Subscription-based business models seem to be everywhere these days. Emerging wine clubs, personal care-in-a-box subscriptions, wardrobe-of-the-month sites — even supporting a favorite podcast! Clearly, these types of businesses are finding success as people jump into subscriptions to save money, time, or just for the fun of getting a box in the mail. And it’s not just cheese-of-the-month clubs anymore. Software as a Service (SaaS) subscriptions are booming in both business and personal markets. This environment is ripe for subscription business models, but you need the right tools to process recurring payments while protecting your business from security risks.
Of course, businesses that serve a local market with more traditional recurring products and services like gyms, childcare, or home improvement services also rely on recurring payments for their revenue stream â whether thatâs automatically charging a credit card or manually sending an invoice.
Choosing a payment processor for this type of business is not a light decision, so letâs take a look at what Square has to offer in terms of solutions geared for the recurring payment model.
How To Set Up Recurring Payments With Square eCommerce
If you are about to launch an eCommerce subscription-based business or you are looking for a different payment processing setup than the one you have, Square should be on your radar. While Square doesnât provide complete âout-of-the-boxâ solutions for eCommerce businesses, they offer three main options for you to get your shop live, with some flexibility under each.
Square Payment Form and Transaction API:
If you are a developer or have the in-house developer support, you can create a custom payment experience that resembles the rest of your site. That means you can save a card on file using the Square Payment Form and set up recurring billing using your own subscription logic. Square also has digital wallet support so you can add Apple Pay, Google Pay, or MasterPass for faster checkout. Hereâs more information directly from Square if you opt to embed the payment form:
Square Payment Form provides secure, hosted components for payment data like card number and CVV, while enabling you to make it your own. Itâs designed to help buyers enter their card data accurately and quickly. Card data is collected securely and tokenized, never hitting your servers, so you donât have to worry about PCI compliance.
When you integrate Square Checkout, you can save a card on file safely, and you wonât need as much developer knowledge. This solution is a pre-built workflow that includes digital wallet support, and itâs all hosted on Squareâs servers. You wonât have as much wiggle room in regards to customization, but itâs still going to give you a fast, streamlined checkout experience. Square provides a technical reference guide to assist you in building what you need, including setting up recurring billing.
Choose An Integration:
If you want a simpler solution that doesnât require coding or technical expertise, a plug-in may be just the ticket for you to get up and running quickly. Of all the options available within the Square Dashboard, Chargify jumps out because it seems to offer everything a subscription service would need. According to Chargify:
Chargify bills your customer’s credit card on whatever schedule you define. In addition to processing one-time and recurring transactions, Chargify can handle free trial periods, one-time fees, promotions, refunds, email receipts, and even dunning (reminders for failed credit card payments) management.
Chargify plans startÂ at $99 a month, but you can work your way up the scale when it comes to additional options. In general, Square plug-in selections abound, so you can shop to find the most promising solution for your business right from your Square Dashboard under Apps. Hereâs a screenshot of a few options listed:
No matter which solution you decide on, you can rest assured that the burden of PCI compliance and security with payment processing sits on Squareâs shoulders, not your own. And the free support you get from Squareâs team if there is a chargeback issue also gives some much-needed peace of mind as well.
To find out more and shop eCommerce solutions, head to Square’s website and select eCommerce under the section, Software services to grow your business. If you want to learn more before signing up, read our post, The Best eCommerce Integrations That Work With Square Payments. And if you want to find out more about Square as an eCommerce solution in general, check out our Square Online Store and eCommerce Review.
How To Set Up Square Recurring Invoices
When you’re ready to set up a recurring invoice for your customer, Square makes it easy. You can create an invoice through your Square POS app or from the Square Dashboard. You can then set up the scheduling frequency of your recurring invoice, though you will need your customer to approve their card on file.
Whether you send a one-time or recurring invoice, enable Allow Customer to Save Card on File so your customer can approve. Then you’ll be all set for repeat billing.
Note: If you need to manually save a card on file from your Virtual Terminal at your computer, youâll need to print out the approval form so your customer can sign it first.
Hereâs a screenshot of what the setup looks like for recurring invoices within the Square Dashboard.
With Square Invoices, you can also request a deposit, either due immediately or within a specific time-frame. So for you business owners that charge a sign-up or other set-up fee, you can seamlessly add in a deposit request and cover all the bases.
Getting Paid with Square Invoices
When your customer makes a payment, credit card payments update automatically in their invoice. Your customer follows the Pay Now prompt to enter their details and can also approve saving the card on file.
Did your customer send a check or pay you by cash? You can also record payment manually when you open up the invoice. If your customer wants to pay over the phone, you can process the amount on your computer through the Square Virtual Terminal located within the Square Dashboard. And finally, you can process in-person payments and apply them directly to the invoice by swiping, dipping, or tapping your customerâs card to your connected Square Reader. Just make sure you go into Invoices and apply the payment to the existing customer invoice.
Square Invoices (read our review) also makes it easy to track when your customer saw your invoice and any activity within the account. You can quickly send a message to follow up or edit the invoice any time from your Square Dashboard.
How To Use Square Installments For Invoices
Another solution that may boost sales is offering payment plans through Square Installments. Square Installments for Invoices finances the cost for your customer, so there’s no need for you to invoice repeatedly; instead, you are paid upfront and in full by Square. Square Installments is currently only available to select businesses, however. Youâll need to apply, and if you are approved, the Installments option automatically appears as a payment option on your invoices and Square POS.
When your customer chooses Installments (either via their invoice or your Square POS), theyâll apply directly with Square Capital at the time of the sale. If they are approved, the balance is reflected in your account. Also note that after the sale, Square Capital takes on the liability of the charge, so you wonât deal with collecting or processing payments. In fact, Square instructs any merchant to direct all questions or issues your customer may have with their installment payments to Square Installments directly. Find out more about it on our post, How Does Customer Financing Through Square Installment Work?
How Much Do Recurring Payments Cost With Square?
Below is a breakdown of Squareâs payment processing per transaction. When you crunch the numbers, keep in mind that you are getting an all-in-one solution as far as payment security with PCI compliance and chargeback support. Square doesnât charge monthly service fees either, so what you see is what you get as far as costs go.
Invoice paid with card by customer: 2.9% + $0.30
Invoice paid with card on file: 3.5% + $0.15
eCommerce processing: 2.9% + $0.30
Square Installments for Invoices: 2.9% of the purchase price + $0.30
Square Installments at your Point of sale: 3.5% of the purchase price + $0.15
Square online payment API and SKIs: Free for developers to use + eCommerce processing fee
Plug-in apps integrated with Square: Price varies with each software provider
Should You Use Squareâs Recurring Payments Tools?
Setting up recurring payments for your customers takes a little bit more forethought and prep than a one-off charge. However, Square makes recurring invoices accessible by offering a range of solutions for both eCommerce and brick-and-mortar shops.
As far as third-party processors and eCommerce go, Square offers similar solutions as its peers. In other words, youâll likely need the help of a developer with any option you choose, including PayPal or Stripe â unless you opt for a plug-in app. That being said, Square enables you to get eCommerce up and running safely â whether that is through a pre-built workflow, easy integration with a plug-in app, or API developer tools. (If you do have theÂ developer expertise and a bit more wiggle-room in your budget, itâs worth mentioning that Stripe affords greater freedom to customize the whole process, add advanced reporting features, and a lot more. But you canât be shy with code!)
Still curious about Square? Why not give them a try and see for yourself? There is no fee to sign up and no binding contract required, so setting up an account may be the next step for you. You can also head over to our Square Review and read how it compares to the other solutions out there.
The post How to Use Square for Recurring Payments And Invoices appeared first on Merchant Maverick.
It’s safe to say that nothing is ever free in payment processing (and if it claims to be, you should be very suspicious). But trying to understand why some types of transactions cost more than others to process can be aÂ confusingÂ and sometimes overwhelming process. For example, why does Square charge 3.5% + $0.15 for keyed transactions and just 2.75% for swiped, dipped, and tapped transactions, even though they both go through the Point of Sale app? Why do invoices and online orders cost more than payments processed with a POS app and credit card reader? The answer is that itÂ matters whether a transaction is deemed “card-present” or “card-not-present” (CNP)Â — in fact, it is a critical factor in payment processing costs.
A card-not-present sale is any transaction where the cardholder does not present their card to the merchant. While that general definition may seem pretty cut and dry, the reality is a bit muddier. Hereâs what I mean: Even if your customer takes out their physical credit card, the transaction is not considered a âcard-present saleâ unless they actually swipe, dip, or tap it. Manually entering a card number throws the transaction into card-not-present territory.
And when a customer taps a credit card terminal with their phone at a coffee shop? That transaction is actually considered a card-present sale even though the merchant technically never sees a physical credit card!
Confused? Donât worry. Keep reading; below, we’ll break down some more examples of card-not-present transactions and help you understand why they cost more to process. We’ll also talk about what â if anything â you need to change in your payment processing setup to protect your business.
The reality is, whether you have a brick-and-mortar store or you run an eCommerce business, you need to understand how CNP transactions affect your business, your customers, and your bottom line. Thereâs much more than meets the eye when it comes to distinguishing from a card-not-present and a card-present transaction, including how much it costs you and the security risks involved. Letâs dive in!
Card-Present VS Card-Not-Present Transactions
Let’s start by talking about what a card-not-present sale actually entails. Once we do that, these transactions will be a little easier for you to identify (and help your sales team navigate the whole issue as well.) A card-not-present sale is any sale processed that does not capture the electronic data of the card at the time of the sale. Â
Itâs not always super cut and dry. Sometimes merchants donât understand that being handed a credit card doesnât automatically qualify the transaction as a card-present sale. It all depends on how it is processed. For instance, say you are at a festival and decide to buy one-of-a-kind art from a vendor. You hand her your card, and she breaks out a little manual machine and makes a carbon copy. Even though you physically handed the vendor your card, this still counts as a card-not-present transaction. No electronic data was captured.
Another example involves Visa and Apple Pay. You can consider any in-store purchase made with Apple Pay a card-present sale, but any payments made using Apple Pay in-app are considered card-not-present. Thatâs because when a customer uses a digital wallet by tapping or scanning a QR in the store, the electronic data of the card is captured in real time. In-app purchases do not capture the electronic data at the time of the sale.
For the most part, the main thing to understand is that transaction categorization ultimately boils down to whether electronic data was captured.
Common Card-Not-Present Transactions:
Invoicing a client
eCommerce / online shopping
Recurring payments that are automatically billed (subscriptions)
Common Card-Present Transactions:
Countertop credit card terminals
Tapping or scanning digital wallets
Swiping via a card reader on a tablet or smartphone (e.g., Square)
If your revenue depends on processing payments with anything other than a POS app and credit card terminal or mobile card reader, it is worth your time to understand how to keep your transactions safe. Processing credit cards costs money whether you process in person or online, but you will face slightly higher fees for processing card-not-present transactions.Â
Understanding The Cost Of Card-Not-Present Transactions
Why are you charged more for card-not-present transactions?Â It’s pretty simple, actually. Card-not-present transactions cost more because there are simply more ways for them to fail. From chargebacks, friendly fraud, and malicious fraud, there is more vulnerability and subsequent cost when things go wrong.Â Â Granted, all credit card processing poses some risk — that’s why businesses have contracts with processors, and why high-risk merchant accounts exist. It comes down to which methods of payment processing (and sometimes even which businesses) present the most risk.Â
With a merchant account that offers interchange-plus pricing, you will pay a higher interchange rate for card-not-present transactions because the card networks want a return in exchange for accepting some of the risk. Even third-party processors, which don’t overtly pass interchange costs directly to you, still build the costs in by adding a markup to their base rate.
