Business Credit Cards For People With Bad Credit

 

business card for bad credit

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

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

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

Capital One® Spark® Classic for Business

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

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

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

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

Wells Fargo Secured Credit Card

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

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

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

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

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

Credit One Bank® Platinum Visa® for Rebuilding Credit

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

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

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

Green Dot primor® Visa® Gold Secured Credit Card

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

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

OpenSky® Secured Visa® Credit Card

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

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

Applied Bank® VISA® Business

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

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

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

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

Final Thoughts

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

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

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The Cheapest Credit Card Processing Companies

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

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

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

The Overall Cheapest Credit Card Processing Companies for 2018

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

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

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

Types Of Providers

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

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

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

How We Chose

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

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

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

Square Payments

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

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

 

Cheapest Mobile Credit Card Processing Company

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

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

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

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

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

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

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

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

PROS:

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

CONS:

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

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

Payline Data

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

 

Cheapest Merchant Account Provider

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

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

For more information, see our complete Payline Data review.

CDGcommerce

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

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

Good Option for Online Payment Processing

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

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

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

Simplified Pricing:

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

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

PROS:

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

CONS:

  • Only available to US-based merchants

For more information, see our complete review here.

Dharma Merchant Services

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

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

Dharma Merchant Services review

Good Option for Nonprofits and B2B Payments

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

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

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

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

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

PROS:

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

CONS:

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

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

Helcim

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

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

 

Good Option for Canadian Businesses

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

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

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

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

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

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

PROS:

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

CONS:

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

For more information, see our complete review here.

Popular (But Less Reliable) Inexpensive Options

PayPal

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

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

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

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

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

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

PROS:

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

CONS:

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

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

Stripe Payments

Stripe logo

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

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

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

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

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

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

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

PROS:

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

CONS:

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

For more information, see our complete review here.

Final Thoughts

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

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

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

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

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

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

The post The Cheapest Credit Card Processing Companies appeared first on Merchant Maverick.

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The Complete Guide to B2B Payment Processing

B2B Payment Processing

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

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

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

What Are B2B Transactions?

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

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

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

Merchant Category Codes (MCC Codes)

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

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

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

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

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

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

Data Levels

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

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

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

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

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

  • Merchant DBA name
  • Transaction amount
  • Billing zip code

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

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

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

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

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

B2B Processing Rate Discounts

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

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

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

Visa Level II & III Interchange Rates - 2018

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

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

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

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

How Processing Rate Plans Affect B2B Processing

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

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

B2B Software Applications

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

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

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

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

Final Thoughts

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

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

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

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How To Get Small Business Loans For Restaurants

Restaurants have a (somewhat unfair) reputation for being especially risky businesses that are hard to get off the ground. The good news is that restaurant business loans aren’t especially hard to find, even if you’re looking for a loan to open a restaurant.

Want to know how to get restaurant financing or a loan to open a restaurant? Below, we’ll look at how to finance your restaurant with working capital. If you’re specifically looking to finance restaurant equipment, check out our companion post on restaurant equipment leasing.

Comparison Chart

fundation logo
Read Review Read Review Read Review Read Review Read Review
Borrowing Amount  $10K – $5M $10K – $5M $2K – $100K $20K – $500K $1K – $5M
Term Length Varies by product Varies by product 3 – 36 months 1 – 4 years Varies by product
Required Time In Business Varies by product Varies by product 1 years 12 months 6 months
Required Sales $1.50 for every $1 borrowed $100K/yr $10K/mo
Required Credit Score 640 670 620  660 550

 

kiva logo avant logo
Read Review Read Review Read Review Read Review Read Review
Borrowing Amount  $5K – $500K $5K – $500K $6K – $5M $25 – $10K $1K – $35K
Term Length 3 – 36 months 13 – 52 weeks 6 – 12 months 3 – 36 months 2 – 5 years
Required Time In Business 6 months 9 months 6 months N/A N/A
Required Sales $10K/mo $42K/yr $120K/yr N/A N/A
Required Credit Score 550 550 600  N/A 600

Where To Get Restaurant Business Loans

Most traditional and alternative lenders, at least on paper, offer restaurant lending services. Typically, your ideal option for restaurant funding is a bank or credit union with whom you have an established relationship. In most cases, they’ll offer the best rates and terms.

If you or your business are too risky for a traditional lender, however, there are still restaurant financing options in the form of alternative lenders.

The Cost Of Restaurant Financing

Before we look at your restaurant funding options, you want to be able to compare the offers you might come across.

Here are some of the data points to consider when comparing restaurant loans:

  • Term Length: The amount of time you have to pay back your loan. The longer the term, the higher your interest or factor rate will usually be.
  • Interest/Factor Rate: A percentage or decimal multiplier that determines the amount of money you have to pay back. For short-term loans, this may be a flat fee rather than accumulate over time.
  • Origination Fee: This is a closing fee some lenders charge in addition to interest. It’s either a percentage of the amount you’re borrowing (1% – 5% is typical) or a flat fee. In most cases, it will be deducted from the amount of money you receive from the lender.
  • Administration Fee: This is a fee charged to maintain or set up your account. It may be a percentage or a flat fee. Sometimes charged in place of an origination fee.
  • APR: Annual percentage rate represents what your effective interest rate over a year would be. This can help you determine how expensive a product is relative to another.
  • Payment Schedule: If you’re used to monthly billing, you may be surprised to hear that some lenders expect payments weekly or even daily. May sure you’re prepared for whatever terms you accept.
  • Collateral: An asset, property, or cash deposit used to secure a loan. Not all loans require collateral.

Types Of Restaurant Business Loans

Restaurant loans and related products come in a few different forms. When you’re looking for a lender, you’ll also want an idea of the type of financial product you’re seeking. All of these products will get you the money you’re seeking, but with different terms. Some are cheaper; others are more versatile. Some are more available to applicants with bad credit.

  • Term Loans: Term loans are for a specific amount that, once received, is paid off in regularly scheduled installments (they’re also sometimes called installment loans). Medium and long-term loans usually accrue interest over time while short-term loans have flat fees.
  • Lines Of Credit: Lines of credit are a bit like credit cards. You’ll be approved for credit up to a set limit. You can draw on your account as often as you want as long as you stay below your limit, paying interest only on the outstanding balance.
  • SBA Loans: As is the case for other business types, there are Small Business Administration loans for restaurants. These loans are partially guaranteed by the SBA, allowing you to access better rates. Just bear in mind that the application process is usually more complicated and often slower.
  • Merchant Cash Advance: MCAs aren’t technically loans, but can serve as the financial product of last resort for businesses with bad credit but steady credit card revenue.
  • Equipment Leasing: If you’re looking to finance restaurant equipment, you also have the option to lease it, which you can read about in more detail in our restaurant equipment financing article.

