To find the cheapest credit card processing company, you’ll want to consider your business’s industry, sales volume, typical transaction size and whether you process payments in person, online or both. Because credit card processing companies often have different pricing structures, no single provider is the cheapest option for all businesses, but these factors can help you estimate and compare credit card processing fees.
In addition to the processing fees themselves, remember to factor in monthly subscription costs and hardware expenses if you plan on accepting card payments in person. To further narrow down options, you can make a list of extra tools and capabilities your business requires.
Here are some of the cheapest credit card processing companies to consider, based on your business type:
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Cheapest Credit Card Processing Companies for Small Businesses
Calculate your monthly cost estimate
Input your business’s monthly transaction details and we’ll help you sort from the best valueProduct | Cost Estimate | Payment processing fees | Cost Estimate | Learn more | ||
|---|---|---|---|---|---|---|
Helcim Learn more on Helcim's secure website | Get an estimated monthly cost for your business. | 5.0/5 Best for High-volume businesses | In-person: 0.4% + $0.08 Online: 0.5% + $0.25 Plus interchange | $0.00 | Get an estimated monthly cost for your business. | Learn more on Helcim's secure website |
Stripe Learn more on Stripe Payments' secure website | 5.0/5 Best for Online businesses | In-person: 2.7% + $0.05 Online: 2.9% + $0.30 | $0.00 | Learn more on Stripe Payments' secure website | ||
Square Learn more on Square's secure website | 5.0/5 Best for Brick-and-mortar businesses | In-person: 2.6% + $0.10 Online: 2.9% + $0.30 | $0.00 Starts at $0/month for unlimited devices and locations. | Learn more on Square's secure website | ||
National Processing Learn more on National Processing's secure website | 5.0/5 Best for Free terminal | In-person: 2.5% + $0.10 Online: 2.9% + $0.30 | $9.95 for Basic In-Person Package. | Learn more on National Processing's secure website | ||
Stax by Fattmerchant Learn more on Stax by Fattmerchant's secure website | 4.0/5 Best for Membership-style pricing | In-person: 0% + $0.08 Online: 0% + $0.15 Plus interchange | $99.00 and up. | Learn more on Stax by Fattmerchant's secure website | ||
Payment Depot Learn more on Payment Depot's secure website | 4.5/5 Best for Tailored interchange-plus rates | 0.2% + $0.00 to 1.95%, plus interchange. | $0.00 | Learn more on Payment Depot's secure website | ||
U.S. Bank Merchant Services Learn more on U.S. Bank Merchant Services' secure website, Member FDIC | 4.5/5 Best for Fast deposits | In-person: 2.6% + $0.10 Online: 2.9% + $0.30 | $0.00 and up. | Learn more on U.S. Bank Merchant Services' secure website, Member FDIC | ||
Payline | 4.5/5 Best for High-risk merchants | In-person: 0.4% + $0.10 Online: 0.75% + $0.20 Plus interchange | $10.00 in person; $20 online. | |||
Dharma Merchant Services | 4.5/5 Best for Nonprofits | In-person: 0.15% + $0.08 Online: 0.2% + $0.11 Plus interchange | $20.00 for most industries; $15 for nonprofits. | |||
PayPal Zettle | 4.0/5 Best for Accepting QR code payments | In-person: 2.29% + $0.09 Online: 3.49% + $0.09 | $0.00 |
Our pick for
High-volume businesses
Though interchange-plus pricing can be confusing, it’s often a good cost-saving alternative to flat-rate processing. On top of using an interchange-plus pricing model, Helcim also extends volume discounts to businesses processing more than $50,000 in credit card transactions per month.
Helcim
Learn more
on Helcim's secure website
Monthly fee
$0.00
Unlike flat-rate payment processors that charge the same transaction fee across different types of credit cards, Helcim uses an interchange-plus pricing model. This means your business saves when a customer uses a card with low interchange rates. Helcim also offers volume discounts if you process more than $50,000 monthly, which is a plus for high-volume businesses. And if you need hardware for taking payments in-person, the company sells its own smart terminal and mobile card reader, too.Read full review
Pros
- Businesses save when customers use cards with low interchange rates.
- Offers free POS software.