It’s also important to understand that not all card-not-present transactions pose the same risks. For instance, you are generally going to pay a higher cost for a keyed-in entry than for an online transaction because there are typically some built-in security measures (like address and CVV verification) for online purchases, whereas there are no security measures for keyed transactions.
Want to know more about how credit card processing works? Check outÂ The Complete Guide to Credit Card Processing Rates & FeesÂ for an in-depth look.Â
Below we talk more about card-not-present fraud and what you can do to protect your business.Â
The Cost Of Fraud
Unfortunately, when it comes to CNP sales, the industry is currently seeing an increased rate of fraud for online transactions. The rollout of chip cards and the EMV liability shift in the US for card-present salesÂ actually plays a major role in the increase of card-not-present fraud, and it’s something that financial experts predicted would happen based on EMV adoption in other parts of the world.
While we certainly donât want to strike fear or dread into any of our readers, the fact is that card-not-present transactions make you more vulnerable to fraud because the physical card data canât be verified. Not only can a card data breach turn into an embarrassing public relations issue, but the business owner is ultimately responsible for absorbing the cost of any fraudulent charges in a card-not-present sale.
A recent press releaseÂ from LexisNexis demonstrates that the cost of fraud is rising. Last year, every dollar ($1) of fraud cost a merchant $2.77. This year, it’s predicted to cost $2.94 on average. And if you are in the digital space, the cost is even a bit higher.
Small businesses need to stay on guard just as much as any medium or large business. The unfortunate fact is that fraudsters are looking for vulnerabilities like outdated data security practices, and small businesses are very likely to be targeted.
There are some very sobering statistics from UPS Capital:
Nearly 90% of small and medium-sized businesses in the U.S. donât use data protection for company and customer information.
Less than half have secure company email processes to prevent phishing scams.
60% of smaller businesses are out of business within six months of suffering a cyber attack.
It is vitally important to be aware of the risks and know how to protect yourself.
Read on to learn more about fraud and what you can do to protect your business if you accept card-not-present transactions.
Protecting Your Business From Fraud
Taking a proactive approach to preventing fraud is a smart move. In this post, we focus on understanding the risks and cost of card-not-present transactions, but card-present sales are certainly not exempt from fraud. If your business processes both types, check out the Merchantâs Guide to Preventing Card-Present FraudÂ for a great breakdown of information on how to protect your business from card-present security issues.
Your first defense against fraud will always be PCI compliance. PCI DSS is an acronym for Payment Card Industry Data Security Standard, which dictates the industry-standard procedures and security measures a business needs to make to protect customer data.
The good news is that unless you are dealing with homegrown software for your payment processing system, you are likely operating with PCI compliant equipment and software. Thatâs because all payment processing software and equipment vendors go through a strict certification process to ensure their products meet industry standards for security.Â
That being said, you still need to take the time to read your contract and understand if there are any steps you need to take to ensure continued compliance.Â Third-party payment processors such as Square are automatically PCI compliant and do not require you to do anything specific to maintain compliance — at least not as far as the contract is concerned. (As a general rule, you should keep yourself informed on PCI compliance and what constitutes a suspicious transaction that could get your account flagged for fraud.)Â
With merchant accounts, PCI compliance is a lot more varied and partially depends on whether you use the provided software or integrate with a third-party. You may be obligated to complete a scan or assessments, or potentially much more depending on your payment processing setup.
The key takeaway is this: PCI compliance is never a one-time event. Assessment, remediation, and reporting is a continual process with best-practices changing each year. Even if your processor doesn’t require you to do anything to maintain compliance, it’s important to make sure you know what security best practices are.
According to the PCI DSS Quick Reference Guide, some habits can put you and your customers at risk for fraud.Â Within the guide, the PCI cites activities that are common across the board in all types of U.S. and European businesses (page 4):
81% store payment card numbers
73% store payment card expiration dates
71% store payment verification codes
57% store customer data from the payment card magnetic strip
16% store other personal data
Let’s break down that first statistic. The majority of business owners store their customers’ credit card numbers. But where?Â Unless you’re using PCI compliant software with a secure credit card vault, you could be exposing yourself to risk and liability â big time.Â
Following best practices and keeping yourself up-to-date with PCI compliance is one of the most important things you can do to prevent fraud.Â Another thing to remember is that it is up to you to ensure your team knows what not to do, too. A retail employee who keys in the majority of her transactions may be helping others commit fraud — or she may simply have trouble getting the credit card terminal’s card readers to work. But you won’t know until you check up on her.Â
Once your bases are covered with PCI compliance, you can rest easy knowing that your legal and liability concerns have at least been reasonably mitigated.
Additional layers of security may be worth looking into as well, especially if your livelihood involves online sales
Address Verification System (AVS):Â This system checks to see if your customerâs address is the same as the person who owns the credit card. Verifying the billing address or zip code against Visa or MasterCard billing information of the cardholder can prevent misuse and protect your business from fraud.
CVV Checks:Â A CVV check requires your customers to enter in the additional three numbers at the back of the card (four digits for American Express). Since this information can be stored (and also stolen), it alsoÂ makes sense to require customers to re-enter the card code whenever there is an unrecognized device or change to a shipping address.
3-D Secure: This provides an extra layer of security for online transactions. If you have heard of MasterCard SecureCode, Verified by Visa, or American Express Safekey, then you are familiar with 3-D Secure. MasterCard SecureCode, for instance, requires a PIN code to be entered into an inline window that is securely hosted by the issuing bank. The code is never shared with you directly. This authentication step is designed to reduce your liability and improve security. Many processors that cater specifically to online businesses, such as Stripe, offer 3D Secure bundled with their services.
Fully grasping the nuances of credit card processing can be difficult. However, itâs definitely worth taking a bit of time to understand how and why card-not-present transactions are different from card-present payment processing.
Even merchants who run brick-and-mortar shops have to deal with the cost of CNP payments. If you have a storefront shop, taking the time to train your team to spot the difference between the two types of transactions and keeping up with the latest compliant software/EMV readers will go a long way towards keeping your costs down âand your payment security tighter.
If you run an online business, your focus should be on making sure you have the appropriate security measures enabled with a good payment processor â preferably one that does the bulk of the work for you!Â At the end of the day, you will take the hit from chargebacks and fraud if you donât have the right protections.Â
Shopping around for eCommerce businesses solutions? ReadÂ How To Choose An eCommerce Merchant Account.
The post What Is A Card-Not-Present Transaction? appeared first on Merchant Maverick.
If youâre considering whether the Square payment processing solution is best for your business, it makes sense to ask about their customer service. For many of us, the customer service experience makes or breaks the way we feel about a company, even if we love everything else about the product. And the truth is that positive — and negative — interactions with customer service can have serious repercussions â especially when you’re trying to run an efficient, successful business and keep your own customers happy.
Not too long ago, Square suffered from a less-than-stellar reputation for customer service, but that is changing. Any company that can identify a pattern in user issues and beef up their service is one that values user experience and trust. And that is a good sign for current users.
For this post, we examined all the negative complaints about Square’s customer service in our complete Square Review and found that the biggest issue that has since been improved is Square’s phone support (more on that below).
We also dug deep into the Square customer service experience to form our own impressions. (Keep in mind that we are looking here at Squareâs business products, not the Square Cash App, which has an entirely different support team. But if youâre looking for information on that, we have you covered there, too. Check out our Square Cash App Review.)
When it comes to SquareÂ Support, the user experience has clearly been well thought out. When you visit the Support page, you will immediately see a lot of ways to find the help you need, and the available material is straightforward to navigate and easy to understand.
Below, we break it all down for you so that you can make the most of Squareâs help features and find what you need in a crunch.
Note:Â To keep things in perspective, the vast majority of Square users (over 2 million) are happy with their experience, including customer service.Â We spend a lot of time sifting through information (including reviews) and understand that negativity bias can affect any anyone. We talk a lot more about that and how we handle the phenomenon here at Merchant Maverick in our post, Understanding Negativity Bias.Â
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
Squareâs Support Center
When you have a question, you can probably find what you need through the prompts and easy-to-digest information within Squareâs troubleshooting articles. They provide a wealth of information on everything from setting up your Square account to tips for using your card reader, troubleshooting any issues, and changing settings.
Support material is laid out in a table of contents, and each section is expandable. You donât have to wade through a ton of text or scroll to find what you need because everything is organized by topic. Already know exactly what you need? You can just type in what you are looking for and simplify your hunt even more. It’s also possible to enter a question or search keywords and topics from any page in the help section. The search feature is very intelligent and can auto-suggest articles for you to explore.Â
Square Compatibility Checker
Wondering if your smartphone or tablet will work with Square? Rather than searching the knowledgebase for a list, you can use Square’s Compatibility checker. Just enter in the make and model of your device and Square will tell you which card readers and other pieces of hardware are compatible (and which aren’t). This is a great way to make sure you don’t unnecessarily buy new devices even before you sign up with Square, or you can check whether the new device you’re planning to buy will actually still work with your hardware.
Having trouble using one of Square’s products?Â If you are looking for a quick way to see if everything on Square’s end checks out, you can head to https://www.issquareup.com/ and see whether an issue is on your end or theirs.Â
Square Community Forum
Square has set up an excellent and unusually active hub for sellers to collaborate, get ideas, and problem-solve with its community forum, known as the Seller Community. You need to be a Square user to join, but once you’ve signed in, you can post your questions. And youâll probably get a response more quickly than you expect! The forum is organized by popular topics, and directly below the fold you can jump right in and view recent discussions.Â
Within the Seller Community, you can also search by keyword or for specific community members. There are spots dedicated to those who are new to Square, as well as a general discussion page, a dedicated forum for questions, and a place just for Square staff to share product updates (so you can stay in the know about any new features).
Youâll see that the Square staff are quite active on the forum, answering questions and even encouraging members to submit feature requests to the development team. Itâs a pretty happening place when you start digging in.
Email & Social Media
If you have a question that requires a bit more personalized assistance, of course, you can still send Square’s support team a message through email or social media. Square has a dedicated Twitter support page, @SqSupport, for technical questions, or you can message the company’s Facebook page.
You can email Square even if you aren’t a Square user, but if you do have an account, Square will ask you to sign in and then choose the reason for reaching out.
After signing in and connecting to the service that applies to you, they provide you with contact details to get you matched with the right person.Â Â In the meantime, you still have the option of checking out the Seller Community or looking through the support topics Square has published on its site.