Restaurant Loans For Start-Ups

If you’re looking for start-up restaurant financing, you’ll face a narrower band of options, but you aren’t completely out of luck. Conservative lenders may still consider approving a loan to start a restaurant if you have a good business plan and credit and are able to put some of your own money into the mix. Additionally, some alternative lenders offer loans specifically geared toward brand new businesses.

Restaurant Loan Providers

Not sure where to start looking for small business loans for restaurants? Here are some lenders to consider.

For Good Rates

Wells Fargo

Borrower Requirements:
• Credit score of 640 or higher
Read Our Review

 

As big banks go, Wells Fargo is one of the easier institutions for small businesses to work with. Due to their size and resources, they can offer a wide range of products for restaurants of any size. Their credit restrictions are higher than those of most of alternative lenders and they require you to show strong month-to-month revenue, but they’re more accessible than many of their conservative competitors.

Chase

Borrower Requirements:
• Excellent credit
Read Our Review

 

Chase has a reputation for offering some of the best business loan rates out there. The trick will be qualifying for them. Despite its size and prominence, Chase is very conservative about who they lend to. You’ll also need to have a branch near you as you’ll need to go to your local branch to apply.

StreetShares

Borrower Requirements:
• 1 year in business
• 620 credit score
Get Started With StreetShares

Read Our Review

 

If you don’t have a bank in your area with whom you’ve built a good relationship, you can still find good rates with online lenders. StreetShares is a bit more selective than many of their competitors, but they offer loans and lines of credits at reasonable rates with no collateral.

Fundation

fundation logo
Borrower Requirements:
• 1 year in business
• 660 credit score
• $100K/yr
Get Started With Fundation

Read Our Review

 

Fundation is another option for borrowers with good credit who would prefer (or have) to avoid dealing with a traditional bank. Fundation offers both installment loans and lines of credit with no collateral needed. Just be prepared for a slightly lengthier application process than you’ll typically experience with alternative lenders.

For Borrowers With Bad Credit

Lendio 

Borrower Requirements:
• 6 months in business
• 550 credit score
• $10K/month
Get Started With Lendio

Read Our Review

 

Lendio is an online lending platform that matches businesses with lending partners. This is a handy service for restaurant owners who don’t have a lot of time to compare loans on their own, or who have bad credit. Lendio’s pool of potential lenders is big enough that you’re more likely than not to find one willing to work with you, even if you haven’t been in business very long. If you’re looking for a loan to open a restaurant, however, you may have to look elsewhere.

OnDeck

Borrower Requirements:
• 12 months in business
• 500 credit or higher
• $100K/year
Get Started With OnDeck 

Read Our Review

OnDeck is one of the bigger names in alternative online lending and a solid choice for borrowers with poor credit but decent cash flow. Just be aware that their factor rates use a per month formula rather than a flat fee, which can make them a little bit difficult to compare to many of their competitors.

OnDeck offers installment loans and lines of credit.

LoanBuilder

Borrower Requirements:
• 9 months in business
• 550 credit or higher
• $42,000K/year
Get Started With LoanBuilder 

Read Our Review

LoanBuilder doesn’t offer as many products as some of the other lenders on the list, but they do give you the freedom to tweak the terms of a short-term loan to your liking. Combined with relatively low qualifications and integration with PayPal’s infrastructure, working with them should be pretty painless.

BlueVine

Borrower Requirements:
• 3 months in business
• 530 credit or higher
• $100,000K/year
Get Started With BlueVine 

Read Our Review

If your company is profitable, but you haven’t been in business long enough to build up a good credit score, BlueVine might be the lender for you. Rather than offering installment loans, BlueVine gives you the option of getting a line of credit or, if you do a lot of B2B business, invoice factoring. Just be aware that their lines of credit aren’t available in every state.

For Borrowers Starting Their Restaurant

Kiva

kiva logo
Borrower Requirements:
• A strong professional and social network
Read Our Review

 

If you’re coming up blank with ideas about how to get a loan to start a restaurant, Kiva is one possible solution. Kiva is a nonprofit microlender that operates worldwide. Rather than measure your income and credit, Kiva uses a process called “social underwriting” to measure your community standing and character. Best of all, the loans have zero interest.

So what’s the catch? Well, Kiva uses a type of crowdfunding to finance your loan, which means you’ll be waiting longer to get your funds than you would with most other lenders. You’ll also be limited to a maximum of $10,000, which may not cut it for your business plan. If you have some of your own money to put into your new business and just need to make up that last few thousand dollars, though, it’s worth a look.

Avant

avant logo
Borrower Requirements:
• Credit score of 600 or higher
Read Our Review

 

Another way around the time in business restrictions you’ll often encounter when seeking new restaurant business loans is to forget the “business” part and get a personal loan. While you won’t be able to borrow the large amounts that you can with a business loan, they can get you a modest ($1,000 – $35,000) amount of money with which to start a restaurant.

Note that you’ll still have to show a strong income relative to the amount of money you’re seeking. Additionally, Avant cannot currently lend to individuals in Colorado, Iowa, Vermont, or West Virginia.

Final Thoughts

If you didn’t find what you were looking in our examples above, don’t fret! We’ve barely scratched the surface of the resources restaurants can tap to find funding. If you don’t have much in the way of collateral, you can try to get an unsecured business loan.

If you’re looking to finance restaurant equipment, check out our resources on leasing and equipment loans. Good luck hunting for restaurant business loans! Do your research and you’re sure to find something that fits your needs.

The post How To Get Small Business Loans For Restaurants appeared first on Merchant Maverick.

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15 Best Touchscreen POS Systems

touchscreen cash register

Touchscreens are everywhere, and the point-of-sale industry is no exception. Touchscreen POS systems are more intuitive and easy to learn than traditional legacy POS software, and many cloud-based systems employ the same kind of iPad and Android tablets that your employees already use every day at home. Whether you’re running a restaurant, a retail outlet, or another type of business, a modern touchscreen POS system helps keep your sales moving and your business data secure. Besides simple point-of-sale features, most of these cloud-based systems also have advanced reporting capabilities, business management features, and integrations with other popular business software.

