When it comes to choosing a small business credit card processing company, merchants are spoiled for choice. There are hundreds of payment processors eager to partner with your business and help you accept credit cards and debit cards.

It’s understandable if you aren’t sure where to start. Selecting the right processor means researching and weighing a variety of factors like fees, payment tools, security features, technical support, reputation, and more. Many merchants feel overwhelmed with the options, but with a little preparation and know-how, you can narrow down the field and choose the perfect credit card processor for your business.

We’ve put together a short guide explaining what to look for in payment processors. Keep reading for clear-cut steps to simplify your search, so you can get back to discovering new business opportunities and growing your revenue.

How to Choose the Right Small Business Credit Card Processing Solution

Small business credit card processing: A smiling woman takes notes while using her laptop

Payment processing is about as far as you can get from a one-size-fits-all scenario. Each processor will cater to different business types, needs, and challenges, so you’ll need to take your time and crunch some numbers to understand which partnership is best. Below, we’ll walk through four important steps to help you select a winner.

1. Evaluate Their Pricing Structure

Pricing transparency is what sets the best credit card processors apart from average or poor processors. The pricing model they use will have a huge impact on your bottom line, so it’s vital to understand how they’ll charge your business.

In general, most credit card processors charge an interchange fee for every credit card transaction. This is a non-negotiable fee that’s set by the major card networks (Visa, Mastercard, Discover, and American Express) and passed onto your business.

Beyond the interchange fee, pricing structures vary. Here are the three most common structures:

  • Interchange plus pricing: Processors simply add a small markup on top of the standard interchange rate. This is considered the most transparent pricing option.
  • Flat-rate pricing: Processors charge the same transaction rate for every type of transaction. It’s easy to understand but difficult to know what you’re being charged for.
  • Tiered pricing: Processors sort your transactions into categories, such as qualified, mid-qualified, and non-qualified, and charge different rates based on their criteria. This is the least recommended pricing model because processors can change their rules and rates, leaving you with unpredictable costs.

Later, we’ll do a direct comparison of some of the most popular payment processors and discuss another lesser-known pricing structure.

2. Ask About Additional Costs and Fees

It’s common to see other costs beyond credit card transaction fees. For example, if you run an online store and use a payment gateway or virtual terminal to take online payments, a processor might charge you a payment gateway fee. Processors that require long-term contracts might charge a contract cancellation or termination fee. 

Here are some other common charges your processor may include:

  • Setup fees
  • Monthly minimum fees
  • Statement fees
  • POS software fees
  • Terminal fees
  • PCI compliance fees

Some processors advertise a low processing fee, while sneaking hidden fees into the fine print of their service agreement. So, we highly recommend asking for a list of additional costs, both scheduled and incidental.

3. Determine Which Payment Tools You Need

Another helpful step is to decide what kind of point-of-sale system (POS system) you’re going to need before you begin your search. This can dramatically reduce the number of payment processors you have to consider. 

For example, do you need an e-commerce payment processing solution or maybe a mobile credit card reader? Perhaps you need a payment processing company that can support online, in-store, and on-the-go payments.

At the very least, your payment processor should accept all major credit and debit cards, and particularly EMV chip cards. Using EMV-ready card terminals will protect your business from fraud liability and enhance security for all your chip card transactions. You may also need solutions for prepaid cards, gift cards, or ACH payments, depending on your business type.

Think about the payment methods your customers regularly reach for or ask about. Do you have young or tech-savvy customers? You might want to set up a near-field communication (NFC) solution, otherwise known as contactless payments. NFC allows your customers to pay with their digital wallets, like Apple Pay or Google Pay (formerly Android Pay), using their smartphone or smartwatch. 

Do you have frequent opportunities to make sales outside your physical store or office? Ask about mobile payment options so you can do business on the go.

Do you accept payments over the phone? You’ll want to make sure you have a virtual terminal available to you.

4. Assess Their Security and Support Measures

You’re entering into a potentially long-term relationship with your payment processor. While the day-to-day extent of it will be accepting credit card payments, unexpected things happen. Your business may be faced with fraud attempts, cyberattacks, chargebacks, and technical issues, and when that happens, you want a credit card processor with top-notch security services and customer support.

After all, 43% of cyberattacks target small businesses, and 60% of small companies close within six months of being hacked. The number of chargebacks is on the rise too, increasing at a pace of 20% each year.

You can ask the following questions to understand how your potential processor approaches security and support:

  • Do you have an integrated fraud detection and prevention solution?
  • What fraud management tools are available to me?
  • Do you help merchants maintain PCI compliance?
  • What are your customer support hours?
  • Is customer support available by email, phone, or online chat?
  • What happens if I have a technical issue outside of support hours?
  • Do you help customers with chargeback disputes?

3 Small Business Card Processing Companies

Here’s a quick look at some of the best-rated credit card processing companies for small businesses. We’ll focus on the qualities that set these processors apart from the rest of the pack. 

1. Nadapayments

If your small business wants to cut processing costs and keep more of your revenue, Nadapayments is an excellent choice. The majority of payment processors rely on the pricing models we covered earlier — interchange, flat rate, and tiered — to shift costs onto merchants’ shoulders. By contrast, Nadapayments uses a surcharge program to provide small businesses with 100% free credit card processing, regardless of transaction volume.

In addition, Nadapayments can be used to process debit and credit cards in whatever way works for you: in store, online, or on-the-go.

2. Preferred Merchant Services 

Preferred Merchant Services gives businesses a free credit card terminal as well as a free chip reader for on-the-go transactions. It offers tiered and interchange pricing with processing rates starting at 0.17%.

3. Square

Square is best known for mobile credit card processing, offering free or low-cost credit card readers, and until recently, its flat-rate pricing structure. For high-volume, small-transaction businesses, Square’s new 2.6% + $0.10 processing rate likely isn’t the best deal available. Plus, when you key in a credit card, the rate goes up to 3.5% + $0.15 per transaction.

Making the Right Choice

A smiling business owner take a contactless credit card payment

As a small business owner, your payment processor will have a big impact on your business, in day-to-day operations and in the long term. Choose well, and you’ll do more than just accept debit cards and credit cards. You’ll see serious cost savings, cater to a wider demographic of customers, and rest easy knowing your transactions are protected from fraud.

 We’ve covered four steps that will lead you toward the best small business credit card processing service, but we can save you some additional time and effort! Get in touch with us at Nadapayments to learn about our 100% free credit card processing, world-class customer support, and secure POS systems.