Square has made a smart move by having actual employees (who collaborate with Square engineers) handle customer service questions. Speaking to a customer service rep who has inherent knowledge about a product can make a big difference when it comes to technical or even workflow questions. A few short years ago that wasn’t the case at Square, but we are glad that they responded to give the people what they wanted.Â
To get your more complicated questions answered, you can access live help when you need it. This live support is only available to existing customers, however. Youâll get a customer code on the Square help page which you can use to patch you through to a person.Â
Square’s phone support is active between the hours of 6 am to 6 pm Pacific time, Monday through Friday.
It’s comforting to know that phone support is an option, but thanks to the exhaustive help sections on their site, including the Square Seller Community, youâll likely get the answers you need without having to call in.
Learn More About Square
If you already use Square, it might be a good idea to check out some of the resources in the help sections and even connect with other sellers in the community forum. Not only does âiron sharpen ironâ when it comes to running a business, but you might also discover how to take advantage of built-in features, like the Square Dashboard, to make your experience even better.
If youâre considering using Square to accept payments, you can sign up for a free account. With no monthly charges or hidden fees, chargeback protection, and full PCI compliance included, it’s easy to evaluate whether Square is right for you without external pressures influencing your choice.
Still not sure? Get more information by digging intoÂ Is Square a Secure Way to Accept Credit Cards or reading our fullÂ Square review.
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
The post Squareâs Customer Service: Why It Works So Well And How To Use It appeared first on Merchant Maverick.
As a small business owner who is launching a new shop or exploring your payment processing options, finding the right POS to accept payments is notÂ a decisionÂ to be made lightly. You probably already know that the grocery industry has its own unique rewards and challenges. Keeping up with supply and demand, getting your name out there, competing with the bigger brands, and strengthening your own brand recognition takes time, energy, and a lot of know-how. Fortunately, Square offers a fantastic POS option for markets and grocery stores that goes way beyond just the swipe.
Read on to find out how Square payment processing tools can benefit your business whether you are opening a pop-up shop, have a brick-and-mortar store, or take your culinary delights on the go to farmer’s markets and trade shows.
Squareâs Free Point-Of-Sale Reader & App
Square is best known for the free Square Point of Sale app and the free Square Reader. Square’s iconic white reader plugs into a smartphone or tablet to make mobile payments possible. The Square Point of Sale app allows you to âswipe, dip, or tap paymentsâ whether or not you have an internet signal. If you run into a spotty WiFi connection or have a service interruption, you donât have to worry about a line bottleneck because the app can securely save data offline.
For the smaller to mid-size shop, the Square Point of Sale app has everything you will need and then some. We dive into all of these features below, so keep reading for a closer look at how Square gives you better control over more parts of your business, from inventory management to sales, employees, and even more.
Weâll also take a look at how Square can also help you completely run or supplement your marketing campaigns with an all-in-one solution that can integrate a loyalty program and private customer feedback. Most of these perks (except for the loyalty program option) are all âin-the-boxâ features that you wonât pay anything more to use with your free POS Square reader. Â Letâs dig in!
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
One thing will never change â people love to eat. However, keeping your supply up-to-date can be a challenge when it comes to balancing the ebb and flow of demand. Your customers come in for a specific product or ingredient; making sure itâs always there for them builds loyalty and trust. Managing inventory can be tricky if you donât have the right tools.
Thankfully, Square builds inventory management right into their product, so you donât ever have to think twice about shopping around for a suite of tools. Itâs easy to set up your inventory â you can bulk import all of your products with a CSV spreadsheet and make any adjustments to name, prices, or quantities as needed. Once your inventory is saved, you can also set low-stock alerts so that Square will let you know if you’re running low on a product. The best part is that you can determine what constitutes “low stock,” whether that’s six of an item, or 100! Youâll also always be able to take a peek in real time at what â and how much â of your products are selling.
Square’s inventory also supports variants and modifiers. Variants are helpful if you carry a product that comes in different flavors or sizes — you can keep the item listing centralized, but still track quantities of each flavor or size and see which ones are most popular. You can even set different pricing for each variant, as appropriate. Modifiers are more applicable to restaurants and cafes, but if you run a small boutique store and want to upsell customers on special bundles or extra discounted products, you could add them as modifiers.
Square’s inventory system allows you to upload photos for each product, and on a tablet you can configure the layout of products. However, if you don’t like browsing for the right item, you can also attach a barcode scanner. While the free Point of Sale App doesn’t have native label printing, you can find several viable workarounds.
Also, if you sell products in bulk, it’s important to know that Square doesn’t currently support tracking partial increments of a product, or selling by weight. Again, you can find workarounds for this, one of them being the variable price point feature. With the variable price point, you can create an item and track sales, but the POS app will prompt you to enter an amount for the sale when you select the item.
Finally, if you have more than one shop, you can take advantage of the free multi-location inventory management tools. Square allows you to set up individual preferences for each location, including taxes. You can build your inventory from Square’s centralized item catalog and adjust pricing and availability as appropriate. Plus, you can run reports to see sales by location, POS device, or even by individual employee (you’ll need an Employee Management subscription for that last report.)Â
The best part is that you can control all of this — every location, all of your inventory, all of your devices — from your Square Dashboard, which is a free web portal.Â Below we also cover a little bit more about the dashboard â including how it helps you keep track of employee sales, tips, peak sales times, and more.
The Square dashboard gives you an integrated look at many aspects of your store â and these reporting and analytics features are all free. You can view your stats in real time and see what is going on in your store â or stores â simply by visiting the Sales tab in the dashboard. Whether you want to dig into the data or you just want a quick visual representation of sales, you can find what you need, fast. You can access reports, view all types of transactions, and keep track of deposits all by quickly scanning the three tabs at the top of your dashboard.
The reports tab breaks all of your data down into simple graphs and data to view aspects of your shop, including:
Sales Summary: Your sales summary report is updated in real time and can be viewed by day, month, or year.
Sales Trends: See your sales performance in daily, weekly, or yearly views.
Payments Methods: This report displays how your customers pay and any fees associated with the transaction.
Item Sales: Allows you to find out how well any individual product is selling.
Category Sales: Get a quick pie-chart view of which categories are bringing in the most sales such as appetizers, side dishes, or drinks, for example.
Employee Sales: This report breaks down tips, hours worked, and when an employeeâs sales peaked for the day. (Note: You need to subscribe to Square’s Employee Management to access these features)
Discounts: Running a promotion? This report tells you how often your customers use a discount, coupon, or another offer when they buy. (More about loyalty programs through Square later in the post.)
Taxes: This report breaks all of your tax information down by the type, amount, and records any non-taxable sales in one spot.
Square also allows you to create your own custom reports, so if you want to see certain pieces of information together, you can tell Square to compile that report for you, and even how often to send it.
Don’t forget that the Dashboard is also the centralized management hub for all of your other Square services, including invoicing, employee management or payroll, and any other tools you might be using.
Built-In Marketing Engagement
One of the interesting aspects of Square’s platform is its customer engagement tools, the foundation of which is the customer directory. With Square POS, you can keep a record of all your customers, with their name, phone number, email, purchase history,Â and even card details, if you prefer (and your customers agree to store the card on file). You don’t need to have Square’s loyalty program to activate this feature, and it comes at no charge. It’s a great way to keep notes on regular customers and their preferences, to see who your most loyal customers are and who spends the most money in your store.Â
If you’d like to build marketing campaigns to reach out to your regulars, your new customers, or even lapsed customers, Square has the tools built right in, plus all of the data right at your fingertips. Square’s marketing services start at $15/month, which is a pretty reasonable price. The price will scale with your use of the marketing services.
With the marketing tools, you can segment your customer list and target people automatically with offers to get them in the door. So whether you are welcoming a new customer or re-engaging a customer you havenât seen in a while with a with a special discount, Square lets you tailor your marketing message to people at different spots in the buying journey.
The email tools are simple â you donât have to understand how to set up multiple campaigns because Square streamlines the creation process for you through prompts. They give you a lot of template designs to choose from and even have some holiday and special occasion suggestions. You can send out a one-time email for a birthday or set up recurring email campaigns that encourage more interaction and more opportunities to buy from you — it all depends on how you want to run your business.Â
Finally, when itâs time to review the success of your email campaigns, Square reports show you how many opens and clicks you get, as well as how many people redeem your offer.
Receive & Manage Feedback Privately
The Feedback feature can be helpful if you want a way to take charge of the customer experience and try to eliminate the troubles they encounter. It allows you to personally engage your customers â while keeping everything private. When you enable feedback management, customers who receive digital receipts also receive an invite to provide private feedback about their experience.
You can then resolve any issues between just you and your customer and hopefully make them happier and engaged. The idea behind this is that it is much easier to respond to private feedback than having to keep track of and respond to negative public feedback. Most customers appreciate being acknowledged whether the experience was good or bad, and if you do have an unhappy customer, you can make it right with a full/partial refund or a coupon for a discount on their next purchase. You can check the customer database to see what their purchase history is like and make a determination of the best offer to send.Â
Best of all, the feedback management feature is totally free to use!
Square Loyalty Program
Square encourages customer engagement and sales in yet another way â a loyalty program.Â The pricing structure of Squareâs loyalty program is based on the number of loyalty visits, starting at $25/month. Costs automatically adjust with the participation of your customers, and you can always track the success of any program at your dashboard to see if youâre getting your moneyâs worth.
Square’s loyalty program is very flexible and allows you to tailor rewards to your business and your branding. You can opt for something as simple as aÂ digital punch card, where customers earn a reward after so many purchases, or you can structure a moreÂ advanced reward system that allows your customers to collect points and cash in their rewards when they want. You can even let them choose from multiple tiers — they could opt for two lower-tier rewards, or spend all their points on a single higher-tiered reward.Â
However you choose to structure your rewards program, you can track the performance on your dashboard. You can see how many customers enroll, how often customers redeem rewards, and how many subsequent repeat visits youâre getting.Â
According to Square, customers who join their loyalty programs spend 37% more after they join it. Across the board, loyalty programs continue to work for businesses of every size to encourage repeat business, and we think that itâs definitely worth giving it a try for a while and seeing if it works for your business.
Fully PCI Compliant & Secure
When dealing with credit card processing companies, one of the biggest questions most business owners have has to do with safety and security. You want to know that your data is secure and your customerâs payment information isnât going to be compromised, because when it all boils down, the burden is on you to make sure that you are PCI compliant. “PCI” is shorthand for the Payment Card Industry Data Security Standard (also sometimes called PCI DSS). No matter how big or small your business is, if you accept credit cards, you have to follow the best practices of the industry when it comes to security â and you can face penalties if you donât.
To remain secure and compliant for each credit card you take, you have to follow the security guidelines when you swipe, key in, store, or transmit their card data. For starters, data must be encrypted properly at each stage of processing and storage, and each year the standards change.
The whole security and compliance issue can be expensive for the smaller to midsize business, and for some, the issue is intimidating enough that they avoid credit card payments altogether.