Arguably, the only problem with touchscreen point of sale systems is that there are so many different products to choose from. Do you go with a proprietary-hardware solution like Clover, an Android POS system like Toast, an iPad POS like Revel, or an open-source POS like Vend? In my opinion, the most important consideration when choosing a touchscreen POS is not just iPad vs. Android. More important are your industry type, your specific business needs, and user reviews. To help you get started in your search, I’ve put together this list of my favorite highly rated touchscreen POS systems, sorted by industry. Most of these are iPad-based, though I included some Android and open-source options as well.

To make it easier to find the best touchscreen system for your business type, I’ve sorted the following 15 POS systems into restaurant, retail, and hybrid (systems that can be used for either restaurant or retail) categories. Be advised that the order in which I’m listing these excellent systems does not indicate their ranking.

Restaurant POS Systems

The following restaurant point of sale systems can be used by just about any type of food industry business, from drive-thrus to fine dining:

1. Breadcrumb

  • iPad POS for restaurants
  • Pricing starts $99/month/location
  • Must use with Upserve payments (interchange plus $0.15 fee)
  • Multi-location support
  • Online ordering

breadcrumb by upserve pos logo

Cloud-based Breadcrumb POS by Upserve (see our review) is a highly versatile restaurant POS, suitable for full-service restaurants, take-out, delivery, bars, and multi-location eateries. With Breadcrumb’s acquisition by Upserve in 2016 (Breadcrumb was previously owned by GroupOn), the company has expanded its restaurant management infrastructure, making this POS a complete business management system for just about any type of restaurant.

Breadcrumb is not the cheapest restaurant POS in town, but nor is it short on features. Some of the system’s strongest features include table management, employee management, customer management, and tableside ordering. Breadcrumb also recently teamed up with GrubHub to offer online ordering and delivery (at the $249/month/location “Pro” subscription level).

One thing Breadcrumb users really like about this system is that it is specifically designed with restaurant employees in mind. While we find Breadcrumb to be a very solid all-around POS/restaurant management system, a couple potential downsides are 1) you can’t use your own merchant account (you need to use Upserve Payments) and 2) there are occasional issues with outages. Learn more in our Breadcrumb by Upserve review.

2. Toast

  • Android POS for restaurants
  • Pricing starts at $79/month
  • Must use with Toast credit card processing
  • Multi-location support
  • Exceptional customer service

toast pos logo

Android-based Toast POS (see our review) is another robust, cloud-based POS system for restaurants. It can accommodate any size or type of restaurant, and features like tableside ordering, labor management, and inventory management make Toast a force to be reckoned with on both the front and back end. Toast is intuitive and easy to use for servers, while also providing detailed reporting, customer data, and menu options.

Although we love Toast’s strong feature set and the fact that it uses Android tablets instead of iPads (cheaper hardware costs, less of a theft risk), keep in mind that if you want every single feature Toast offers, it’s gonna cost ya. For example, online ordering, table management, delivery management, and gift card support all carry an extra monthly charge. You also can’t choose your own credit card processor to use with this POS and must use Toast’s in-house processor (which Toast users seem to like, at least). What really sets Toast apart from a lot of other cloud-based POS systems, however, is their excellent customer support – an indispensable quality in any POS, given the inherent complexity of a system that lets you take payments, process orders, and manage almost all aspects of your business.

3. TouchBistro

  • iPad POS for restaurants
  • Pricing starts at $69/month
  • Compatible with multiple payment gateways
  • Best for single-location businesses
  • Locally installed system (not cloud-based)

touchbistro POS

Elegant and easy to use, Ontario-based TouchBistro (see our review) has the distinction of being the top-grossing POS Application on Apple’s App Store in over 35 countries. TouchBistro is one of the few systems on our list that, while tablet-based, is not cloud-based; rather, your store data is stored locally on your restaurant’s iPad or Mac.

TouchBistro is not a full “restaurant management system” like Toast or Breadcrumb, but it’s good at what it does, and can readily handle the POS needs of just about any size/type of eatery, from a food truck to a full-service restaurant. Since TouchBistro stores data on local servers, it’s probably best for single-location restaurants (if coordinating data between locations is important to you). Keep in mind, though, that you will need an internet connection to process credit cards.

Some great features of TouchBistro include table management, menu management, kiosk option, tableside ordering, split-payment option, bar tabs, and sales reports. Customer service doesn’t seem to be as responsive as some users would like, though 24/7 support via phone and email is included in the standard cost. TouchBistro is compatible with Mercury, Cayan, Moneris, PayPal and several other gateways.

4. Lavu

  • iPad POS for restaurants
  • Pricing starts at $69/month with annual contract or $79/month without
  • Can use in-house payment processing or BridgePay, Heartland, PayPal, Nets, or Vantiv Integrated Payments
  • Multi-location support
  • Option to install in-house server backup in case you lose your wireless connection

lavu pos logo

Lavu (see our review) is yet another highly popular iPad POS system for restaurants, used in more than 20,000 restaurant terminals across 88 countries.

Lavu is not the most advanced restaurant POS there is, but it is equipped to handle the needs of most small-to-medium restaurants (or cafes, bars, coffee stands, etc.). Some features that make this POS system a hit include its customizable table layout and menus, easy employee management, advanced menu management, and useful integrations. Lavu also has renowned customer service, which is included in the standard monthly fee. You can add both a loyalty program and gift cards onto your subscription for just $40 a month.

Customers have complained about occasional glitches with the Lavu software, but the company releases frequent updates to solve any bugs or complaints. Affordable and highly customizable, Lavu is a strong and growing contender in tablet POS systems for restaurants.

Retail POS Systems

The following POS systems are suitable for retail store establishments, such as clothing boutiques, toy stores, electronics shops, and many others.

5. Lightspeed Retail

  • iPad and web browser POS for retail
  • Pricing starts at $99/month (billed annually)
  • Integrates with Vantiv Integrated Payments (Mercury), Cayan, and izettle
  • Multi-location support
  • Bike rental store add-on

lightspeed retail pos logo

Lightspeed Retail (see our review) is one of the most fully featured tablet POS systems out there for retail. While Lightspeed can support up to enterprise-level size businesses, this cloud-based system is ideal for small and medium-sized businesses that want powerful functionality — think unlimited inventory, integrated eCommerce, work order management, and customer relationship management. Lightspeed Retail also makes it easy to transfer inventory between different store locations.

