. A merchant account is simply an account where funds from processed transactions are deposited. Those funds are then transferred by your provider into a business account that you specify, such as a business checking account.

Credit Card Terminals

Retail merchants will also need a hardware product that can read your customers’ credit and debit cards and then transmit that information to your provider’s processing network. Traditional countertop terminals such as the Verifone Vx520 can connect to processing networks via either an Ethernet connection or a landline. Wireless models are also available, but they tend to be bulkier and more expensive than wired models, and require a wireless data plan (usually around $20.00 per month) to operate.

Terminals may be purchased outright or leased from your merchant services provider. Because most providers support the same terminals, we recommend either buying your terminal directly from your provider or purchasing it from a third-party supplier. Terminals require a software load which must be installed before they can accept transactions. If you buy your terminal from a third-party source, you’ll need to have it re-programmed to install this software. We strongly discourage terminal leasing due to the noncancelable nature of the leases and the fact that you’ll pay several times more than the value of the terminal over the lifetime of the lease.

In shopping for a terminal, you should select an EMV-compliant model as a minimum. Support for NFC-based payment methods (such as Apple Pay and Google Pay) is also a good choice as these methods are becoming more popular among customers.

Point of Sale (POS) Systems

POS systems combine the functions of a credit card terminal with a large computer display, enabling you to manage inventory and monitor your sales through a single piece of equipment. These systems include fully-featured, dedicated terminals and tablet-based software options that can run on an iPad or Android tablet. Many providers offer optional accessories such as tablet mounts, cash drawers, and check scanners, allowing you to accept any form of payment through a single device.

Mobile Payment (mPOS) Systems

These systems allow you to use your smartphone or tablet as a credit card terminal. mPOS systems consist of a mobile card reader that connects to your mobile device and an app to communicate with your provider’s processing network. While Square (see our review) was the first provider to offer a simple mPOS system, most providers now offer similar products. Although they’re difficult to find and cost more than simple magstripe-only readers, we recommend selecting a card reader with EMV compatibility and a Bluetooth connection (rather than the traditional headphone jack plug) to future-proof your system.

Payment Gateway

A payment gateway is simply software that communicates between your website and your provider’s processing networks, allowing you to accept payments over the internet. Because not all merchants need a gateway, providers usually charge a monthly gateway fee (around $25.00) to access this feature. Most gateways include support for recurring billing, a customer information management database, and security features such as encryption or tokenization to protect your customers’ data.

Virtual Terminal

A virtual terminal is another software product that turns your computer into a credit card terminal. Transactions can be entered manually or swiped using an optional USB-connected card reader. Virtual terminals are most commonly used by mail order/telephone order businesses that don’t have an eCommerce website.

Online Shopping Carts

Shopping cart software is designed for eCommerce merchants who need a more specialized shopping experience or want to customize the features of their website. Shopify (see our review) is one of the most popular online shopping carts. Check compatibility with your merchant services provider before selecting an online cart.

eCheck (ACH) Processing

eCheck processing is an optional feature offered by most merchant service providers. It allows you to scan paper checks and instantly confirm that funds are available to cover the purchase. This service protects you from fraud and saves you a trip to the bank.

Merchant Cash Advances and Small Business Loans

Merchant cash advances and small business loans provide another way for your business to receive funds when you need them, and most merchant services providers offer them. Check out our Merchant’s Guide to Short-Term Loans for more information.

Final Thoughts

Which specific merchant services you need will depend on the nature of your business. Retail-only businesses won’t need a payment gateway, but they will need reliable credit card terminals. eCommerce businesses can’t function without a payment gateway, but do not require terminals. Of course, if your business operates in both the retail and eCommerce sector (which is becoming more common), you’ll need just about every service your provider has to offer.

Every merchant service provider has their own unique combination of products and services, so you’ll want to ensure that a provider offers the features that you need before you sign up. Many of these services are proprietary, meaning they’ll only work with the provider that offers them. While this helps to ensure compatibility between different products, it also means you won’t be able to take your favorite product with you if you switch providers. This is more of a factor in the eCommerce sector, where payment gateways are often proprietary products. For an overview of our highest-rated merchant services providers, check out our Merchant Account Comparison Chart.

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The Best First Data Credit Card Processing Alternatives

First Data logo on the websiteIf you’re a business owner searching for a merchant account provider, you’re going to hear about First Data sooner or later. They’re rather hard to ignore, as they’re the largest provider in the United States. The company currently processes 45% of all credit and debit card transactions in the US, either directly or through a network of sub-ISOs and third-party partners. There are several really large providers in the processing industry, but First Data is simply huge.