- Offers volume-based discounts automatically.
- No termination fees, long-term contracts or PCI compliance fees.
Cons
- Deposits are available within two business days; same-day deposit option is not available.
- Interchange-plus costs can be difficult to predict.
Our pick for
Online businesses
Though Stripe offers POS hardware for accepting credit card transactions in person, its product is best for businesses that sell mostly online. You can embed its prebuilt payments form on your e-commerce website or create your own customized checkout experience for customers.
Stripe
Learn more
on Stripe Payments' secure website
Monthly fee
$0.00
Online businesses can integrate Stripe with their e-commerce platform to create a unique checkout experience for customers. If you want a simpler solution that doesn't require as much customization, Stripe offers prebuilt payment forms, a product referred to as Stripe Checkout, that can be embedded into websites. Stripe also gives merchants global reach, accommodating online sales in more than 195 countries.
Pros
- Highly customizable online checkout options.
- No termination fees or long-term contracts.
- 24/7 chat support.
- Can process transactions in more than 135 currencies.
- No PCI compliance fees.
Cons
- Doesn’t sell full countertop POS setups; hardware is limited to handheld terminals and card readers.
- Deposits can take up to two business days.
- No phone or email support.
Our pick for
Brick-and-mortar businesses
Square’s flat-rate processing fees, reasonably priced hardware options and free POS software plan make it an easy solution for small-business owners accepting credit card transactions in store. The mobile app also lets you accept card payments with Tap to Pay on your smartphone — no hardware purchases required.
Square
Learn more
on Square's secure website
Monthly fee
$0.00
Starts at $0/month for unlimited devices and locations.
Square's simple, flat-rate pricing structure is clearly displayed on its website, making it easy for business owners to predict costs and compare options. It’s a great pick for small e-commerce businesses and physical storefronts alike, but its free mobile card reader makes it an especially low-cost option for on-the-go businesses that accept payments using a smartphone app.
Pros
- Offers a free mobile card reader and free POS software plan.
- Can subscribe to related services, such as payroll, that integrate with its POS system.
- No termination fees or long-term contracts.
- No chargeback or PCI compliance fees.
Cons
- Complex businesses might prefer a processor that integrates with more specialized POS systems.
Our pick for
Free terminal
Small-business owners who qualify for a free terminal with National Processing can save money on POS hardware costs. If you already have POS hardware, the company may be able to reprogram it for free, too.
National Processing
Learn more
on National Processing's secure website
Monthly fee
$9.95
for Basic In-Person Package.
National Processing offers competitive rates, useful integrations and compatibility with several card readers. New merchants that meet specific criteria may receive a free terminal when they sign up. The processor also works with high-risk merchants.
Pros
- No termination fees, long-term contracts or PCI compliance fees.
- Works with high-risk merchants.
- New merchants may qualify for a free terminal.
- 24/7 phone support.
- Compatible with multiple POS system providers, including Clover.
Cons
- Fees may be higher if you process less than $10,000 per month.
- Basic plans for processing in-person and online transactions are separate.
- Deposits take 2-3 business days for basic plans.
Our pick for
Membership-style pricing
Stax’s membership-style pricing model is more expensive than competitors upfront, but can cut high-volume business’s overall credit card processing costs in the long run. Comparing your monthly costs under different pricing models can help you decide which is cheaper for your business.
Stax by Fattmerchant
Learn more
on Stax by Fattmerchant's secure website
Monthly fee
$99.00
and up.
Stax’s subscription fees start at $99 per month, but its low interchange rates can be a cost saver for businesses processing at least $5,000 in credit card transactions monthly. Businesses looking to save more can use Stax’s surcharge program to pass processing fees to consumers.
Pros
- Businesses save when customers use cards with low interchange rates.
- Unique add-on features, like custom branding.
- No long-term contracts.
- Compatible with POS system providers, such as Clover.
- No PCI compliance fees.
Cons
- Not ideal for businesses with low-volume sales.
- Pricing isn't as transparent as competitors.
- Interchange-plus costs can be difficult to predict.
Our pick for
Tailored interchange-plus rates
Instead of charging all businesses a standard per-transaction fee on top of interchange rates, Payment Depot tailors its markups to your business. If you’re able to negotiate a smaller margin than competitors offer, you may be able to save a significant amount of money.