Lightspeed is among the pricier systems on this list, and various integrations to extend its functionality, such as eCommerce, can make it even more expensive. So, it’s not going to be the right POS every business. But if you want a super robust POS that you can operate from any desktop browser (meaning, you don’t have to buy expensive iPad registers), Lightspeed Retail might just be right for you. The POS is especially suited for apparel businesses but can accommodate virtually any type of retail setup, including rentals.

Note that there are several Lightspeed products in addition to Lightspeed Retail. These include Lightspeed Onsite, Lightspeed Restaurant, and Lightspeed eCommerce.

6. Vend

  • iPad and web browser POS for retail
  • Pricing starts at $69/month
  • Compatible with Vantiv, PayPal, and Square
  • Multi-store support
  • Apple Pay-capable

vend pos logo

Vend (see our review) was actually the very first web browser-based POS system when it was introduced back in 2010. Today, it is still a big force to be reckoned with in the retail POS world, used by more than 20,000 businesses in 100 countries.

Cloud-based and scaleable for retail stores both small and large, Vend uses an HTML5 browser (such as Google Chrome), or an HTML5 iPad app, for all operations. If the internet goes down, Vend can keep operating locally using the cache and will sync back up with the cloud once the connection resumes. Being browser-based means you can run Vend on a PC, Mac, or iPad. Some features on Vend we really like include customer management, eCommerce, built-in loyalty program, inventory management, and a good selection of third-party software integrations. Vend doesn’t have as much functionality as a POS like Lightspeed or Revel – for example, Vend doesn’t have item modifiers – but it is cost-effective and a good choice for a store (or even chain of stores) that doesn’t need every single “business management” feature out there.

Note that Vend’s email support is free, but 24/7 phone support costs an extra $19 per month, unless you have the multi outlet subscription ($199/month billed annually).

7. Shopify POS

  • iPad POS system for retail (Also supports mobile sales on iPhone and Android phones)
  • Pricing starts at $9/month for mobile and Facebook sales, or $54/month to also include Retail Package for in-store sales
  • Integrates with Shopify Payments and many outside processors
  • Multi-store support
  • Instant syncing with your Shopify online store

shopify pos logo

Shopify (see our review) started as an online shopping cart for businesses who wanted an easy way to sell their products online. Eventually, Shopify extended their offering to include a POS system for in-person sales. As you might expect, Shopify POS does a great job integrating online and offline sales for retail businesses that also do eCommerce with Shopify.

Shopify’s pricing structure is a little convoluted, but the most important thing to know is that if you have a brick-and-mortar store, you’ll need to purchase the Retail Package, which costs $45/month on top of whatever other package you select — the $9/month Shopify Lite plan, the $29/month Shopify Basic plan, or another higher-tier plan. The Basic plan plus the Retail Package will cost $74/month and provide pretty much everything most retailers need for both online and in-store sales. You also have the option to get better credit card processing rates at higher price tiers.

Most Shopify POS features are comparable with other top iPad retail solutions, and they have strong customer service too. The thing that really sets Shopify apart is their seamless online/offline sales integration. So, if you already use Shopify for online sales or would like to, this might be the right POS for you.

8. Quetzal

  • iPad POS for independent fashion retailers
  • Pricing starts at $75/month per location
  • Integrates with Evo Payments International, Velocity, CardSmith, National Discount Merchant Services, Vantiv, and Moneris
  • Multi-store support (max. 10 locations)
  • Clothing/shoe matrix

With its exclusive focus on fashion retailers, Quetzal (see our review) is an iPad POS that’s tailor-made (ha-ha) for stores that sell clothing, shoes, and/or accessories. This aesthetically appealing system has a streamlined iOS aesthetic; the interface seriously looks like it could have been designed by Apple itself, and Quetzal even has an iTunes app that lets managers check in on their store from their Apple Watch. Quetzal also uses a compact, sleek register, Star Micronics’ mPOP system.

Of course, functionality is more important than aesthetics when it comes to a POS, but Quetzal doesn’t come up short in terms of function either. We like the clothing/shoe matrix, in-depth sales reports, “tag cloud,” loyalty program, employee leaderboard, and “sales thermometer,” in particular. At only $75/location price is right as well, especially as there is no charge for additional users or terminals. A couple downsides are that after setup and installation, customer support costs extra, and also there is no QuickBooks integration.

While it doesn’t have a huge marketshare of the overall retail POS segment, Quetzal’s niche focus makes it a functional, affordable, and visually appealing choice for emerging independent clothing brands.

Hybrid POS Systems

These POS systems are flexible in that they are equally suited to retail and restaurant environments. Service-based industries such as beauty salons, rental businesses, and hospitality businesses also often use hybrid POS systems.

9. Shopkeep

  • iPad POS for retail and quick serve restaurants
  • $69/month/register ($29/month/register for fourth register and beyond)
  • Integrates with Shopkeep Payments and outside processors
  • Multi-store support
  • Matrix inventory feature

shopkeep pos logo

Shopkeep (see our review) is an affordable and enjoyable-to-use POS system that runs locally from an iPad and syncs data back to the cloud. Shopkeep is used in both retail and restaurant environments, and while it’s more feature-rich on the retail side of things, it will more than meet the needs of most quick-service/coffee carts/food truck businesses.

Some things about Shopkeep we especially like include its comprehensive register functionality, in-depth reporting suite, mobile app to view your business stats on the go, and unlimited inventory matrix (which includes raw goods management). Shopkeep also offers unlimited 24/7 customer support (though premium phone costs an additional $30 per month). This POS integrates with MailChimp for email marketing, QuickBooks for accounting, and BigCommerce for eCommerce.

Shopkeep is a wise choice for a small-to-medium retail business or restaurant that doesn’t need extensive restaurant-centric features like table management. Note that ShopKeep is currently only available on iPad but is in the works to make its service available on the Clover Station via a recent partnership with First Data.

10. Revel Systems

  • iPad POS for retail, restaurants, hospitality, and more
  • Supports numerous payment processors
  • Custom pricing based on industry and individual business needs
  • Multi-store support
  • Ethernet internet connection

revel systems logo

Revel Systems (see our review) is arguably the holy grail of iPad POS systems. Revel is powerful enough that franchises like Cinnabon use it, and flexible enough that it can support businesses in virtually any industry, from brewpubs to gas stations. It’s also the only iPad POS system that offers a “wired” ethernet connection for a faster an more reliable internet.