The great news is that when Square offers you their product or service, they are taking the burden of PCI compliance on themselves when it comes to their hardware and app. Square is an industry leader in security and compliance. Their team participates on the PCI board itself and has an inside view into the ever-changing world of data security. What that means for you is that when you use Square, you donât have to jump through any other security hoops â Square maintains PCI compliance and does the work for you. You won’t even need to pay any PCI compliance fees.Â
Cost Per Swipe & Getting Started With Square
Getting started with the Square POS app and the reader you will use to swipe your customerâs cards is entirely free. Square continues to remain a favorite among small business owners because they donât charge sign-on or monthly fees for their free POS reader or app â and they donât make you sign contracts and punish you with charges if you decide itâs not for you.
If you bring your own smartphone or tablet and combine it with one of Square’s mobile card readers, you’ll pay 2.75% for each swiped, dipped, or tapped transaction. If you opt for one of Square’s all-in-one hardware systems, such as Square Terminal or Square Register, you’ll pay slightly different rates. With Square Terminal, swiped, dipped, or tapped transactions process at 2.6% + $0.10 per transaction.Â If you want to know more about all of Square’s different card readers and hardware, check out A Guide to Square’s Credit Card Readers and POS Bundles.
Considering that these are pretty low rates to begin with, and there are so many additional built-in features like dashboard analytics, invoicing, the customer database, and inventory management, we think that is a pretty sweet deal for any grocery store looking to expand.
If you are curious and want to dig even deeper, check out our Square reviewÂ or visit the Square Point of Sale page and sign up for free to see how it all works for yourself!
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
The post Why Square Is A Great Free POS For Markets And Grocery Stores appeared first on Merchant Maverick.
Square is best known by online sellers and brick-and-mortar shops for its secure credit card processing solutions. With a free mobile point of sale app — and free credit card reader–, Square has made it easier for the everyday small business owner to start taking credit cards. Card readers like Square’s also make it more convenient for shoppers to buy without carrying cash. That can be a win-win for everyone involved with the sale.
Because a business owner no longer has to purchase an expensive POS system to process credit card payments, itâs no wonder that the use of Square has rapidly grown over the last few years. In fact, a surprising number of businesses still did not accept credit cards at the time Square was launched. For a solo entrepreneur or a smaller shop, it used to be a lot more expensive and time-consuming to get started (not to mention more than a little intimidating, given PCI compliance and other regulations). Nowadays, you can find these portable credit card readers everywhere â from your favorite ice cream place to high-end boutiques, salons, and even consulting agencies. If youâre buying at a local shop, there is a good chance that Square is the company processing your payment.
In typical Square fashion, Square Installments provides a more accessible option for businesses that want to offer financing to their clients. If your company sells higher ticket items â from $250 to $10,000 â and youâd like to offer on-the-spot approval and financing to your customers, read on to find out more about Square Installments. But first â a little primer on customer financing.
What Is Customer Financing?
Before we dig too deep into Square Installments, letâs cover the basics of customer financing. By financing a purchase, customers can take home a product or use a service right away without paying for it in full at the time of purchase.
A common example of customer financing would be heading to the dealership and leaving with a new-to-you car â and a payment plan for the next three years to pay it off. Getting the newest version of your phone and rolling payments into your mobile phone bill is also another (more painless) way to finance an upgrade for your phone with less sticker shock.
Financing makes things a little easier on your customer, but it shouldnât require you to wait for the cash. When you offer to finance through a third-party like Square Installments, you sell your product or service and permit payment to be settled directly between the lender (in this case Square Capital) and your customer. Square pays you in full at the time of purchase.
Financing customers is all about convenience and accessibility. For your customers, financing can make large ticket items easier to purchase with predictable monthly payments spread out over time. Instead of shelling out the entire lump sum, they have more time to pay. This makes for an easier sell for your salesperson and a more comfortable decision for your customer.
When a purchaser thinks about what they are buying in terms of monthly vs. the total amount of dollars, financing can significantly lower the âsticker shock.â Giving purchasing flexibility to your customers will make buying from you a more attractive and accessible option â and of course, thatâs good for your business, too.
Companies that invoice monthly payments for ongoing services are also offering a financing option to their clients, in a way. Yet anyone who has a business model based on retainers or monthly agreements knows that sometimes when the bill comes due, it doesnât always get paid â possibly because the person you invoiced has bad credit or is in financial trouble. These issues can be virtually nonexistent when you let Square Installments pre-screen and approve your clients â and take on the financial risk.
Read on to find out how Square Installments works and how much it costs so you can decide if Square Installments services are right for you.
How Does Square Installments Work?
There are two ways you can use Square Installments for your business: at the point of sale or via Square Invoices. Once you sign up for Square Installments, your business will get a custom URL. This web address is just for your business and is the link youâll send to every customer who wants to apply for financing.
The Square Installments Process For In-Store Sales
Once you share the link with your customer, they’ll follow the instructions from their smartphone and fill out a short online application. In almost all scenarios, customer approval happens in real time, right when theyâre ready to purchase at your shop.
If approved, they can accept one of the financing options on offer and will receive a one-time-use number for a digital card they use to pay you for their purchase. The number is valid for seven days, and your customer can only redeem it at your business.
When your customer is ready to buy, theyâll present you with the digital card number given to them by Square Installments; you will key that number directly into your Square Point of Sale app, online through Square API, or through your virtual terminal.
Square pays you in full for the amount at the time you process the approved application.
Square Invoices From Square Installments
Square Invoices allows you to send your customers invoices through Square as well. After you are approved and set up, the option for installment payments will appear on your invoice automatically. Once your customers receive your invoice, the process is similar to the one above â they fill out an online application, can pick a plan, and once approved, you get paid upfront and in full.
To spread the word, Square will also sendÂ you some free marketing material â both in print and in the form of a banner for your website so your customers wonât miss this new option for buying with you.
You Donât Need To Be A Financing Expert
Worried about the fine print and fielding financing questions? Donât be. If your customers have questions about Square Installments, they’ll contact Square directly. In fact, because this is considered a âhighly regulated financial product,â itâs essential to pass any questions or concerns off to Squareâs own customer service folks. And of course, this arrangement means youâre not burdened with the nitty-gritty details of financing or payment collection.
How Much Does Square Installments Cost?
If youâre a business owner considering whether or not the cost is worth the convenience of the service, here are some figures to help you crunch the math.
Square Installments for Square Invoices costs 2.9% of the purchase price plus $0.30 per transaction. Square Installments at your Point of Sale costs 3.5% of the purchase price plus $0.15 per transaction. If a custom rate applies to your business for keyed-in Square Invoices transactions, this rate also applies to any Square Installments transactions.
The good news is that there are no recurring monthly usage fees or long-term commitments. You can cancel the service any you time want with no fees or contracts for your business to worry about.
For a customer who is considering using Square Installments to pay for a purchase, the annual percentage rate will vary depending on a few different factors. However, every customer will have more three options when it comes to repaying the loan. Square makes things upfront and easy to understand for the borrower, with ease of use in mind.
Should You Use Square Installments?
The main benefit of Square Installments is that customers can pay over time — making them more likely to buy and making your business more likely to sell more inventory. Whether to break up payments for a big purchase that a customer normally couldnât afford, or simply to offer a convenient option other than cash or checks, financing through Square Installments can be a valuable tool for your sales team to leverage.
When the average business owner thinks about customer financing, one of the biggest concerns is that the customer gets possession of the product or service without paying in full. While that may be a concern if you offer in-store financing and manage it yourself, in this case, Square takes on the financial risk entirely. You get paid right away and let Square manage the installments.
There are some important things to keep in mind when you consider whether Square Installments services are right for your business, however. As noted above, Square Installments isnât free. Also, keep in mind that Square Installments is only applicable for purchases between $250 and $10,000 â so businesses that deal with higher ticket products or services will need to consider other options for financing.
When you make the final decision to use Square Installments, consider the benefits vs. the costs. Here are a few questions to ask:
Would your target market and current customers likely make the purchase anyway? (In other words: How âwarmâ or âcoldâ are the people who come to your online sales page or place of business?)
Does opening up financing options also open up the possibility of a new target customer or a larger final sale?
If you send out invoices, will Square Installments give you a more convenient or secure option to take secure payments and prescreen users, despite the cost?
For any business owner, the benefits and conveniences should outweigh the cost of Square Installments per sale. Because you donât need to sign any long-term contracts to use Square Installments, it might be worth it to try the service for a bit, see what you think, and compare sales over the next few sales cycles to be sure either way.
Learn More About Square
While you consider whether or not you want to jump in and offer Square Installments as an option for your customers, check out some of the other reviews for Square services. Find out how much Square charges for their primary services and get armed with more information about Square processing to see if these payment options are right for your business. If you want to see the service for yourself, sign up for a free Square account today and check it out!
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
The post How Does Customer Financing With Square Installments Work? appeared first on Merchant Maverick.
As a consumer mobile wallet, PayPal is darn-near ubiquitous. But with more than 17 million merchants worldwide calling PayPal their payments processor, it’s alsoÂ a massive force in the merchant services industry. So if you’re looking for a quick and easy way to get set up with credit card payments, whether for a POS system or online, PayPal is probably going to be on your radar, and with good reason.
But should you choose PayPal as your payments processor, and what will it cost? The good news is that PayPal offers transparent, pay-as-you-go pricing with no monthly fees, no account termination fees, or other hidden costs. You can predict fairly well what you’ll pay with PayPal, and all payment processing fees are deducted before PayPal deposits funds in your account.
The one major drawback is that PayPal is a third-party processor, also referred to as an aggregator. That means the company essentially onboards merchants as sub-users of one, giant merchant account that includes the entirety of PayPal’s merchant base. This means that the company does minimal underwriting before approving an account. You don’t need to provide much info beyond confirming your identity to open an account. However, this does mean you face a greater amount of scrutiny after opening an account, and PayPal can terminate your account or place a hold on funds with no notice to you.
That sounds worrisome, but the reality is it only happens to a small percentage of merchants. You can also take steps to protect yourself by recognizing the common red flags that processors look for and avoiding them. Check out our article on how to avoid merchant accounts holds and terminations to learn more.
PayPal obviously isn’t the right choice for everyone. There are restrictions on the types of products merchants can offer, and it doesn’t support certain business models. High-risk businesses should look somewhere else for a merchant account. However, most merchants should be fine with a PayPal account for payment processing.
Read on for a closer look at what you can expect to pay with PayPal as your business’ credit card processor! You can also check out our PayPal and PayPal Here reviews for a focused look at the products and services.
Payment Processing Fees
The major concern for most merchants who use (or are considering using) PayPal are the payment processing costs, so we’ll start there. PayPal offers predictable, flat-rate pricing for all merchants. You don’t have to worry about higher interchange for American Express cards, or MCCs, or qualified vs non-qualified transactions. Your exact rate will depend on the type of transaction.
Merchants who use PayPal’s mPOS app, PayPal Here, or integrate with one of PayPal’s POS partners (such as Vend), will pay the following for in-person transactions:
2.7% per swiped, dipped or tapped transaction
3.5 + $0.15 per keyed transaction
For online transactions, including monthly subscription charges, donations,Â and digital invoices, PayPal charges the following:
2.9% + $0.30 per online transaction
That’s it. Really. The simplicity of PayPal’s pricing is one of the biggest draws for merchants. You can predict fairly easily what your pricing will be and, because PayPal deducts its fees before depositing funds in your account, you don’t have to worry about an end-of-the-month invoice or going over a limit and incurring additional fees.