Payment Depot
Learn more
on Payment Depot's secure website
Payment processing fees
0.2% + $0.00
to 1.95%, plus interchange.
Monthly fee
$0.00
Payment Depot is a payment processor owned by Stax, a membership-style payment processing platform. But as opposed to offering monthly subscription pricing like Stax, it uses an interchange-plus pricing model and charges no monthly fee. The margin Payment Depot charges on top of interchange varies, so businesses must reach out directly for specifics.Read full review
Pros
- Businesses save when customers use cards with low interchange rates.
- No cancellation or PCI compliance fees.
- Compatible with several POS hardware providers, including Clover.
- 24/7 phone support.
Cons
- Markups vary by business.
- Website doesn’t disclose hardware pricing.
- Interchange-plus costs can be difficult to predict.
Our pick for
Fast deposits
Small businesses with U.S. Bank checking accounts get access to free same-day funding, seven days a week, which can help improve their cash flow. Some competitors only offer same-day funding as an add-on that increases your overall processing fees.
U.S. Bank Merchant Services
Learn more
on U.S. Bank Merchant Services' secure website, Member FDIC
Monthly fee
$0.00
and up.
U.S. Bank Merchant Services is an all-in-one solution for banking, payment processing and POS software. Businesses with a U.S. Bank checking account are eligible to receive deposits more quickly than they might with competitors, thanks to the company’s Everyday Funding option. This gives you access to free deposits every day of the week, including weekends.
Pros
- Same-day funding seven days per week for U.S. Bank checking account holders.
- No cancellation or PCI compliance fees.
- Free POS software plan available.
- 24/7 support.
Cons
- POS system onboarding assistance can be costly.
- Deposit times are not as quick for merchants using third-party bank accounts.
- Virtual terminal costs extra.
Our pick for
High-risk merchants
Payline can be an ideal solution for high-risk businesses struggling to find affordable merchant services. Supported high-risk industries include cannabis, travel, vitamins and credit repair. Additionally, high-risk businesses’ first two months with Payline are free.
Payline
Monthly fee
$10.00
in person; $20 online.
Payline’s affordable and transparent pricing helps business owners accurately calculate their payment processing fees, and its user-friendly interface makes it a good option for small-business owners. Unlike many of its competitors, Payline can also provide custom merchant account solutions for some high-risk businesses.
Pros
- No long-term contracts or cancellation fees.
- First month or two (depending on the business) is free.
- Works with high-risk merchants.
- No PCI compliance fees.
- 24/7 support.
- Compatible with multiple POS terminal providers, including Clover.
Cons
- Separate monthly fees for in-person and online processing.
- Must contact Payline for information on hardware costs.
Our pick for
Nonprofits
Dharma Merchant Services offers discounted interchange-plus rates for nonprofit businesses, along with the ability to accept recurring donations. You can also use its services to add a “donate now” button to your existing website.
Dharma Merchant Services
Monthly fee
$20.00
for most industries; $15 for nonprofits.
Dharma Merchant Services is an interchange-plus payment processor that prioritizes simplicity and affordability. It integrates with a variety of POS systems and is exceptionally transparent when it comes to which fees you should expect to pay. Monthly costs for nonprofits are discounted.
Pros
- Reduced processing rates for nonprofits.
- Businesses save when customers use cards with low interchange rates.
- No long-term contracts.
- No PCI compliance fees.
- Compatible with Clover POS systems.
Cons
- Charges account closure fee.
- Requires separate accounts for online and in-person payments.
- Recurring billing and online invoicing cost an extra $10 per month.
- Deposits can take up to two business days.
Our pick for
Accepting QR code payments
Among other flat-rate payment processors, PayPal Zettle has one of the lowest card-present transaction rates. It applies to both in-person card transactions and QR code payments made through PayPal and Venmo.
PayPal Zettle
Monthly fee
$0.00
PayPal Zettle delivers the essentials at a relatively low cost with a small commitment. On top of accepting credit and debit cards (customers can either dip or tap them to the device), Zettle accepts other payment methods like Venmo, PayPal and digital wallets. But consider other options if you want features like customer loyalty and email marketing programs. Although Zettle can expand through hardware, it doesn’t offer plan upgrades or those types of add-ons.Read full review
Pros
- No long-term contract or termination fees.