Revel POS pricing is determined by which industry-specific package you choose, but depending on your needs, you can expect to pay about $80 to $200/month per location. Myriad add-on applications and integrations extend Revel’s functionality to make it do just about anything you can imagine, though this naturally increases the system’s cost as well. Some of Revel’s more impressive features include its kiosk mode, digital menu board, and ability to accept mobile payments (including ApplePay, PayPal, Bitcoin, and others). Because Revel is so powerful and customizable, initial system setup can take a while.

Revel can manage multiple locations and up to 500,000 SKUs. It is optimized for mid-sized businesses, particularly busy quick-serve restaurants that can afford one of the best iPad POS’s money can buy.

11. ERPLY

  • Web browser/iPad/Android/Windows POS for retail and restaurants
  • Pricing starts at $200/month/location
  • Compatible with all big-name payment processors, (though currently promoting PayPal as a preferred processor)
  • Multi-store support
  • Strong inventory features

erply-logo

ERPLY (see our review) originated in 2009 as a retail POS system, though it has eventually expanded support to food service too, now offering food-centric features such as kitchen printing and sell by weight. Whether you run a retail business or restaurant, ERPLY is especially powerful in the inventory management department, with functions like automated ordering, supplier management, and multichannel (online, in-store, phone, email) inventory tracking and transfers.

ERPLY gives you a lot of flexibility as a business owner. Using just about any payment processor under the sun, you can accept traditional swipe, chip card, and mobile payments, including Apple Pay, PayPal, and Android Pay. You also have the option to use pretty much whatever device you want, even without a reliable internet connection, or run ERPLY right from your browser.

It’s actually kind of hard to come up with a feature ERPLY doesn’t have. An open API architecture allows customizability and the ability to develop your own software integrations and customize it to meet your needs (or, have ERPLY make these integrations/customizations for you). Being such a versatile piece of software, it’s one of the pricier cloud-based POS systems. If you have a larger or franchise business, or you just want the flexibility and horsepower this system offers, you might try ERPLY out for size.

12. talech

  • iPad POS for retail and restaurants
  • Standard subscription is $62/month/location (billed annually upfront)
  • Compatible with multiple payment processors
  • Multi-store support
  • Kiosk mode

talech POS logo

talech (see our review) is a smaller player in the iPad POS world, but with their affordable price point and impressive set of more than 100 features, they can certainly give their larger competitors a run for their money. talech is used by both retail and restaurant businesses, but restaurants, in particular, will find a lot of useful features, including table management, coursing, and the ability to split the check by table positioning (seat).

Advanced inventory management, self-service (kiosk) mode, and the ability to generate purchase orders are some more features that set talech apart from some of its competitors in both the retail and restaurant spheres. talech also made it possible for restaurant owners to integrate an online ordering system so that you can manage in-person and online orders all from your iPad POS terminal.

One caveat: being 100% cloud-based, talech is unable to take credit card payments in the event of a WiFi outage, and you also won’t be able to access your back office. However, it’s possible to circumvent such issues by getting a specialized backup router.

13. Bindo

  • iPad POS for retail and restaurants
  • Custom pricing depends on industry and number of SKUs
  • Works with nearly any payment processor
  • Multi-location support
  • “Favorites” grid displays most popular items as register buttons

Bindo POS logo

Bindo (see our review) is a hybrid POS whose varied and easy-to-use features make it suitable for retail or restaurant environments. A reasonable pricetag, clean interface, robust eCommerce storefront, and thoughtful inventory reporting suite make this an especially versatile touchscreen POS option. While fewer than 5,000 businesses use new-ish POS, customer support (included at all price levels) is responsive to these customers’ needs and tech support (also included) issues frequent updates to fix any software glitches.

As with most other fully cloud-based systems, you’ll need fast internet to experience the best functionality. More than one customer has also complained about being stuck in a leasing contract with Bindo for equipment they were not satisfied with (though in general, we do not recommend leasing POS equipment). Since Bindo works with most standard iPad POS equipment and offers a 14-day free trial, it is likely that you’ll be able to test out Bindo using your current equipment before you commit to purchasing.

14. SalesVu

  • iPad POS for restaurant and retail
  • Basic restaurant and retail packages start at $75/month
  • Works with Vantiv, Evo, and WorldPay
  • Multi-location support
  • Allows items to be charged by decimal and fractional quantities

SalesVu (see our review) is another affordable and feature-rich iPad POS system that can be used in many industries, including service industries and traditional retail and restaurant environments. Since this system allows you to ring up transactions in fractional amounts, it’s especially useful for hourly professionals such as therapists or dog walkers, and businesses that sell items based on weight, like fro-yo shops. SalesVu also has an appointment booking system that health, beauty, and hospitality businesses will appreciate. Like the majority of touchscreen POS’s on this list, SalesVu is best suited for smaller to medium-sized businesses, though it has the capacity to scale up if you open a second or third location.

SalesVu runs locally on iPad registers and syncs all your data to your account in the cloud. Though you can use the SalesVu POS app without an internet connection, you’ll need internet to process credit card transactions; however, you can use a specialized router with a 4G wireless modem with a data plan so that you can switch to 4G without any interruption if your main internet connection goes down.

Another cool thing about SalesVu is that it will run on an iPhone, allowing you to take mobile sales on the go. The basic mobile POS app without any frills is free, similar to Square. Which brings us to the final favorite touchscreen POS on our list …

15. Square Register

  • Proprietary POS hardware with free cloud software for retail, restaurants, service industry
  • Hardware costs $49/month for 24 months or $999 one-time payment
  • In-house credit card processing is 2.5% + $0.10/transaction or lower for high-volume businesses
  • Multi-location support
  • Best for businesses with average transaction of $40 or higher
  • Ethernet support for more reliable internet connection

While Square‘s popular free POS mobile app has been around for some time, the Square Register is a relatively new product, released in October 2017. There are still no monthly service fees, but rather than selling on your smartphone or iPad, you’re ringing up sales on fully featured POS hardware that you purchase as a complete package from Square. With a concept similar to that of Clover Station (which I didn’t include on this list because it is locked into First Data’s less than stellar payment processing), the Square Register is sleek, proprietary POS hardware that works right out of the box, complete with a customer facing screen and built-in credit card terminal. The Square Register hardware itself costs $49/month for 24 months, or you can simply purchase the system outright for $999.