What About Alternative Payment Processing Rates?
If you’re wondering whether PayPal offers any sort of alternative payment plans, the answer is yes. Merchants with an average transaction size under $10 can opt for the micropayments plan. PayPal also offers a nonprofit discount for online transactions to qualified 501(c)(3) nonprofits.
Micropayments Plan: 5% + $0.05 per transaction. (Note: This rate applies to all transactions, even those above $10)
Nonprofit Discount (Online Only): 2.2% + $0.30 per transaction
If you integrate with one of PayPal’s partner POS systems, such as Vend or TouchBistro, you may be eligible for special discountsÂ (presumably volume-based) or other promotions. However, these offers aren’t clearly disclosed, just advertised on the POS software sites.
Other PayPal Fees For Payment Processing
While PayPal does charge a few extra fees relating to payment processing, they aren’t many. But these are what you might come across:
1.5% Cross-Border Transaction Fee: For US merchants who accept online payments from buyers out of the country, or in-person transactions involving a card from outside the US, PayPal charges a 1.5% cross-border fee. That means, for example, that a US merchant accepting a Canadian card at a POS terminal will pay 4% of the transaction value to PayPal.
2.5% Currency Conversion Fee:Â If PayPal has to convert the currency before it deposits the funds in your account, you’ll pay another 2.5% conversion fee. Whether you have to pay the conversion fee depends on the customer’s bank and whether it will handle the currency conversion (usually at a cost to the customer).
$20 Chargeback Fee: Chargeback fees are pretty standard, and if a customer files a chargeback against you, PayPal will assess a $20 fee in addition to withdrawing the funds to cover the transaction amount.
Refund Fee:Â In the event of a refund, PayPal will refund the percentage-based fee from the transaction to you, but keep the fixed fee. For most in-person transactions that means you’ll pay nothing. However, refunds on keyed transactions mean you’ll pay $0.15. Refunds on online or invoiced transactions will cost $0.30. PayPal can be a bit confusing about how this works in its transaction summaries, but be aware that you will pay a fee for most refunded transactions, albeit a small one.
1% Instant Transfer Fee: If you’d like to move your PayPal balance to a bank account immediately, you can do that — for a fee. PayPal charges merchants 1% of the transfer value, capped at $10 per transfer, but your funds will be available typically within 30 minutes (s0 long as your bank’s system isn’t incredibly slow). You’ll have to connect an eligible debit card to support instant transfers as well. However, if you prefer to have instant access to funds without paying a fee, don’t forget that PayPal offers a business debit card that’s linked to your PayPal balance, too.
One of the big draws for PayPal is the lack of software fees. Instead of paying a monthly fee for PayPal’s ecommerce features, you pay only the payment transaction costs (in most circumstances — but we’ll come back to this in a moment). While you’ll need to arrange for your own domain and web hosting, you can implement PayPal’s “buy” and “donate” buttons with no additional costs. You can send digital invoices for free and only pay the transaction cost when the invoice is paid.
Likewise, access to PayPal’s mPOS app, PayPal Here (read our review) is also free. However, if you opt to integrate PayPal into a POS app, invoicing software, or another platform, you’ll be responsible for those software costs. PayPal doesn’t charge anything for use of the integration.
Also, take note: PayPal doesn’t charge merchants any PCI compliance fees, account maintenance fees, customer service fees, or termination/account closure fees.
However, PayPal does offer a couple of advanced software options that come with additional costs:
PayPal Payments Pro: The “Pro” plan from PayPal has two advantages. One, it includes a virtual terminal to accept payments over the phone by keying in a card from a browser window.Â Two, it allows merchants to keep the checkout process on their own website rather than redirecting to PayPal to complete a transaction. This does come with a couple of concerns. For one, you’re not automatically PCI compliant and you’ll need to take additional steps to handle your PCI compliance. Two, $30/month for a virtual terminal is pretty pricey considering you’ll still pay higher rates than swiped/dipped/tapped transactions. Square and Shopify both offer free virtual terminals. Also, opting for PayPal Payments Pro and the Virtual Terminal will mean a few different transaction fees to worry about:
3.5% American Express Fee: Any Amex cards will process at the higher 3.5% rate if you’re on the Pro plan.
3.1% + $0.30 Virtual Terminal Fee: Any transactions processed through PayPal’s Virtual Terminal process at 3.1% + $0.30, plus the international transaction fee if applicable.
Recurring Billing: If you’d like to sell subscriptions (software, gift boxes, etc.), PayPal does offer a set of recurring billing tools. Recurring payments are available with PayPal’s Express Checkout Option at no additional charge, but if you have PayPal Payments Pro and want advanced tools, they’ll cost youÂ $10/month. This doesn’t apply to “Donate” buttons, which have their own option for donors to choose between a one-time or recurring donation.
Mass Payouts:Â If you need to distribute funds to multiple parties, PayPal’s Mass Payouts feature might be an appealing option. You have two options here: using PayPal’s API to handle the command, or uploading a spreadsheet. Which method you choose affects how much you pay — if you opt to upload a spreadsheet through PayPal’s website, you’ll pay 2% per transaction, capped at a maximum $1 USD, which is pretty reasonable. If you opt for the API, you’ll pay a flat fee of $0.25 USD per payment. This is a great way to distribute payments to contractors, for example, or manage marketplace payments if you use PayPal’s platform.
PayPal Hardware Costs
Unless you’re integrating PayPal with a POS system or using the free mPOS, PayPal Here, you won’t have to worry about hardware costs. But if you do, you’ll have a few options for card readers:
Chip & Swipe Reader: PayPal’s entry-level chip reader sells for $24.99. In addition to EMV capabilities it supports magstripe transactions, but no contactless payments. However, it does connect to phones and tablets via Bluetooth and comes with a convenient mounting clip.
Chip & Tap Reader: To get a credit card reader that supports magstripe, EMV, and contactless payments, you’ll need the Chip and Tap reader, which sells for $59.99. We’ve already reviewed this reader as well as the optional charging dock ($30 separately, or bundled for $79.99), with a very positive rating. Again, the Chip and Tap reader connects via Bluetooth. In addition to the charging dock, it comes with a convenient mounting clip.
Chip Card Reader: The Chip Card Reader was the first EMV-enabled card reader PayPal offered, and it’s still the only hardware option for merchants who want to integrate with one of PayPal’s POS partners. It sells for $99 on the PayPal site, with an optional charging dock. Given the price point, it shouldn’t surprise you to learn that this all-in-one reader connects via Bluetooth.
Mobile Card Reader: PayPal used to offer its entry-level swipe-only reader for free, but now it sells for $15 because PayPal, like most processors, really wants you to start accepting EMV. Use of the mobile reader comes with limitations on accounts, so if you do a decent volume of credit card transactions and don’t want to encounter any holds on your funds, you should avoid the mobile reader at all costs:
*Key-in transactions and sales over $500 in a 7-day period made with the Mobile Card Reader are subject to an automatic 30-day reserve where funds are held in your PayPal account to cover the high risk associated with these types of transactions. For increased protection from fraudulent transactions, we recommend using a chip card reader. All PayPal accounts are subject to policies that can lead to account restrictions in the form of holds, limitations, or reserves. Additional information about these policies can be found in theÂ PayPal User Agreement.
Apart from the cardreaders, PayPal doesn’t offer any proprietary hardware. If you need a countertop register setup, you can choose from an array of tablet stands, receipt printers, and cash drawers. A few select models are confirmed to work, while many others are “unofficially supported” in that they’re likely to work in most cases. The PayPal Here app doesn’t officially support any external barcode scanners (it supports in-app scanning using the device’s camera), but Bluetooth-enabled scanners may work with your setup.
Is PayPal Actually a Good Value?
We’ve talked pretty extensively about the cost of using PayPal, but we haven’t really talked about value. Because value is so much more than just the actual, physical cost. Value encompasses convenience, customer service, and other extra factors that could easily justify paying more than the absolute lowest prices.
PayPal isn’t the absolute cheapest processor out there — especially not for businesses that handle more than $10,000/month in credit card transactions. Larger businesses may be eligible for merchant accounts with volume discounts.Â For low-volume businesses, PayPal often does offer more competitive pricing because of the lack of monthly fees. The flat-rate pricing, especially for in-person transactions, can mean cost savings over interchange-plus.
But the real value in PayPal is the massive consumer trust and convenience. Just about everyone recognizes the PayPal name, and with 200+ million consumer users around the world, it’s safe to say a lot of people have PayPal accounts. The barriers to entry are minimal — you don’t need a huge amount of technological experience to implement PayPal for in-person or online payments. As long as you aren’t using PayPal Payments Pro, you don’t even have to worry about PCI compliance. PayPal handles it for you, at no additional cost.
Apart from the issue of account terminations or funding holds, the only other consistent complaint about PayPal is its customer service, and reports vary. Some merchants say they’ve never had a problem with customer service. Others say that their support reps have been downright unhelpful when they’ve called in. Fortunately, PayPal offers extensive self-help resources so you should be able to deal with most technical issues without having to contact PayPal directly.
I can’t say unequivocally that PayPal is right for everyone. It’s not. But it is a really good option for a lot of merchants, especially low-volume businesses that are just starting out. For a closer look at PayPal and all its services, we recommend checking out our PayPal and PayPal Here reviews.
If you’re not sure PayPal is right for you, I suggest looking at our Square vs. PayPal article, as the two companies are fairly similar in their business models and offerings.
Thanks for reading! If you have any questions or comments, we’d love to hear from you, so please drop us a comment!
The post The Complete Guide to PayPal’s Fees, Rates, and Pricing appeared first on Merchant Maverick.
Ordinary payment processing is complicated. But finding good offshore, international, or high-risk payment solutions can be a real nightmare. If you fall into one of these categories, youâve likely had your merchant account applications denied at least a few times. Even worse, perhaps youâve had your processing service terminated and your money withheld from you for months. We understand your struggle. Weâve seen hundreds of businesses go through the exact same thing, and weâre here to help you find the perfect offshore merchant account for your high-risk business.
If youâre just looking for a run-of-the-mill high-risk merchant account for your business, youâll want to check out our article The Best High-Risk Merchant Account Providers. The high-risk category often includes business types that you wouldnât normally associate with the term âhigh-risk,â such as airlines or online furniture sales. While these types of businesses are usually treated as high-risk by banks and processors, they can usually be approved for a domestic merchant account by working with a high-risk specialist.
For our purposes, weâll use the terms offshore merchant account and international merchant account interchangeably, as they mean the same thing. Both terms refer to a merchant account that is underwritten by a bank or processor that is situated in a different country from the one where the business is located. The most common reasons for needing an offshore account include the following:
You do a significant amount of business in a foreign country and need to accept payments in the local currency.
Your business has offices in multiple countries, and you need separate merchant accounts for each location.