The company dominates the processing industry in the same way that Amazon and Walmart dominate the retail sector. Unfortunately, First Data’s outsized chunk of the market share is the only thing they have in common with these two retail giants. While Amazon and Walmart have succeeded by offering lower prices than their competitors, First Data is more like the Apple of the processing industry. They provide a high-quality product, but you’ll pay top dollar for it, and they make no effort to lower their prices to accommodate customers of more modest means.

We’ve reviewed First Data and found that their products and services are generally quite good. However, their prices and contract terms are geared toward the top end of the market. If you’re a large business processing over $100,000 per month, they can offer you very competitive rates. They’ll also charge you high account fees, but you’ll still save money overall. Small businesses, on the other hand, will be far more impacted by the higher fees, and won’t qualify for the lowest possible rates. First Data also continues to push outrageously expensive terminal leases through their subsidiary, First Data Global Leasing.

If you’re a small business owner, you’ll want to consider several alternatives to signing up with First Data. Below, we’ve presented four alternative processors that work better for smaller businesses. One (Dharma Merchant Services) is a merchant account provider that uses First Data as their backend processor. This relationship gives you access to many of First Data’s powerful features, but at a much lower cost and with far more personal customer support. The others (Helcim, Fattmerchant, and Chase Merchant Services) offer services similar to First Data but are much more affordable for small businesses. Of these four alternatives, only Chase Merchant Services is a direct processor, able to manage your merchant account and process your transactions.

Overview of First Data

If you’re still thinking about signing up with First Data, you’ll want to read our in-depth review of the company before making a decision. While we’ve given them a decent score overall, the fact remains that their services are geared (and priced) more toward big businesses. They’re not a good deal for smaller companies, and merchants who only occasionally need to process credit or debit card transactions should steer clear altogether due to their high account fees.

First Data’s standard contract imposes a four-year term, with an automatic renewal clause that extends the contract for one-year periods after that. The contract is enforced through an early termination fee (ETF). Rather than charge a fixed amount for breaking your contract, First Data adds your monthly minimum, monthly customer service fee, and monthly account fee together, then multiplies this amount by the number of months remaining in your contract to calculate your ETF. This amount can easily exceed $1000 in the first year or two of your contract – far more than most providers charge for an early termination fee. While the company is sometimes willing to waive this fee altogether, you might prefer to avoid liability for this fee entirely by choosing one of our alternative providers, none of whom charge early termination fees at all.

First Data doesn’t disclose any information about processing rates on their website, but they offer a combination of both tiered and interchange-plus pricing plans. Of these two, tiered pricing is almost always more expensive. Because it brings in more revenue for First Data, you’re likely to be offered this type of pricing if you don’t ask for interchange-plus. Sales representatives have some leeway to negotiate the kind of pricing plan you’ll receive and the rates you’ll pay, but very small businesses or those without an established processing history might have no choice but to accept a tiered plan. You can avoid the uncertainty and the possibility of overpaying for processing by looking into one of our alternative providers. Dharma and Helcim offer fully-disclosed interchange-plus rates exclusively, while Fattmerchant uses a unique subscription-based pricing system that offers very low interchange-plus rates in exchange for a higher monthly account fee. Chase Merchant Services offers a combination of both tiered and interchange-plus rates, but seems more amenable to offering interchange-plus rates to smaller businesses than First Data.

First Data also charges a number of monthly, annual, and incidental account fees to maintain your merchant account. While none of these fees are directly disclosed on their website, you can find information about most of them in the sample contract. While some of these fees may be waived or reduced through negotiation, they’re generally higher than industry averages. If you don’t want to pay extra just to maintain your merchant account, you’ll be happy to know that our preferred alternatives charge lower fees than the industry average. Better yet, Dharma, Helcim, and Fattmerchant fully disclose their fee schedule right on their website. You won’t have to talk to a sales representative or sift through pages of fine print to figure out what your fees will be for your merchant account. Chase doesn’t disclose their fees in such a transparent manner, but merchant feedback indicates that they’re reasonable and in line with industry averages.