- Accepts a variety of payment types, including Venmo and PayPal payments.
- Inexpensive card reader with a keypad, plus built-in payment processing and a free mobile app lets you quickly accept in-person payments on the go.
- Low in-person processing fees for a flat-rate processor.
Cons
- Accepting online transactions involves additional monthly fees, depending on your gateway.
- No offline mode.
Helcim
Best for high-volume businesses
Why we like it: Helcim is a fantastic choice for small businesses looking for low rates and no monthly subscription fees. Its interchange-plus fee structure is a cost-effective option, especially for businesses with high sales volumes, and its website makes it easy to find pricing information. The company's volume discounts, which are applied automatically as the amount you process increases, are a nice perk to have as your business grows. Read our full Helcim review.
$0.
- Interchange plus 0.4% and 8 cents per in-person transaction (if $50,000 or less in monthly card transactions).
- Interchange plus 0.5% and 25 cents per online or manually keyed transaction (if $50,000 or less in monthly card transactions).
- 0.5% plus 25 cents for ACH payments (capped at $6).
- No long-term contracts or cancellation fees.
- No monthly subscription fees.
- No setup fees.
- Processing rates go down after your business processes more than $50,000 in payments per month.
- Doesn't work with high-risk merchants, meaning businesses that are more susceptible to fraud and chargebacks.
- No 24/7 support.
Square
Best for brick-and-mortar businesses
Why we like it: With clear, flat-rate pricing, free POS software and a free mobile card reader, Square is one of the cheapest credit card processing solutions, especially for smaller businesses. Businesses can use the payment service provider to accept a variety of payments, including both in-person and online. To process in-person payments, for example, you can use free POS software alongside one of its hardware options. Businesses can also opt for Square's retail POS or Square's restaurant POS software plans to access more features. Square offers Tap to Pay on iPhone and Android, which lets merchants accept card payments using only an iPhone or Android phone with the Square POS app. API integrations let clients accept credit card payments on their website or e-commerce site too. Read our full Square review.
- $0 for Square POS, Restaurant, Retail and Appointments Free plans.
- $29 for Square Appointments Plus plan.
- $69 for Square Appointments Premium and Square Restaurants Plus plans.
- $89 for Square Retail Plus plan.
- $165 for Square Restaurant Premium plan.
- Custom pricing for Square Retail plan.
- 2.6% plus 10 cents for in-person transactions.
- 2.9% plus 30 cents for online transactions.
- 3.5% plus 15 cents for manually keyed transactions.
- 3.3% plus 30 cents for invoices.
- No early termination, activation, refund or chargeback fees.
- No PCI compliance fees.
- No monthly subscription fee.
- Free point-of-sale software.
- Free mobile card reader (magstripe only).
- May be more expensive than an interchange-plus pricing model for some businesses.
- Doesn't work with high-risk merchants.
- Only paid POS plans include 24/7 live customer service.
» MORE: Best POS systems
Stripe
Best for online businesses
Why we like it: With transparent, flat-rate pricing and no subscription fees, Stripe is one of the easiest payment processing solutions for online businesses. Although you may find an alternative provider with lower processing fees, it’s difficult to beat the lack of other fees, flexibility and included-payment tools within the company's platform. The payment service provider offers its own invoicing, billing, business data and tax calculation features, too. Read our full Stripe review.
- $0 for standard services.
- $10 for custom domain.
- 2.7% plus 5 cents for in-person transactions.
- 2.9% plus 30 cents for online transactions.
- 3.4% plus 30 cents for manually keyed transactions.
- 4.4% plus 30 cents for international card transactions.
- No setup fees.
- No monthly subscription fees.
- 24/7 phone, chat and email support.
- More than 450 platforms and extensions available.
- Accepts payments in more than 135 currencies.
- Doesn’t work with high-risk merchants.
Stax
Best for membership-style pricing
Why we like it: Instead of charging interchange fees plus a percentage markup per transaction like some of its competitors, Stax requires its clients to subscribe to a monthly plan and charges interchange plus a fixed per-transaction fee, which is 8 cents for in-person transactions. This fee structure could help high-volume businesses save money, especially if they’d otherwise pay more than $99 per month in percentage markups and other fees. Read our full Stax review.