Your business is considered to be so risky that you cannot obtain a regular high-risk merchant account in your own country.
Below, weâll discuss the factors to evaluate when considering an offshore merchant account and several special features that youâll want to include in your service. Weâll also profile four offshore merchant account providers that we feel offer superior service and overall value in comparison to their competitors.
Factors To Consider When Selecting An Offshore Merchant Account
While many offshore merchant account providers also specialize in high-risk accounts more generally, not all high-risk processors work with international merchants or provide offshore accounts for domestic merchants. Many high-risk specialists only work with US-based businesses, and only provide accounts through US-based banks and processors. Before you apply for an offshore account, youâll want to confirm that the company youâre considering works with businesses located in your country. This information might be spelled out explicitly on the providerâs website, or you might have to talk to their sales staff to get a confirmation.
Providers that specialize in setting up offshore merchant accounts can usually get you an account in just about any country around the world, though obviously, there are exceptions. As a US-based merchant, donât expect to set up your offshore account in a place like Afghanistan or North Korea. Itâs simply not going to happen. With the exception of countries limited by political considerations or a high level of instability, however, the possibilities are wide open.
In most cases, you should aim to get an account in a country where you expect to do a significant amount of business. On the other hand, if your business is going to operate exclusively in the United States, an offshore account serves mainly as a last resort for getting a merchant account when you simply canât get approved for a domestic high-risk account. Banking regulations are more relaxed in certain other countries, and the willingness on the part of banks and processors to work with high-risk businesses is also more favorable. At the same time, you should be aware that setting up an offshore account under these circumstances, while it might be your only option for accepting credit cards, can present some serious risks to you as well. Your ability to pursue a legal remedy against a foreign bank or processor might be severely limited â or even nonexistent. At a minimum, you should consider legally registering your business in the country where your account will be located. Even with legal standing in the country, however, be aware that it might be extremely inconvenient and expensive to pursue a legal action outside of your own country.
Thereâs also an increased risk that you could become the victim of fraud or identity theft. Banks in other countries collect the same personal data about you and your business that US-based banks do, but they donât always do as good a job of protecting it. Youâll want to keep an especially close eye on your merchant account, your business account, and any personal accounts about which youâve released information to get approved for an offshore merchant account.
High-risk merchant accounts are notorious for including higher processing rates and account fees, and offshore accounts can be even worse. Providers know youâre particularly desperate and some, but not all, will take advantage of your situation by charging you as much as they think they can get away with. We recommend that you shop around and compare multiple quotes when looking for an offshore account. Donât accept the first offer from a bank or processor just because theyâre the first one that hasnât rejected your application due to the nature of your business.
Note that merchant account providers who market offshore accounts often downplay or fail to mention these risk factors, so itâs up to you to look out for yourself. Do your own independent research, compare multiple offers, and thoroughly review all contract documents before you sign up for an account.
Special Features Of Offshore Merchant Accounts
For the most part, youâll want the same services and features for an offshore account that you would want for a traditional merchant account. This includes processing hardware such as credit card terminals and POS systems for retail merchants, and a robust payment gateway for eCommerce merchants. Youâll also want an online account dashboard of some kind that allows you to monitor your sales in real-time. While online account access is now a standard feature in the United States, you might not always find this feature with an offshore account. Mail-order and telephone-order (MOTO) businesses often find a virtual terminal to be the most cost-effective method for inputting transactions. Depending on the needs of your business, a smartphone- or tablet-based mobile processing system might also be important. Almost all providers offer some type of mobile processing system these days, either as a proprietary product or through a partnership with a third-party provider. Be aware that very few mobile processing systems have begun to offer EMV-compatible card readers, and youâll often be stuck with a magstripe-only reader.
In addition to these basic merchant account features, there are several special features that your offshore merchant account might (or might not) include. How important these features are to your business will be determined by how you intend to use your account. Extra features to look for in an offshore merchant account include the following:
Multi-Currency Support:Â If youâre going to do business in a foreign country, it only makes sense that youâll want your customers to be able to pay in their local currency. Multi-currency accounts allow you to maintain balances in multiple currencies and can save you a ton of money in currency conversion costs.
Currency Conversion Services:Â Having an offshore account will invariably require you to convert funds into your own local currency at some point. Most offshore account providers include built-in currency conversion services that allow you to convert foreign funds when it comes time to transfer them to your business account. While these services can sometimes offer you much lower conversion fees than what a bank would charge you, it still pays to shop around for the best deal on this service. You might save money by using an international transfer service such as TransferWise or OFX.
Expanded Anti-Fraud Features:Â Offshore merchant accounts invariably involve a higher degree of risk of fraud than their traditional counterparts, so youâll want as many extra services to avoid it as you can get. Most offshore account providers offer a number of enhanced anti-fraud features as a standard part of their service. These features automatically detect suspicious activity, hopefully stopping any fraudulent activity before it can affect your business. Providers are increasingly turning to artificial intelligence (AI) features to improve their ability to detect potential fraud beyond what would be possible with a traditional algorithm.
With these considerations in mind, letâs take a brief look at four of our overall favorite offshore merchant account providers:
Durango Merchant Services
Durango Merchant Services is a small merchant account provider headquartered in Durango, Colorado. Established in 1999, the company specializes in providing high-risk and offshore merchant accounts to hard-to-place businesses. They work with a wide variety of banks and processors to find a suitable account for almost any business. While they canât place 100% of the merchants who apply to them, their track record is very good, and their sales process is so transparent and honest that weâve even seen praise for the company from merchants whoâve been turned down for an account.
If you need an offshore account, Durango has you covered. Their accounts include multicurrency support as well as enhanced anti-fraud features to keep you protected. They can set up accounts in countries as diverse as Germany, Panama, Spain, and many others.
Durango doesnât try to set you up with expensive leases when it comes to processing equipment. Instead, they offer a variety of terminals for sale right on their website. Options include both wired and wireless models, with some offerings that support NFC payments. They also sell the iPS Mobile Card Terminal, which connects to a smartphone to provide mobile payments capability in conjunction with the iProcess mobile app. If youâre using a virtual terminal, they sell the MagTek DynaMag, a USB-connected magstripe card reader that attaches to your computer. Unfortunately, itâs Windows-only. Durango currently doesnât offer any POS systems for sale.
The company supports eCommerce through its proprietary Durango Pay payment gateway, which integrates with the numerous processors the company uses and includes support for most of the popular online shopping carts. Durangoâs gateway also features an Authorize.Net Emulator, which allows it to interface with any shopping cart that works with Authorize.Net (see our review).
Because Durango works with such a wide variety of third-party processors to set you up with an offshore merchant account, they donât list rates or fees on their website. These will vary tremendously depending on which processor they set you up with. While we normally like to see more transparency from merchant account providers, in this case, itâs understandable. Depending on your qualifications, you can expect either an interchange-plus pricing plan or a tiered one. Merchant accounts through Durango donât seem to have standardized fees. Again, these will depend on the terms that your backend processor imposes.
Durango assigns a dedicated account manager to every one of their merchants, which means youâll be talking to the same person every time you have an issue. While this can sometimes be problematic outside of regular business hours and when your account manager isnât available, overall it provides a much higher level of service than youâll get from a random customer service representative.
Direct sales of processing equipment
Reasonable rates and fees based on your business and your backend processor
Dedicated account manager for customer service and support
No support for POS systems
USB card reader not compatible with Mac computers
For more information about Durango Merchant Services,Â read our complete review.
SMB Global is a new high-risk provider that was spun off from one of our favorite providers, Payline DataÂ in 2016. Headquartered in South Jordan, Utah, the company specializes in providing merchant accounts to high-risk and offshore businesses. Using a variety of backend processors, theyâre able to approve a merchant account for almost any high-risk business (including those selling CBD oils). They have an excellent reputation for fair prices and top-notch customer service.
As a newly-established business, SMB Global is still a little rough around the edges, lacking a mobile processing system and credit card terminals for retail merchants. At the same time, they offer a full range of services for eCommerce merchants, including a choice between the NMI Gateway and Authorize.Net.
Because they work with so many banks and processors to get you approved for an account, the company doesnât offer any pricing information. Processing rates, account fees, and contract terms will all vary widely depending on which backend processor is handling your account. While we highly recommend that you request an interchange-plus pricing plan, be prepared to have to accept a tiered plan instead, particularly if you havenât been in business for very long. Likewise, you can also expect to have a standard three-year contract with an automatic renewal clause and an early termination fee if you close your account early. As a high-risk merchant, you should be prepared to have a rolling reserve included in your account agreement.
SMB Global requires a minimum processing volume of $50,000 per month for an offshore merchant account, although they will occasionally waive this requirement if your business has a very strong financial history. Offshore accounts support multi-currency processing, allowing you to avoid cross-border fees. They also feature dynamic currency conversion, letting your customers pay in either their local currency or the currency in which you bill them.
Offers international merchant accounts to a wide variety of industries
Reasonable pricing and contract terms
Excellent customer service
No mobile app
No information available about credit card terminals or POS systems
For a more detailed look at SMB Global, be sure to check out our full review.
Host Merchant Services
Host Merchant Services is a relative newcomer to the merchant accounts business, first opening in 2009. The company is headquartered in Newark, Delaware and has a second office in Naples, Florida. While they primarily cater to traditional, low-risk businesses, they can accommodate several categories of high-risk businesses and also offer offshore accounts. Their interchange-plus-only pricing and a full range of products and services make them an excellent choice â if you can get approved. A former web hosting company, HMS is ideally suited for eCommerce merchants. They use TSYS as their primary backend processor, but can also work with several international banks and processors to get you an account.
For retail merchants, HMS offers a variety of Verifone and Equinox (formerly Hypercom) terminals. Terminals are offered for sale, and the company does not lease its equipment. While prices are not disclosed on the HMS website, you should be able to negotiate a very reasonable deal on terminals, especially if you need more than one. If you already have a compatible terminal, theyâll reprogram it for free.
HMS also offers a variety of POS systems that utilize either tablets or touchscreen displays. Choices range from an 8â tablet-based system up to a 17â touchscreen monitor. The companyâs Starter, Plus, TouchStation Plus, and Custom POS options should meet the requirements of just about any business that needs or wants a POS system.
If you need a mobile processing capability for your business, HMS has you covered, offering the ProcessNow mobile payments system via a partnership with TSYS. ProcessNow works with either iOS or Android phones, but the current card reader is magstripe-only and requires a headphone jack to plug into.
As a tech-focused company, eCommerce is HMSâ specialty. The company has recently introduced their proprietary Transaction Express payment gateway, which includes a free virtual terminal. HMS also supports a large number of third-party gateways, including Authorize.Net.
HMS uses interchange-plus pricing exclusively for its low-risk merchants, but you might have to pay tiered rates if you have an offshore account. While they donât disclose their rates on their website, theyâre based primarily on monthly processing volume and are very competitive. Fees are not disclosed either, but include a $24.00 annual fee, a $14.99 monthly account fee (which includes PCI compliance), a variable payment gateway fee ($5.00 per month for Transaction Express, $7.50 per month plus $0.05 per transaction for Authorize.Net) and the usual incidental fees (i.e., chargebacks, voice authorizations, etc.). High-risk and offshore merchants should expect to pay higher fees than these, and possibly additional fees as well. In particular, be prepared to have a rolling reserve included as part of your account.