While pricing is understandably the most important concern for most merchants when choosing a provider, customer support and service after the sale should also be an important consideration. All our suggested alternative providers offer excellent customer support. First Data has a surprisingly good reputation in this area despite their huge size, but we’ve found that smaller providers generally offer better, more personalized service than the larger companies. With these considerations in mind, let’s take a closer look at our recommended alternatives to First Data:

Dharma Merchant Services

Dharma Merchant Services review

If you want to harness the power of First Data’s specialized services and products, but at a lower cost, take a look at Dharma Merchant Services (see our review). While the company uses First Data as one of its backend processors, they have a completely different pricing structure and a unique corporate philosophy. Dharma Merchant Services takes its name from the term dharma, which is found in several Eastern religions and roughly translates to a “right way of living.” The folks at Dharma take this concept seriously, offering a full spectrum of credit card processing services for a fair and reasonable price. Their fee structure is completely transparent, with all fees and charges disclosed on their website. All merchants receive interchange-plus pricing, and there are no annual fees. They also don’t charge account setup fees, early termination fees, or have a monthly minimum. Fees that they do charge (including PCI compliance fees) are fully disclosed. Dharma is unique in the world of credit card processing companies in that they donate a significant percentage of their profits to charity, living up to their motto “Commerce with Compassion.”

In addition to merchant accounts, Dharma offers a variety of wired and wireless countertop terminals for in-store use, including the First Data FD130. Their terminals are EMV-compliant and support Apple Pay. If you need a full-featured POS system, they offer the popular Clover Mini. Dharma also offers their proprietary MX Merchant system, which integrates a payment gateway, virtual terminal, and mobile processing solution into a single product.

Dharma easily offers the fairest and most transparent fee structure in the industry. In addition to a flat $10.00 per month fee for storefront and eCommerce accounts, transactions are billed according to an interchange-plus pricing model. In-person transactions are charged interchange + 0.25% + $0.10 per transaction, while eCommerce transactions are charged interchange + 0.35% + $0.15 per transaction. For restaurants, Dharma offers a special discounted rate of interchange + 0.20% + $0.07 per transaction. Other additional fees (such as PCI compliance fees) are clearly spelled out on Dharma’s website.

While there is no minimum monthly volume requirement, Dharma openly acknowledges that their full-service merchant accounts don’t make financial sense for low-volume businesses processing less than several thousand dollars per month in transactions. If your business falls into that category, they recommend either PayPal or Square.

Helcim

Helcim logo

“Trust, transparency, and fair pricing” is Helcim’s motto, and they live up to it by providing the most up-front, clearly-explained pricing structure of any of the credit card processing companies we’ve reviewed. A Canadian company, they also have an office in Seattle and provide full support to US-based merchants.

Helcim (see our review) offers a full gamut of services and equipment for both storefront and online businesses. Their website features a variety of EMV-compliant and NFC-capable credit card terminals, starting at $199. Unlike many of their competitors, they encourage US customers to buy their terminals outright, rather than renting or leasing. Helcim will reprogram your current equipment for free if it’s up-to-date. If your current terminal isn’t compatible, they’ll exchange it for a refurbished model for $75.00. 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 option for Canadian merchants.

Helcim has recently introduced their Helcim Commerce system, a web-based solution that processes both online and manual payments on your computer or with a traditional terminal, generating receipts that can be emailed or printed. This system includes a virtual terminal, payment gateway with API, support for recurring billing, billing information vault storage, e-invoicing, shopping cart integration, and hosted payment pages. Best of all, you get all these features for a flat $15.00 per month for retail users or $35.00 per month for eCommerce merchants.

Mobile payments are supported through the free Helcim Commerce Mobile app for iOS and Android. To use the app, you’ll need the Helcim Mobile Reader, which supports magstripe swiping and plugs into your smartphone’s audio jack. Readers cost $30 each.

Helcim uses an interchange-plus pricing model for all merchants. Rates for retail merchants range from as high as interchange + 0.25% + $0.08 per transaction to as low as interchange + 0.10% + $0.05 per transaction, depending on your monthly processing volume. Online rates range from as high as interchange + 0.45% + $0.25 per transaction to as low as interchange + 0.10% + $0.10 per transaction, again depending on monthly processing volume. Helcim doesn’t charge fees for account setup or termination, and PCI compliance is included in the monthly subscription fee. All contracts are month-to-month, with no early termination fees. For small businesses processing at least $1500 per month, Helcim will save you a significant amount of money over First Data through lower interchange-plus rates and lower account fees.