- $99 if you process less than $150,000 per year.
- $139 if you process between $150,000 and $250,000 per year.
- $199 and up if you process more than $250,000 per year.
- Interchange plus 8 cents for in-person transactions.
- Interchange plus 15 cents for manually keyed transactions.
- No contracts.
- 24/7 technical support.
- Offers add-ons like custom branding and next-day funding.
- Not ideal for low-volume small businesses.
Payline
Best for high-risk merchants
Why we like it: Payline is a merchant account provider that offers interchange-plus pricing at very low rates. It has two plan offerings, one designed for brick-and-mortar retailers and one designed for e-commerce merchants. Although paying for both plans isn't ideal for businesses that sell products both online and in stores, it could be one of the cheapest options for businesses that require only one or the other. It also offers high-risk merchant accounts for businesses involved in industries such as tobacco, cannabis, credit repair and more. Read the full Payline review.
- $10 for in-person sales.
- $20 for online sales.
- Interchange plus 0.4% and 10 cents for in-person transactions.
- Interchange plus 0.75% and 20 cents for online transactions.
- No long-term contract or cancellation fees.
- No PCI compliance fees.
- Offers high-risk merchant accounts.
- First month is free for eligible merchants.
- 24/7 phone support.
- Negative user reviews.
Payment Depot
Best for tailored interchange-plus rates
Why we like it: Payment Depot is a merchant account provider owned by Stax. Its interchange-plus model may be best suited to businesses that are looking for ways to save and don’t mind the more complex pricing structure. Read the full Payment Depot review.
$0.
0.2%-1.95% plus interchange.
- Businesses save when customers use cards with low interchange rates.
- No cancellation fees.
- Compatible with several POS hardware providers, including Clover.
- 24/7 phone support.
- Markups vary by business.
- Website doesn’t disclose hardware pricing.
National Processing
Best for free terminal
Why we like it: National Processing is a payment processor with competitive rates, useful integrations and compatibility with several card readers. Plus, it works with high-risk merchants. Its long-term contracts are a concern, but every plan includes free reprogramming of existing equipment and some merchants qualify for free hardware. Read our full National Processing review.
- $9.95 for Basic In-Person Package, Basic E-Commerce Package.
- $19 and up for Premium Package.
- Basic In-Person Package: 2.5% plus 10 cents per transaction.
- Basic E-Commerce Package: 2.9% plus 30 cents per transaction.
- Premium Package: 2.41% plus 10 cents.
- Works with high-risk merchants.
- Offers several good integrations for accounting, online selling and shopping carts.
- Each plan includes free reprogramming of existing hardware plus a free mobile card reader.
- National Processing’s payment processing fees are only guaranteed for merchants that process at least $10,000 in sales a month.
- Monthly fees can add up.
- Requires a long-term contract, and there are early termination fees (with a few exceptions).
Dharma Merchant Services
Best for nonprofits
Why we like it: Dharma Merchant Services charges nonprofits reduced monthly fees and processing rates, making it a top choice for these organizations. It's also a certified B Corp, meaning it's held to higher environmental and social standards. That’s a big plus for small businesses that pride themselves on working with socially responsible companies. The company also offers reduced rates for small businesses that process over $100,000 per month. Read our full Dharma Merchant Services review.
- $15 for nonprofits.
- $20 for business to business, e-commerce, hospitality, retail and restaurant.
- Interchange plus 0.15% + 8 cents for in-person transactions.
- Interchange plus 0.20% + 11 cents for online transactions.
- Interchange plus 0.25% + 8 cents for in-person AmEx transactions.
- Interchange plus 0.30% + 11 cents for online AmEx transactions.
- No long-term contracts.
- Includes access to a free virtual terminal and online reporting.
- No PCI compliance fees (although there is a $39.95 monthly fee for those that become noncompliant)
- 24/7 support.
- Monthly fee required.
- Doesn’t work with high-risk merchants.
