Credit card processors are a third party between your business and your customers' credit card company. You may also hear it referred to as a payment processor (not to be confused with a payment gateway ). You cannot accept credit card payments without one.
The processor analyzes and transmits the transaction data, then sends the relevant information to the issuing bank and authorizes the transfer of funds between the buyer and seller.
Each business will have its own pricing structure, so what may be chinese overseas africa database the cheapest option for one business may be more expensive for another. The cheapest option depends on your sales volume, industry, and typical transaction size.
What to consider when choosing
No two businesses are the same, and as your business evolves, you may need to change providers. When making a choice, consider:
Monthly charges
Some companies will charge a flat monthly fee just to access their services. If you have a high monthly fee on top of your payment processing fees, these costs can add up quickly.
Transaction Costs
Each processor will charge a fee for each transaction they process. This fee is usually based on the amount of the transaction. You will pay a percentage of the transaction plus a small fee for each one that is processed. Many companies offer reduced transaction fees once you reach a certain volume of online payments each month.
Interchange plus rates can fluctuate, but they offer balanced and fair pricing. The interchange fee is different from card to card. The more premium the card, the higher the interchange fee. Credit card processors charge a small surcharge to cover interchange fees.
Volume per month
Your credit card's monthly sales volume can greatly influence your pricing. Some providers are geared toward high-volume merchants, while others are efficient for e-commerce businesses just starting out. Your business type can also influence your credit card processing risk and volume, limiting your options.
POS Features
Point of sale (POS) features aren't necessarily that important for an e-commerce business, but for brick-and-mortar locations with an online store, they're crucial for accepting credit cards. Not all payment processors accept all types of credit cards, so that's another thing to think about.
If you need a POS system to process in-person transactions, make sure it offers everything you’re looking for. Do you want to be able to accept other payment methods, such as digital wallets like Apple Pay, Google Pay, or Amazon Pay? Do you want to be able to accept gift cards or track inventory between your physical store and eCommerce website ? These are all things to think about when evaluating your options.
Check out our article on Shopify vs Lightspeed .
Contracts
Contracts aren't always a bad thing, but they can be restrictive. If your business is in a period of growth where circumstances change frequently, locking yourself into a contract can mean paying more than you need to in order to process payments. It can also mean early termination fees if you decide to break it to switch to another provider.