Fattmerchant

Fattmerchant (see our review) is a newcomer to the merchant account industry, starting up in 2014. Focusing on transparency and lower costs for merchants, the company offers several subscription-based pricing plans. Under these plans, you’ll pay a higher monthly fee, but you won’t pay any markup percentage on your processing costs. With a high enough processing volume, this can lead to significant savings in overall costs over traditional interchange-plus pricing plans. Your monthly subscription fee also covers things like PCI compliance, eliminating most of the additional fees that traditional processors like to add to your bill.

With Fattmerchant, you’re encouraged to buy your own terminals, and they’ll re-program them to work with their services for free. They also offer EMV-compliant terminals and POS systems with some of their pricing plans. For mobile payments, the company offers their free Fattmerchant Payments Mobile app, which is currently available for iOS only. An Android version is under development.

Fattmerchant offers a choice between two subscription-based pricing plans. The $99 per month plan is available for businesses that process up to $1 million annually. Larger businesses processing over that amount pay $199 per month for their subscription. With the $99 per month plan, retail merchants pay interchange + 0% + $0.08 per transaction. Enterprise users on the $199 per month plan pay interchange + 0% + $0.06 per transaction. Online and mobile transactions cost interchange + 0% + $0.15 per transaction under the $99 per month plan, and interchange + 0% + $0.12 per transaction under the $199 per month plan. As you might have guessed, the bulk of your monthly subscription fee goes to covering the markup that traditional interchange-plus pricing plans charge. If your processing volume is high enough, you could save quite a bit in processing charges with one of these plans. On the other hand, it’s probably not cost-effective for low volume or seasonal businesses. Fattmerchant doesn’t charge PCI compliance fees, batch fees, or statement fees, as these are all covered by your monthly subscription fee.

While Fattmerchant claims that there are no contracts, what they really mean is that there are no long-term contracts. Their merchant accounts are billed month-to-month, and there is no early termination fee if you close your account.

Fattmerchant offers an intriguing alternative to traditional merchant accounts. Their processing rates are extremely low, although this is offset by the high monthly subscription costs. You’ll want to run the numbers carefully and compare your current processing costs to what you’d pay with them to see if their plans make sense for your business. While mid-sized companies could save as much as 40% over the cost of a First Data merchant account, smaller businesses might find the subscription cost to be too high to save money overall on processing costs.

Chase Merchant Services

Chase merchant services review logo

While all the alternatives to First Data we’ve discussed so far have been smaller providers, Chase Merchant Services (see our review) is one of the larger merchant services providers in the industry. They’re large enough to be a direct processor, much like First Data itself. As such, they can offer you many of the same powerful features that First Data can. However, their pricing and terms are more competitive, and they have a much better reputation for customer service.

Like First Data, Chase doesn’t disclose any pricing information on their website. However, they offer a similar combination of both tiered and interchange-plus pricing rates. Merchant feedback suggests that they’re more likely to provide you with interchange-plus pricing, and that their account fees are reasonable. They also sell their equipment rather than leasing terminals, which is a big plus.

While the company doesn’t appear to offer true month-to-month billing, they no longer include an early termination fee in their contracts. So, while you might still be bound by a three-year contract with an automatic renewal clause, it will be much easier to close your account early, and you won’t be charged a penalty for doing so. As always, we strongly advise you to read your entire contract thoroughly before signing up, and don’t rely on any verbal assurances from sales representatives.

Chase Merchant Services is a good choice for both retail and eCommerce merchants. They offer several EMV-compliant credit card terminals, which you can purchase outright rather than leasing. Their Orbital Payment Gateway is one of the best in the industry. They also have a solid mobile payments system, which uses their Chase Mobile Checkout app (available for both iOS and Android) and an EMV-compliant mobile card reader. Note that, as of this writing, they’re one of the few providers in the industry to offer an EMV-capable mobile card reader.

Chase Merchant Services is also a good choice for companies that do business overseas or process a lot of B2B transactions, offering payments in over 120 currencies and providing the ability to process Level II and Level III card data.

While you won’t find the same high level of transparency that our other alternative providers offer, Chase Merchant Services is a good choice for mid-sized and larger businesses looking for a provider that can match First Data’s services, but at a more competitive price. The company also has a remarkably low complaint volume relative to its size. As a point of comparison, Chase Merchant Services has 37 complaints within the last three years, while First Data has over 1000.

Final Thoughts

With nearly half the market share in the United States, it’s impossible to ignore First Data in your search for an ideal merchant services provider. However, bigger isn’t always better, and First Data is really only a good choice if you’re already very successful in your business and experienced in negotiating with providers. Smaller businesses and merchants who are just starting out should steer clear of First Data and consider one of our preferred alternatives instead.