U.S. Bank Merchant Services
Best for fast deposits
Why we like it: U.S. Bank Merchant Services stands out for its Everyday Funding feature that gives U.S. Bank checking account holders access to same-day funding seven days per week. It offers competitive in-person and online processing rates, along with a variety of POS software plans ranging from $0 to $99 per month. If you plan on depositing funds directly to an outside bank account, though, this might not be the best option.
- $0 for Mobile plan.
- $15 for Terminal plan.
- $29 for Starter plan.
- $69 for Standard plan.
- $99 for Premium plan.
- $15-$29 for each additional software license.
- 2.6% plus 10 cents for in-person payments.
- 2.9% plus 30 cents for online payments.
- 3.5% plus 15 cents for keyed payments.
- Same-day funding seven days per week for U.S. bank checking account holders.
- No PCI compliance fees.
- No cancellation fees.
- Free POS software plan available.
- POS system onboarding assistance can be costly.
- Deposit times are not as quick for merchants using third-party bank accounts.
PayPal Zettle
Best for accepting QR code payments
Why we like it: PayPal Zettle’s low card-present transaction rates — which also apply to QR code payments — and free POS app make it an affordable option for service-based businesses and solopreneurs selling at markets or popups. To accept a QR code payment, you enter the sales total into the app, choose PayPal or Venmo as the payment method and ask your customer to scan the QR code that the app generates. Since processing online transactions may involve separate payment gateway subscriptions, it’s not the best choice for businesses making the bulk of their sales online. Read our full PayPal Zettle review.
$0.
- 2.29% plus 9 cents for in-person and QR code transactions.
- 3.49% plus 9 cents for manual-entry card transactions.
- 2.99% plus 49 cents for invoicing (payment made with card).
- 3.49% plus 49 cents for invoicing (payment made with PayPal).
- No monthly software fees for accepting in-person payments.
- No long-term contract or termination fees.
- Accepts a variety of payment types, including Venmo and PayPal payments.
- Inexpensive card reader with a keypad, plus built-in payment processing and a free mobile app lets you quickly accept in-person payments on the go.
- Accepting online transactions involves additional monthly fees, depending on your gateway.
- No offline mode.
Didn't find what you're looking for?
Explore NerdWallet’s list of top credit card processing companies for more details on some of the products listed here, along with alternatives.
To predict your business’s monthly credit card processing fees, start by determining your average card transaction amount and how many card sales you complete each month. From there, you can use this calculation to estimate your monthly credit card processing costs for specific types of transactions (e.g., online, in-person or keyed-in):
[(average credit card transaction dollar amount x transaction percentage fee) + transaction fixed fee] x [number of credit card sales completed per month]
Here’s a breakdown of credit card processing fees, plus other associated costs.
Credit card processing fees
Credit card processing fees vary by provider and which fee structure they use: interchange-plus or flat-rate. Generally, interchange-plus is more transparent and better for high-volume merchants, but flat-rate pricing can be more predictable and easier to understand. Alternatively, some processors may choose to lower their per-transaction fees and charge a monthly fee. On average, though, credit card processing fees range from 1.5% to 3.5% of the total transaction cost.
Hardware and software fees
In terms of hardware, chances are you’ll need to buy credit card readers or a more robust point-of-sale (POS) system for accepting in-person payments. Some companies offer free card readers and others range from around $29 to $59. Card readers with receipt printers or a screen usually cost more. You’ll also need some type of POS software or app to use alongside the hardware. Some basic software plans are free, but prices rise as you seek out additional features like inventory tracking, employee management or in-depth reporting.
If you only need to accept a handful of transactions each day, payment apps let you complete contactless transactions using just your smartphone. That way, you can skip the card reader and save on hardware. However, processing rates vary.
Other fees
Look out for additional fees related to services like PCI compliance, setup, cancellation, funds withdrawal and more. Not all processors are transparent about these added fees, so be sure to read the terms of your contract closely and speak to a representative if anything is unclear.
Learn more about credit card processing fees
Explore ways to offset processing fees and use NerdWallet’s calculator to estimate how much your business should expect to owe.
If you want to offer your customers the option to pay by card, whether in person or online, you will need to pay fees to credit card companies and financial services providers to authorize and complete card transactions. However, carefully weighing credit card processing companies can guide you toward the most cost-effective option.