Note that Square Register users have a different credit card processing rate than the standard Square mobile processing rate. With Square Register, businesses are charged 2.5% + $0.10 on every transaction, vs. 2.75% (+ $0.00) with regular Square. This pricing setup may at first blush look like Square Register has cheaper rates, but if you have a lot of small transactions you’ll actually pay more with Square Register than with the Square mobile POS. For this reason, Square Register is a more appropriate solution for larger businesses with average ticket sizes of $40 or higher. Larger businesses processing more than $250,000 per year and with an average ticket size of $15 or higher may also qualify for lower rates.

As for the specific business type, 100% cloud-based Square can work with just about any industry. Square has a built-in 24/7 online booking system for service-based industries, as well as restaurant-centric features such as suggested tipping amounts and online food orders.

Finally, Square Register is not to be confused with Square’s iPad-only, $60/month solution, Square for Retail (see our review).

Final Thoughts

When sorting through your options for touchscreen POS systems, the plethora of choices may at first seem overwhelming. But that’s why we’re here to help you sort out the stinkers and lead you to the very best tablet point of sale systems. And really, you can’t go wrong with any of the POS software systems on this list. Just check that the touchscreen POS system you’re considering meets your business’s needs in terms of functionality and budget, and test it out with a free trial before purchasing. And of course, don’t forget to check user reviews and complaints on the BBB and other consumer review sites. If you need further help choosing a touchscreen POS system, please contact me in the comments section and I’ll give you some further guidance.

The post 15 Best Touchscreen POS Systems appeared first on Merchant Maverick.

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Complete Guide To Credit Card Machines And Terminals

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

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

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

Credit Card Machines

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

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

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

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

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

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

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

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

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

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

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

Virtual Terminals

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

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

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

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

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

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

From there, you will generally have two options.

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

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

Merchant Services

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

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

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

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

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

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

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

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

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

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

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

Your POS System

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Final Thoughts

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

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

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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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Loans For Freelance Businesses: Your 13 Best Options

loans for freelancers

Freelancer. The very word evokes freedom (and lances). If you’re a self-employed freelancer, I’m sure I don’t have to lecture you about the perks and drawbacks of running a freelance business. You probably enjoy the independence — the feeling of freedom that comes from choosing your own work assignments and making your own financial choices without a boss looking over your shoulder.

However, you’re probably less than thrilled with the difficulty of getting a small business loan. It’s not easy for any business to qualify for a loan from a big bank these days, but it’s all the more difficult for a freelance business. Most banks see sole proprietors as a lending risk, as you are personally liable for all losses and debts your freelance business incurs. Plus, your entire business is dependent on your good health and ability to work.

For these and other reasons, many freelancers would benefit from exploring alternate means of financing. Thankfully, many different types of financing are available from online lenders. When compared with the big banks, online lenders tend to be somewhat more relaxed in their eligibility requirements. But while you may face fewer hurdles regarding your credit score, annual revenue, and time in business, online lenders usually charge higher interest rates than bank loans. That’s the trade-off you accept in exchange for the convenience and less stringent eligibility barriers of online lenders.

Let’s explore the main categories of financing available to freelance businesses and the top reputable lenders that offer loans within each category. Note that many online lenders offer more than one type of loan, so if I list a lender under a particular loan category, that doesn’t mean they don’t offer other loan products!

Personal Loans

Freelancers will find it difficult to get a business loan, whether from a bank or an online lender. In fact, this goes for most young businesses, freelance or not. Lenders of business loans closely examine your business’s revenue, net income, debt-to-asset ratio, business credit, and collateral, and only the most profitable and well-established businesses tend to qualify.

Personal loans are different. With a personal loan, the lender assesses your credit-worthiness, not that of your freelance business, though you will have to disclose the fact that the loan will go towards supporting your freelance business. However, whether or not you qualify for a personal loan will mainly depend on your personal credit score, credit history, source of income, and debt-to-income ratio. Borrowing amounts are also less than with business loans. Typically, the maximum borrowing amount for personal loans is $35K to $50K.

I’m going to walk you through some of the top online vendors of personal loans. But first, here are some links to articles we’ve done on using personal loans for business expenses.

  • The Merchant’s Guide To Personal Loans For Business
  • Top Personal Loans For Business Compared

Upstart

Borrower requirements:
• Must have a personal credit score of 620 or higher.
• No time in business or revenue requirements.
Visit the Upstart website
Read our Upstart review

Upstart is a great personal lender for the freelancer whose credit might not be stellar. In contrast to the personal lenders who scrutinize your credit score/history and finances to the exclusion of all else, Upstart takes a broader view of your earning potential by considering factors such as your employment history and education. You’ll likely still need decent credit to qualify — your credit score must be 620 or higher — but it’s good to see a lender whose conception of credit-worthiness isn’t quite so exclusionary.

You can borrow a maximum of $50K (in most states) from Upstart — more than with many competitors. As far as Upstart’s terms and fees go, the APR ranges from 7.73% to 29.99%, term lengths are for three or five years, and there’s an origination fee of up to 8%.

Overall, Upstart is a top-rated personal lender with a relatively progressive lending ethos. Check out our full Upstart review and Upstart’s website using the links above.

Lending Club

lending club logo
Borrower requirements:
• Must have a personal credit score of 600 or higher.
• No time in business or revenue requirements.
Visit the Lending Club website
Read our Lending Club review

Founded in 2006, Lending Club was one of the first non-bank online lenders to come upon the scene. They remain one of the most popular online lenders out there, as their rates are competitive and their loans are relatively easy to qualify for. What’s not to like?

For personal loans, Lending Club’s maximum borrowing amount is $40K. The APR ranges from 5.98% to 35.89%, term lengths are for three or five years, and there is an origination fee of 1-6%.

Lending Club has lent money to countless people in its decade-plus in business. To learn more about Lending Club, links to the company’s website and our Lending Club review are posted above.

Prosper

Borrower requirements:
• Must have a personal credit score of 640 or above.
• No time in business or revenue requirements.
Visit the Prosper website
Read our Prosper review

Another pioneer in the online lending industry is Prosper, founded in 2005. As with the previous lenders listed, Prosper offers personal loans you can put towards your freelance business.