HMS provides customer service and support via 24/7 telephone and email. Chat is available via the HMS website during regular business hours. They also feature an extensive collection of articles and blog posts on their site for customer education. Support quality appears to be well-above-average, based on the almost complete absence of complaints about it on the BBB and other consumer protection websites. If your business falls into one of the categories of high-risk activities that the company can accommodate, HMS is an excellent choice for an offshore merchant account.
Full range of products and services for retail and eCommerce businesses
Can only accommodate a small number of high-risk business categories
Mobile card reader not EMV-compliant
For more information, see our complete review.
Easy Pay Direct
Easy Pay Direct is headquartered in Austin, Texas and has been in business since 2000. The companyâs primary product is their proprietary EPD Gateway, but they also provide full-service merchant accounts for international, high-risk, and traditional non-high-risk merchants. High-risk merchants will have to pay a premium in terms of processing rates and account fees, whether they’re partnered with a domestic or offshore bank or processor. However, the additional expense is entirely reasonable under the circumstances.
Like most offshore merchant account specialists, Easy Pay Direct works with a variety of banks and processors, both domestic and international, to find one thatâs a match for the needs of your business. Youâll have to pay a $99 account setup fee to get started, but considering the extra effort required to underwrite a high-risk or offshore account, we feel the expense is justified in this case. Processing rates will be under a tiered pricing plan, but you should still have some room to negotiate your rates, especially if you have a high monthly processing volume. Contracts generally follow the industry standard, or a three-year initial term that automatically renews for one-year periods after that. One very positive feature about Easy Pay Directâs contracts is that they do not have an early termination fee, even for high-risk businesses. While this isnât quite the same thing as true month-to-month billing, it does make it much easier to close your account without penalty if you have to.
One helpful feature offered by Easy Pay Direct is called load balancing, where a business can divide its incoming funds among multiple merchant accounts. This is particularly helpful for high-risk businesses that often exceed the monthly processing volume limits imposed by the processor underwriting their account. Just be aware that youâll usually have to pay separate monthly fees for each account, so it might not be cost-effective for some merchants. Also, be aware that you might not need this feature if you opt for an offshore account. Underwriting guidelines in some (but by no means all) foreign countries are more relaxed, and you might not have a monthly processing limit imposed on your account at all.
Although Easy Pay Direct doesnât get as much attention as other, better-known processors, itâs a solid choice for merchants in the high-risk category or those who need an offshore account. We particularly recommend the company for high-risk eCommerce businesses due to the robust feature set of their EPD Gateway.
Load balancing feature for high-risk merchants
No equipment leases
No early termination fee
$99 account setup fee
Three-year contract with automatic renewal clause
Check out our full review of Easy Pay Direct for more information.
Having a hard-to-place business doesnât mean you have to run your company through Bitcoin. You can accept credit card payments just like any other business by finding a payment processor that will set you up with the right acquiring banks. At the same time, you need to be fully aware that, for a US-based business, signing up for an offshore merchant account is a risky endeavor. Youâll want to be very cautious and carefully research any provider you consider, even the ones weâve recommended above. Take extra care to protect your sensitive personal financial data and be sure your account includes additional fraud prevention features. You might also want to consider registering your business in the country where your merchant account is located â just in case. Having a merchant account in Panama might sound very tempting if youâve been repeatedly turned down by domestic providers, but it will be very expensive to have to travel there in person if you later run into legal troubles with your account provider.
Of the four offshore merchant account providers weâve reviewed above, Durango Merchant Services is undoubtedly the best all-around provider of the group. They disclose more detailed information about offshore accounts than any of the other providers. SMB Global is also an excellent choice. While the company itself is very new, they have an impressive track record from their days operating as the high-risk division of Payline Data. Finally, both Easy Pay Direct and Host Merchant Services offer a solid line-up of products and services for both eCommerce and retail merchants. If you need an offshore account to break into the world of accepting credit cards, they both have everything you need to get started.
Finally, we canât caution you strongly enough that selecting and setting up an offshore merchant account involves a higher level of risk on your part, and youâll need to be extra cautious in choosing a company to go with. Relaxed underwriting guidelines and a general lack of monthly processing limits make offshore accounts very tempting to merchants whoâve had a hard time getting their business approved for a traditional account, but these advantages come at a price. If anything goes wrong in your relationship with your provider, you might face some real challenges in pursuing a legal remedy. You should also be aware that if this happens, the US-based provider that brokered your account will not be able to help you in most cases.
Do your homework! Research your provider thoroughly and review all contract documents very carefully before signing up. While these steps wonât eliminate the chance of things going sideways somewhere down the road, they will shift the odds considerably in your favor.
The post The Best Offshore Merchant Account Providers appeared first on Merchant Maverick.
Business owners today know that itâs 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 youâre an eCommerce merchant selling online, taking âplasticâ is just about your only option. Unfortunately, you canât accept credit cards unless you have a merchant account, and merchant accounts arenât free. In fact, they can be very expensive â especially for a small business â 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 thatâs 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 âWhich one is the cheapest?â Thereâs nothing wrong with wanting to save money, especially for a new business that has to count every penny. However, if you look up âcheapâ in the Merriam-Webster Dictionary, youâll note that while cheap can mean âcharging or obtainable at a low price,â it can also mean âof inferior quality or worth.â If youâve 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.Â
The Overall Cheapest Credit Card Processing Companies for 2018
Best Choice For
Small-ticket, Canada,Â Mobile, eCommerceÂ
All businesses, Mobile, Retail
Large-ticket, All-in-one, Recurring billing
POS and Other Features Included
Rate Matching/ Negotiable
0.30% + $0.10
0.20% + $0.10
0.00% + $0.08
Basic Monthly Fee
Before we delve into specific processors, there are two important points that you need to understand:
The company offering the lowest processing rates or fees isnât necessarily the cheapest. The total percentage of your credit card sales that youâll have to fork over to your merchant account provider isnât 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.
The âcheapestâ processor isnât 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. Itâs very important that you understand the difference between the two.
Payment service providers (PSPs) can process your credit card transactions, but they donât 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 wonât have to pay so many recurring fees just to keep your account open. Be aware, however, that youâll 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 youâll 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 wonât 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 donât come cheap, of course. Youâll pay more in monthly fees than you will for an account with a PSP. However, youâll 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 weâre profiling the cheapest processors in the industry, it should come as no surprise that pricing would be our top criterion. It isnât 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 thereâs 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 âinterchangeâ 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 thatâs what many traditional merchant account providers will offer you. All the companies profiled here â including both PSPs and full-service merchant account providers â 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 youâre running an eCommerce-only business, youâre going to need some equipment to process your customersâ 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 â sometimes itâs even free! You can also buy your own equipment and have it reprogrammed to work with your providerâs 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 weâve noted, some PSPs donât provide very good customer support at all. Thatâs one of the trade-offs youâll have to be aware of if you want to go with the âcheapestâ option for credit card processing.
Remember, there isnât 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 wonât 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 isnât 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:
Everyone has heard of Square (see our review) by now. With its free Square Reader, app-based payment system, and simple pricing structure, itâs one of the most popular processing services on the market for small businesses. Squareâs pay-as-you-go system allows businesses that ordinarily couldnât 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 thatâs both affordable and mobile. In addition to a card reader, youâll need the free Square app, a smartphone, and an Internet connection. Squareâs original card reader is free and youâll 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 â no headphone jack required.
Cheapest Mobile Credit Card Processing Company
â $0 monthly fee
â 2.75% for all card-present transactions
â Exceptional POS app included free
â Free credit card reader available Proprietary software suite includes:
â¢ Point of sale software
â¢ Inventory management
â¢ Mobile app
â¢ Virtual terminal
â¢ API for custom solutions
Visit the Square website
Read our Square review
Squareâs 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 âhiddenâ 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 wonât need them. Squareâs 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
Thatâs it! You donât have to worry about non-qualified transactions, batch fees, or anything else. Funds are deposited into the userâs account within 1-2 business days in most cases. Billing is month-to-month, so you donât have to worry about long-term contracts and early termination fees. You can quit anytime you want without penalty.
This all sounds great â and it is â if youâre a small business that has to watch every penny and canât afford to shell out a significant amount of money every month just to have a merchant account. For a larger business, however, Squareâs pricing actually isnât 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), youâre actually better off going with a full-service merchant account provider that offers interchange-plus pricing. Yes, youâll have to pay those pesky account fees, but your processing rates will be so much lower that youâll save money overall.
Besides high processing rates, Square has a few other drawbacks as well. Weâve already mentioned that your account is much more likely to be frozen or terminated unexpectedly, but what makes this situation worse is that Squareâs customer service isnât so great. The company didnât even have telephone support for several years after it launched, but it does now. Unfortunately, itâs only available during business hours, and the large number of complaints about it suggests that the quality of support youâll 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 doesnât have a high processing volume, Squareâs 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 wonât get a true full-service merchant account. The trade-off is that thereâs 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 itâs catastrophic to an eCommerce business where cash isnât an option.
No monthly account fees
Low-cost EMV-compliant card readers available
No long-term contracts or early termination fees
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 DataÂ (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
â No early termination fees
â Transparent interchange-plus pass-through pricing
â Outstanding $0 monthly fee option
â Exceptional ecommerce shopping cart compatibility Proprietary software suite includes:
â¢ Excellent mobile processing app
â¢ Easy integration API for customization
â¢ Virtual terminal
â¢ Billing management
Visit the Payline website
Read our Payline review
For brand-new or mobile businesses, Payline Start is the most affordable plan. Thereâs no monthly fee, and pass-through markup rates are set atÂ 0.30% + $0.10 per transaction. In addition to the free virtual terminal, youâll also receive a free Ingenico GX5 card reader and the Payline Mobile app to go with it. If youâre 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 atÂ 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.
No account setup fees. No PCI compliance fees. No gateway fees. No monthly minimums, either. Thereâs a lot of things that CDGcommerce (see our review) doesnât 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 arenât happy with their service, you can close your account without penalty.
So, what do you pay for? Besides processing charges, youâll 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 CDGâs own proprietary Quantum gateway or Authorize.Net. Either way, thereâs 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. Itâs well worth paying a little extra for, especially for eCommerce merchants.
Good Option for Online Payment Processing
â No early termination fees
â Transparent interchange-plus pass-through pricing
â Free payment gateway option with activation within an hour
â Exceptional ecommerce shopping cart compatibility
â Over 20 years with excellent reputation Proprietary fraud prevention suite includes:
â¢ Automatic high-risk order detection
â¢ Dialverify phone order verification
â¢ Cardholder authentication (VbV/MSC)
â¢ Chargeback defender
â¢ Easy integration and API for customization
Visit the CDGcommerce website
Read our CDGcommerce review
We donât recommend leasing a credit card terminal, but CDG has a program thatâs 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, youâll also have to pay $20.00 per month for wireless data and an additional $0.05 per transaction in processing fees.