To find the cheapest credit card processing company for your business, consider the following factors:
- Your industry: Your industry’s perceived level of risk can impact how many payment processors you have to choose from. For example, many credit card processing companies won’t work with high-risk businesses in industries like CBD, credit repair, travel and vitamins. That’s where high-risk payment processors come into play. Risk aside, certain types of businesses, like retail shops and restaurants, might want to work with a credit card processing company that sells POS systems created specifically with their industry needs in mind.
- Typical transaction size: Average transaction size affects how much your processing costs cut into your margins. For example, imagine you run a landscaping company and your average transaction size is $1,000. A flat rate of 2.6% plus $0.10 would cost you $26.10. If you own a cafe, however, and your average transaction size is $5, you’d owe $0.23 cents per transaction, which adds up to $46 in processing fees per $1,000 in sales. This discrepancy illustrates why it’s so important to predict and compare your processing fees across multiple credit card processing companies before committing.
- Sales volume: Similar to average transaction size, the number of transactions your business completes each month also impacts your overall credit card processing costs. The cheapest credit card processing company for a business that does $5,000 in transactions per month may not be the best choice for one that completes $100,000 in monthly sales. That being said, higher-volume businesses might be able to negotiate down rates or qualify for volume discounts.
- Convenience: If you want to start accepting card payments immediately, payment service providers, like Square and Stripe, are often good options. They might not offer the absolute lowest rates, but they don’t require you to apply for your own merchant account, which simplifies the process. Oftentimes, there’s a tradeoff between convenience and cost.
While you can’t avoid credit card processing fees altogether, there are several strategies for reducing the burden on your business.
Incentivize customers to pay with cash
Certain credit card processing companies offer credit card surcharge programs that pass some or all of the processing fees to customers who choose to pay with a card instead of cash. If you go this route, be sure to understand your state’s laws around the program. Another option is cash discounts, and unlike credit card surcharging programs, they’re legal in all 50 states. Essentially, cash discount programs extend discounted prices to customers who choose to pay in cash. Customers using a credit card pay the advertised, non-discounted price.
Implement minimum purchase amounts
Paying processing fees on a small transaction amount, like $3, might not be worth it for your business. If that’s the case, consider implementing a minimum credit card purchase amount and require customers to use cash if their receipt total is below the minimum.
Request a volume discount
Some credit card processing companies reduce processing fees as your business’s sales volume grows. Helcim, for example, begins lowering rates once businesses clear $50,000 in credit card transactions each month. Other companies might offer a similar discount but not advertise it as openly. It’s worth reaching out to a representative to ask.
Consider interchange-plus over flat-rate pricing
Interchange-plus pricing passes interchange fees, plus a set markup, to the merchant. This means that the merchant pays less when customers use cards with lower interchange fees. Many times, this pricing model is more cost-efficient, but less predictable, than flat-rate pricing.
Negotiate markups
If you go with an interchange-plus processor, you might be able to negotiate how much they charge on top of interchange fees. Prior to having that conversation, though, make sure you have the figures ( e.g., your monthly processing costs, average transaction amount, how your processor‘s markups compare to competitors) to back up your request.
Make sure your interchange fees align with your industry
When you start accepting credit card payments, your business is assigned a merchant category code based on its industry and what it sells. That code determines your interchange rate, among other factors. If you use an interchange-plus processor that passes fluctuating interchange rates to your business (instead of charging a consistent fee, like flat-rate processors), ensuring your business is assigned the correct code can help guarantee you’re being charged the appropriate interchange fees for your industry type.
Learn more about minimizing credit card fees
Read more about surcharge programs and cash discounting, their pros and cons and which credit card processing companies offer these options.
Last updated on August 2, 2024
Methodology
NerdWallet’s ratings of payment processing providers rewards companies whose products and services are priced well and work in a variety of payment scenarios, among other criteria. Ratings are based on weighted averages of scores in several categories, including overall cost, hardware and software options, system capabilities, customer service, contract requirements and integrations. Learn more about how we rate payment processing providers.
These ratings are a guide, but fees, hardware, software and contract requirements can vary widely from business to business and provider to provider. We encourage you to shop around and compare several providers.
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