Credit Card Processors

How to Find The Best Credit Card Processing Solution

Low transaction rate, fair tiered pricing, gateway fees, and charge-back fees are just a few considerations for small business owners looking for the best solution to process credit card payments. This article will help you choose the right credit card processor for your company.

Credit card payment processing unfolds in two phases: the first phase is an authorization (getting actual approval for the transaction taking place) and the phase is the settlement (processing the order or sale, which then transfers the funds from the issuing bank to the merchant's bank account).

Here are the top 5 questions to ask when selecting a credit card processor.

What is the cost per credit card transaction? This is especially important for those that have high volume transactions with a low cost per sale. An ideal rate would be about $0.08 per transaction, but should not exceed $0.25. This is simply a fee that the processor adds as a per-transaction fee to every sale that you process.

What is the cost of swiped debit cards/credit cards? This fee is charged as a percentage and is impacted by “qualified” and non-qualified purchases. The typical fees will range between 0.25% – 1.75% and this will be on top of the per-transaction fee.

How much is the monthly gateway fee? Typically the monthly gateway fee sill fun between $5 – $10 and is charged to process online transactions.  Many credit card processing companies will also charge a one-time setup fee between $25 -$99.

How much is the chargeback fee? Typically about $25, a chargeback fee from your credit card processor occurs if you have a customer who requests his/her transaction be canceled and the funds returned to them. Usually, this results from technical errors, delivery failures, fraud, or customer dissatisfaction.

How long does it take for charges to be deposited into your account? In most cases, it takes two business days for funds from transactions to be deposited into the merchant's account, though it can take up to three days to clear the account.


Why Credit Card Processors Are Difficult to Evaluate

Let’s face it, credit card processing looks like it’s been designed to be complex and expensive since it involves so many parties, including financial institutions, credit card issuers, and processors who all want a share of the transactions your business processes. Many credit card processors customize their rates to your business and set the rates according to your monthly processing volume, average sale size, and type of transactions your business processes. Your company's creditworthiness and industry will also be taken into consideration. Although our comparisons and reviews can equip you with the information needed to know about this industry and can help you narrow down your choices, you still need to contact the processors that you're most interested in and ask questions before you make your final decision.

Most companies offer numerous pricing options, such as interchange-plus pricing or tiered pricing, which can also make it complicated to compare pricing across providers. Even though credit card processing pricing customization is common it's very useful for you to consider the pricing estimates that we published to get you started and find the credit card processor that's best for your business. It's also important to know that while every processor charges fees in addition to processing costs, some fees are negotiable.

Author: Hudson Piccini

Hudson Cynar, a Harvard University alumna and the owner of three prosperous enterprises, is a distinguished business consultant, author, and writer. Her expertise spans multiple business sectors, with a particular emphasis on storage containers, commercial copiers, payroll services, and medical billing software. Dedicatedly investing thousands of hours into product and service research, Hudson crafts insightful reviews to guide entrepreneurs in making informed decisions for their businesses.