Prosper offers fixed-term loans with lengths of three or five years. The company’s APRs range from 5.99% to 35.99%, which includes a closing fee of 0.5% to 4.95%, and the maximum borrowing amount is $35K. You will need a credit score of at least 640, however.

Check out our Prosper review at the link above if you’re intrigued. Afterward, visit Prosper’s website and see what kind of rates you can get compared to the other personal lenders I’ve mentioned.

SoFi

sofi logo
Borrower requirements:
• Must have a personal credit score of 660 or above.
• No time in business or revenue requirements.
Visit the SoFi website
Read our SoFi review

SoFi describes itself as “a new kind of finance company.” Short for “social finance,” SoFi offers free career coaching and financial advising to all members. SoFi’s loans are quite flexible in comparison to the other personal lenders listed here.

SoFi’s maximum borrowing amount of $100K is remarkably high for a personal loan vendor, and term lengths run from three, five, or even seven years. With fixed APRs from 5.49% to 13.49% and no origination fees, SoFi’s flexible personal loans are quite competitively priced indeed. On the other hand, SoFi’s borrower requirements are a bit more stringent than those of the other personal lenders listed here, plus the loans are slower in coming — after you’re approved, it can take up to 30 days for you to get your funds.

Visit the above links to read our SoFi review and check out their website to see what they can offer you. Remember, with lenders, as with life, it pays to comparison shop!

Lines Of Credit

Many online lenders include lines of credit as part of their product offerings. If you own a credit card, you’ll understand the concept of a line of credit loan. You’ll get access to a certain amount of funds, and you can draw upon these funds at any time while paying interest only on what you actually borrow.

Lines of credit actually tend to be less expensive than credit cards. Moreover, the repayment terms usually differ.

I’m going to list some lenders offering business lines of credit, but first, here’s further information about this common loan type.

  • The Merchant’s Guide To Line Of Credit Loans

StreetShares

Borrower requirements:
• Must be in business at least 12 months with a revenue of $25,000 per year (sometimes StreetShares will make exceptions for high-earning businesses at least 6 months old).
• Must have a personal credit score of 620 or above.
Visit the StreetShares website
Read our StreetShares review

StreetShares is an online lender offering lines of credit along with traditional installment loans and contract financing. While StreetShares was founded by veterans and takes pride in catering to the particular needs of veteran-owned business, any business owner can use StreetShares to take out a loan — including freelancers!

Take note of the requirements listed above, as there are revenue/time-in-business requirements to be met. As for the lines of credit themselves, the maximum amount you can borrow is $100K, but the amount of the line of credit you can actually get will depend on your revenue. The more you earn, the more you can borrow. All things considered, StreetShares’s borrower requirements for a business line of credit are not terribly onerous.

The draw term length for a StreetShares line of credit is 3 to 36 months, the APR range is 7% – 39.99%, and there is a draw fee of 2.95% each time you draw from your line.

BlueVine

bluevine logo
Line of credit borrower requirements:
• Must be in business at least 6 months with a revenue of $10,000 per month.
• Must have a personal credit score of 600 or above.
• Lines of credit are not available in all states. See full review for details.
Visit the BlueVine website
Read our BlueVine review

Founded in 2013, BlueVine is an online lender that offers both business lines of credit and invoice factoring (more on that later). Let’s examine their lines of credit.

While the amount you can borrow will depend on your revenue, BlueVine’s maximum borrowing amount is $200K. Term lengths are for 6 or 12 months. APRs range from 15% to 78%, and there is a draw fee of 1.5%.

Along with the borrower requirements listed above, note that BlueVine lines of credit are not available in all 50 states.

Invoice Factoring

Invoice factoring is a way for B2B businesses to maintain a consistent cash flow by selling their invoices, at a discount, to factoring companies in exchange for cash upfront. It’s a way to even out your cash flow when you have clients who take their sweet time paying their invoices.

Invoice factoring has some complexities to it, so if you’re thinking it makes sense for your freelance business, I highly recommend reading our explainer article on the subject.

  • A Basic Introduction To Invoice Factoring

Fundbox

Invoice financing borrower requirements:
• No specific time in business, revenue, or credit score requirements.
Visit the Fundbox website
Read our Fundbox review

Founded in 2013, FundBox offers an invoice financing product called FundBox Credit. Invoice financing is very similar to invoice factoring — the difference to the borrower is that you must make payments on your loan on a weekly basis, not whenever your customer pays their invoice.

Fundbox Credit will hold great appeal to many freelancers due to its relaxed eligibility requirements — you don’t have to meet any time in business, revenue, or credit score threshold! However, you are required to have been using compatible accounting or invoicing software for at least three months, or a compatible bank account for at least six. See our Fundbox review for details.

Fundbox Credit lines are offered up to $100K, the term lengths are 12 or 24 weeks, and there is an advance fee of 0.4% to 0.7% per week when you make your weekly payments.

Riviera Finance

Invoice factoring borrower requirements:
• No specific time in business, revenue, or credit score requirements.
• Best for B2B and B2G businesses.
Visit the Riviera Finance website
Read our Riviera Finance review

Founded all the way back in 1969, Riviera Finance is no newcomer when it comes to invoice factoring. Riviera Finance offers non-recourse factoring, which means you won’t have to repurchase an invoice if a customer goes bankrupt.

While Riviera Finance is a real-world meatspace lender with 20 offices throughout the U.S. and Canada, you can nonetheless apply online to use their services.

Riviera Finance offers contracts that run anywhere from month-to-month to 12 months long, and the credit faculty size runs from $5K a month to a whopping $2 million per month! Check out the links above to learn more about Riviera Finance.

P2P Loans

P2P (peer-to-peer) lending is a lending model employed by many online lenders. Instead of borrowing from a central banking entity, your loan application is instead approved by a banking platform to go live for online bidding, where everyday investors who like the cut of your business’s jib can invest in your business.

Small-time investors can be risk-averse, so freelance businesses with bad credit may have difficulty securing the needed financing. Nonetheless, you’re still more likely to be approved for a P2P loan than a bank loan.

Many online lenders of personal loans and other kinds of loans are P2P lenders. In fact, of the lenders I’ve mentioned thus far, Upstart, Lending Club, Prosper, and StreetShares are all P2P lenders!