One of the significant advantages offered by Dharma, Helcim, and Fattmerchant is that they fully disclose their pricing upfront. Not only does this eliminate the need to negotiate with a sales representative, but it also allows you to make a far more accurate estimate of your anticipated processing costs before you ever contact their sales department. While you won’t be able to do this with Chase Merchant Services, a price quote from them will allow you to make an accurate estimate of how their costs stack up against our other, more transparent, providers.

In selecting between these four alternatives, Dharma and Helcim are best for nonprofit businesses, as they offer discounted pricing for qualified nonprofits. Dharma is also an excellent choice for restaurants, being one of the few providers in the industry to provide lower pricing just for restaurant owners. Helcim is a great all-around choice for small or newly-established businesses. Fattmerchant can offer the most significant savings over more traditional providers to businesses that are large enough to afford their subscription rates. Finally, if your business needs the power of a direct processor and you can negotiate a good deal, Chase Merchant Services is a great alternative to First Data. If your business is too small to afford any of these alternatives, we recommend that you look into a payment service provider (PSP), such as Square or PayPal.

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Team Bio Series — Frank Kehl (The Mountain Climber)

This week on “Meet The Merchant Maverick Team” — the world’s least conflict-driven reality show — we’ll get to know Frank Kehl, one of our merchant accounts writers. Frank gets the award for “most amazing careers outside of Merchant Maverick,” but what else is interesting about him? (Hint: a lot.)

Name: Frank Kehl

Title: Merchant accounts writer

Hometown: Berwick, Pennsylvania

Current city: Paso Robles, California

Education and background: I have a Bachelor of Science in Psychology from Penn State and a Juris Doctorate degree from The Ventura College of Law. Prior to joining Merchant Maverick, I served as an officer in the United States Air Force and California Air National Guard for 28 years. I flew as a navigator on both the B-52 and C-130 aircraft, and ended up logging a little over 7500 hours of flying time around the world.

Merchant Maverick department/specialty: I write about merchant accounts, payment gateways, and, occasionally, mobile payment systems.

Proudest professional moment: Passing the Bar Exam here in California after graduating from law school. It was a three-day exam and only has about a 40% pass rate, so I felt really good about getting through it on the first try.

Favorite Merchant Maverick post/moment/opportunity: The 5 Best Small Business Credit Card Processing Companies. It was the first post I wrote when I first started at Merchant Maverick, but it’s generated a lot of interest and I still get comments on it almost every day.

What do you do when you’re not working?: When I was young and single, I had quite a passion for mountain climbing. I’ve climbed a lot of the classic peaks, including Mount Whitney and Mount Shasta here in California, as well as Mount Rainier, Pico de Orizaba in Mexico, and Kilimanjaro. These days, it’s mostly family hikes and the occasional camping trip here on the Central Coast or up in the Sierras.

What literary character do you identify most with and why?: My son has recently shown a strong interest in The Lord of the Rings movies, so I’m going to say Gandalf. I just need a staff…

Favorite song: I’m not sure that I have a single favorite, so I’ll give a shout-out to ‘Lawyers, Guns, and Money’ by Warren Zevon. It’s funny as hell, and the lyrics are rather timely. Check it out!

Favorite classic movie: I suppose I should pick something serious and inspirational. Nah. Monty Python and the Holy Grail still cracks me up.

What is your ideal dinner out?: Getting a sitter and having dinner with just my wife. It’s usually a ‘romantic dinner for three’ these days, unfortunately.

What skill have you always wanted to learn?: In retrospect, computer science might have been a good major to choose in college. I took a few programming classes in school, but I’ve never found the time to go back and brush up on my coding skills since then.

If you could travel back in time to any stage in your life and observe, where/when would you go?: Just observe? No do-over? Then probably the first few years of my life, since I don’t remember very much about them.

Mac or Windows?: I’ve been a Windows guy since back when they were called “IBM PC-compatible.” However, all my mobile devices are from Apple. It’s the best of both worlds, I think.

You’re given an unlimited budget at any retail establishment. Where do you go and what do you buy?: I’ve already lived out this fantasy, but without the unlimited budget. Let’s just say I’ve built up some pretty impressive dividends at REI over the years. You can never have too much gear.

I think it’s safe to say that Frank is the coolest member of the Merchant Maverick team. An ex-Air Force navigator who has climbed Kilimanjaro? Please. Come on Frank, you’re making the rest of us look lame.

Interested in reading about other members of the Merchant Maverick staff? Check out our team interview series.

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