Microloans

Microloans are small loans — under $35K but typically in the range of $5K to $10K — offered at low interest rates. Microlenders typically focus on marginalized groups that face difficulties getting a loan elsewhere. As such, they are a solid option for women and minority freelancers seeking smaller loans, though any freelancer can take advantage of the generous terms offered by microlenders.

Kiva U.S.

kiva logo
Borrower requirements:
• No specific time in business, revenue, or credit score requirements.
Visit the Kiva U.S. website
Read our Kiva U.S. review

Kiva U.S. is a remarkable microlender in that not only are there no revenue, credit score, or time-in-business requirements to meet in order to qualify, but Kiva U.S. loans carry no interest or fees whatsoever! Pretty cool, eh?

With Kiva U.S., the only requirement to get a loan is that you run a business and that you put your funding towards your business. You can take out a Kiva U.S. loan for as much as $10K or as little as $25. Yes, that’s 25 dollars. Your APR will be a big fat 0%. Term lengths are for 6 to 36 months.

Does this sound too good to be true? Well, keep in mind that Kiva’s application process is significantly longer than that of other online lenders. The process can take up to two months. For more information, check out our Kiva U.S. review and Kiva U.S.’s website at the links above.

Accion

Borrower requirements:
• Requirements vary based on location — see full review for details.
Visit the Accion website
Read our Accion review

Accion is a nonprofit microlender that also happens to be one of our highest-rated lenders, period. Their reputation, customer service, and financial education programs are all top-notch. While Accion’s loans aren’t “free” like those of Kiva U.S., Accion is an excellent funding option for the freelance business owner.

Borrower requirements vary by location, so you’ll need to visit Accion’s site at the link above to see just what is required of you to get an Accion loan. Credit score requirements vary from 550 to 575, and you must demonstrate that you have sufficient cash flow to repay the loan.

While Accion’s loan offerings vary by U.S. state, you can borrow as little as $300 to as much as $1 million (and yes, it would be a stretch to call that a microloan!). APRs generally range from 7% to 34%, and you may need to put up specific collateral in some situations. Check out our full Accion review above for more details, then head to Accion’s website to see what specific offerings are available in your area.

Crowdfunding

Crowdfunding is an excellent way for freelancers in the creative industries to get funded by those who enjoy their work. Note that while P2P lending is sometimes referred to as debt crowdfunding, the kind of crowdfunding I’m talking about is rewards crowdfunding in which backers support you financially and get exclusive access to your work in return. It’s not technically lending, as you don’t have to pay back your backers!

Of course, running a crowdfunding campaign will require much more of your time and energy than a loan application, so know what you’re getting into. Below is a basic primer on running a crowdfunding campaign. (Note that I mention debt and equity crowdfunding in that article — I’m not focusing on those here.)

  • Crowdfunding For Startups: 8 Tips You Should Know Before Launching

Kickstarter

Campaign requirements:
• Must offer rewards to your backers.
Visit the Kickstarter website
Read our Kickstarter review

Founded in 2009, Kickstarter has become synonymous with crowdfunding. With over $3.6 billion in funding sent to creators and entrepreneurs, Kickstarter is the largest commercially-focused crowdfunding site in existence. If your freelance business is devoted to making creative works, Kickstarter is a great way to raise money for a big project.

Kickstarter requires all crowdfunding campaigns to create something that can be shared with others. There’s no limit to the amount of money you can raise on the platform. Your funding campaign can last for up to 60 days (though Kickstarter recommends 30-day campaigns), and Kickstarter will take 5% of what you raise as a platform fee. An additional 3% + $0.20 per pledge goes to the payment processor.

One thing to keep in mind with Kickstarter is that in order to collect the funds at the end of your campaign period, you must reach or surpass your funding goal. Fail to reach your funding goal, and you get nothing — no soup for you.

Check out our Kickstarter review at the link above if you’re interested, then cruise on over to Kickstarter’s website.

Indiegogo

indiegogo
Campaign requirements:
• Offering rewards to your backers is strongly recommended.
Visit the Indiegogo website
Read our Indiegogo review

Indiegogo is a crowdfunding platform that caters to a similar audience as Kickstarter — creative and tech projects and the backers who love them. Initially founded as a funding engine for independent films, Indiegogo soon expanded their mission, offering crowdfunding for a wide variety of commercial purposes. However, Indiegogo differs from Kickstarter in a few key ways.

While Kickstarter pre-screens campaigns for suitability before letting them campaign, Indiegogo serves all comers — just sign up and get started (though this doesn’t mean there are no rules to abide by). Another difference is that you’re not actually required to offer rewards to your backers. However, as you can imagine, you’re probably not going to raise much money if you offer people nothing, so I don’t recommend doing that!

Another difference with Kickstarter is that when you run an Indiegogo campaign, you can choose to employ the keep-what-you-raise crowdfunding model in which you keep whatever you raise at the conclusion of your campaign regardless of whether you’ve met your funding goal. Indiegogo is more flexible in its terms than Kickstarter.

Fees are largely the same as those of Kickstarter — there’s a 5% platform fee and a 3-5% per pledge payment processing fee. Check out the links above if you’re interested in Indiegogo’s crowdfunding model.

Patreon

patreon
Campaign requirements:
• Must offer rewards to your backers.
• Funding is ongoing on a per-month or per-creation basis.
Visit the Patreon website
Read our Patreon review

Patreon differs fundamentally from Kickstarter and Indiegogo. Instead of campaigning for a fixed period of time for a single project, Patreon lets you crowdfund on an ongoing basis. You can just keep creating on your own time schedule. Your patrons (assuming you attract some!) sign up to support you either on a monthly or per-creation basis. It’s a great way for freelancers to monetize their creative output indefinitely, not just for one specific project.

Patreon is generally more relaxed in the sort of campaigns it allows than Kickstarter or Indiegogo — you can probably get away with producing “edgier” content than with the other two. As for fees, Patreon takes 5% off the top, with payment processing fees coming to approximately 5% as well.

Final Thoughts

Life’s not easy for the freelancer. With all the other challenges you face, securing the funding you need can seem like an insurmountable hurdle. Thankfully, there are many viable funding options out there for the freelance business owner determined to make it work.

Be sure to explore multiple options in your funding quest so you can weigh each option on its relative merits. Now go forth and let your freelance flag fly!

The post Loans For Freelance Businesses: Your 13 Best Options 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.

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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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