You wonât 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:
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 youâve been using Square or PayPal and want to upgrade to a full-service merchant account, theyâre an excellent option.
Month-to-month billing with no long-term contracts or early termination fees
Free payment gateway with virtual terminal
Excellent customer service
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 ServicesÂ (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 donât try to squeeze extra money out of struggling small business owners, you wonât have to pay an account setup fee or an annual fee. Thereâs 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 doesnât have long-term contracts, either. Billing is month-to-month, and thereâs no early termination fee if you close your account.
Good Option for Nonprofits and B2B Payments
â Provides discounted rates for nonprofits
â Exceptional customer service
â Transparent interchange-plus pass-through pricing
â Proven track record with nonprofits Free MX Merchant Software includes:
â¢ Level 2 and level 3 data for lower interchange rates on B2B processing
â¢ Virtual terminal
The company uses interchange-plus pricing exclusively and lists their rates right on their website. Hereâs 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. Theyâll 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 phoneâs headphone jack.
Dharma doesnât have a minimum monthly volume requirement, but they do acknowledge that their fees and rates arenât the lowest on the market for businesses that process less than $10,000 per month. Youâre still free to sign up if you need a full-service merchant account, but they recommend either PayPal or Square if you donât.
Transparent interchange-plus pricing
Minimal account fees
Full range of services and equipment for both retail and online businesses
Great customer support
Not a good fit for low-volume (less than $10,000 per month) accounts
For more information on Dharma, see our complete review here.
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 youâll find anywhere.
Transparency and honesty are major themes with Helcim, which is something you wonât 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 wonât 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
â No early termination fees
â Transparent interchange-plus pricing
â Exceptional reputation in Canada
â High-quality all-in-one payment platform
â Great educational material Proprietary Helcim Commerce solution includes:
â¢ Point of sale software
â¢ Inventory management
â¢ Billing and invoicing
â¢ 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, theyâll 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. Thereâs also no monthly minimum. All swiped transactions are processed at a rate of interchange + 0.25% + $0.08 per transaction.
Helcimâs eCommerce Plan works the same way, but it costs $35.00 per month. This gives you access to the companyâs 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 Helcimâs services. One way theyâre able to keep costs so low is to exclude high-risk merchants from signing up. This policy lowers the companyâs overall risk profile, but it also means youâll be out of luck if you meet their high-risk criteria. Because they charge a monthly fee (albeit a very reasonable one), theyâre also not quite as affordable as Square, PayPal, etc. if youâre processing below $2,500 per month. Weâre 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.
Extremely transparent fee structure
Very competitive rates for businesses processing over $1,500 per month
Excellent customer service and support
Not suited for very small businesses processing less than $1,500 per month
Not available for high-risk merchants
Mobile card reader isnât EMV-compatible
For more information, see our complete review here.
Popular (But Less Reliable) Inexpensive Options
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, itâs 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 â either retail or eCommerce â using just their payment processing services and equipment. But would this be cost-effective? Hereâs 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 isnât free. Instead, itâs $30.00 per month, plus your processing charges.
PayPal doesnât offer true, full-service merchant accounts. Instead, they function as a payment service provider (PSP), which keeps costs relatively low, but also means that theyâre quick on the trigger to freeze your account if they suspect that fraud has occurred. Like most PSPs, they donât have long-term contracts and donât charge early termination fees. Billing is month-to-month, and an account that doesnât have a monthly fee is good for a business that only processes credit card transactions occasionally.
PayPalâs 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 youâll always know in advance what youâll 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, youâll pay $30.00 per month for it. Thereâs 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 weâve mentioned, sudden account holds or terminations are also a possibility. If you simply canât afford to lose access to your account temporarily, consider a different option.
For some businesses, PayPal is really all you need. If you donât 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.
No monthly fees (for standard account)
Transparent flat-rate pricing
Most customers have a PayPal account
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.
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 donât 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 youâre 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 youâd 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 â 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 wonât 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 Stripeâs 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 itâs definitely programmed to err on the side of caution. This wouldnât be so bad if you could call up a human customer service representative on the phone and resolve the situation. Unfortunately, you canât â Stripe doesnât offer telephone support at all. Instead, youâll have to contact the company through email and wait for a response. Judging from the many complaints about Stripeâs 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. Youâll enjoy pay-as-you-go service with no monthly fees, and you wonât have to worry about long-term contracts. The companyâs 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, youâll need the security and reliability of a full-service merchant account. Youâll also save money on processing charges by switching to interchange-plus pricing.
Simple flat-rate pricing structure
No additional fees or long-term contracts
Huge API library for developers
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.
As youâve 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, itâs not realistic to expect that youâll be able to come up with a precise figure. Fortunately, the companies weâve profiled here fully disclose their processing rates and fees, making your job of estimating your costs much easier.
Weâve 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, youâll want to find a provider with low monthly and annual fees. One of the most appealing aspects of Square or PayPal is that they donât 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 wonât be as important for low-volume merchants.
If your business has a high processing volume, fees arenât as important, and youâll 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 youâd 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 wonât 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 weâve 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.
Best Choice For
Small-ticket, Canada,Â Mobile, eCommerceÂ
All businesses, Mobile, Retail
Large-ticket, All-in-one, Recurring billing
The post The Cheapest Credit Card Processing Companies appeared first on Merchant Maverick.
We donât 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 doesnât 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. Thereâs a lot of information to take in if youâre a novice when it comes to credit card processing, and youâll 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?
Weâll 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 doesnât 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 worldâs 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, letâs 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 cardâs magnetic strip has been read? In simple terms, there are three phases involved in actual processing:
Authorization:Â 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 etcâ¦). 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:Â 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:Â 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 merchantâs 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 customerâs 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 customerâs card information without that card being physically present.
Of course, within these different machines, youâll 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, aÂ 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 customerâs information, giving an inherent level of security on those transactions. As previously mentioned, you donât 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 customerâs 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 âdippedâ 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.
Itâs 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 oneâs 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!Â
What is a virtual terminal? Let’s delve in deeper to get a sense of whether or not itâs 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 evenÂ 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,Â 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, youâll receive confirmation.Â
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 arenât 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.
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. TheseÂ 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.Â There are a handful of different kinds of merchant services providers, including:
Merchant Account Providers:Â 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:Â Even though itâs advisable, itâs not essential to have a merchant account to process payments. Payment service providers, like the ubiquitous PayPal, donât 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:Â 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 youâll have to have a merchant account from a third party.
When youâre looking at various card processors, there are a few things that you should keep an eye on. Perhaps most importantly youâll want to research the companyâs 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).
Youâll 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 youâre suddenly processing a high number of transactions, those fees will add up and quickly wipe out any savings youâre receiving from not paying a monthly fee.
Youâll also want to doublecheck the compatibility of your processor. If, for instance, youâve found a point of sale system that you are comfortable with, youâll want to make sure that the processor integrates seamlessly without additional costs. If youâre 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 youâre 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 youâre in the process of picking out a processor, youâll 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 isnât 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 youâll 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:Â 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:Â 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:Â 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:Â For companies that donât 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 doesnât 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 youâll 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, itâs 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 youâre looking at purchasing a POS system, there are a number of factors to keep in mind. First and foremost, itâs 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 isnât something youâre 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.
Letâs talk about some features you can expect to find in pretty much any good, modern point of sale system:
Inventory Management:Â 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:Â 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:Â 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 youâre 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 youâre 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 youâre doing your research there are a number of other features youâll 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.
Youâll 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.
Itâs difficult to make a decision, but at Merchant Maverick, weâve come across a number of point of sale systems that we would happily recommend depending on your business.
Shopkeep:Â 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. Itâs 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:Â 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:Â 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:Â 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.
There is obviously a lot to process when it comes toâ¦ wellâ¦ credit card terminals andÂ payment processing. If youâve made it this far, hopefully youâre 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 donât overlook things like a companyâs customer service reputation. Itâs 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.
The post Complete Guide To Credit Card Machines And Terminals appeared first on Merchant Maverick.
Spend a little bit of time reading up on Stripe (read our review) and Square (read our review) and you’ll start to see the similarities. They’re both giants in the payment industry, media darlings that have transformed the way people pay for things and the way merchants accept payments. They’re both on the leading edge of technology and rely heavily on machine learning to drive their payment processing systems.
Most importantly, both Square and Stripe offer huge assortments of commerce tools that make it easy for merchants to run their businesses. With the various APIs and integrations available, there are almost limitless possibilities for creating a custom system with everything from invoicing to email marketing and more.
But that’s where I stop pointing out the similarities. Once you get past that point, it becomes harder to draw apples-to-apples comparisons because Square’s offerings are much more varied. Square really is an all-in-one processor that can handle in-person and eCommerce payments, as well as inventory management, customer databases, and more. Stripe is more limited to eCommerce, both for websites and for mobile apps, but it has powerful tools for global enterprises, subscription-based businesses, and other online companies.
To keep things fair and within a manageable scope, we’re going to limit the scope of this comparison to each companies’ online and mobile commerce tools. That means, for the most part, we’re not going to look atÂ mPOS apps, POS integrations, appointment booking, or email marketing…except to say if you need them, Square is the better choice.That also means we’ll be ignoring Stripe Atlas, the company’s service for helping international merchants establish themselves in the US.
If you want to sell online and Square and Stripe have made your shortlist, you should start by asking yourself some questions:
What features do you absolutely need? Which features aren’t essential, but would be very nice to have?
What percentage of your transactions are from outside the US?
Do you have a developer or advanced coding knowledge yourself?
Do you have limited tech knowledge and need an easy solution?
Are you looking for specific integrations?
What industry is your business part of?
How advanced are your subscription tool needs?
Once you have the answers to these questions, you can sit down and look at each company in more detail. Read on for our comparison of Stripe vs. Square!
Products & Services
It’s so important to have a list of must-have features before you set about choosing any sort of payments or eCommerce software because you don’t want to make the decision and then find out that you’re missing a very important function. But it’s also important to think about where you want your business to go and what tools you want to invest in as your business scales up. If you pick the right service, it could mean you never need to switch. But if you don’t think about growth, you may wind up having to make a complicated switchover later in the future once you’ve outgrown a solution.
The good news is that for the most part, Stripe and Square are both very good solutions that scale up as a business grows. It just comes down to in which direction a business wants to grow.
Square Tools and Services for Online Merchants
Square initially stood out among mobile competitors by offering a free webstore to its merchants. Since then, the company has branched out considerably to include eCommerce integrations as well as developer tools. For a more in-depth review of all of Square’s offerings, check out our full review.
Online Store: Square’s free online store is very basic. There are only four templates to choose from, and you can only customize portions of the site (such as filling in your business name and address in the footer) in addition to loading your products. This is not a good solution for anyone with a large and diverse inventory, especially if your shipping costs vary significantly or if you’re looking for a particular visual aesthetic.
eCommerce Integrations:Â When you first take a look at Square’s eCommerce offerings, you’ll see that Square very conveniently groups everything by a merchant’s level of technical expertise. I think this is a really helpful approach.
The easiest integrations are listed on the site and Square lets you know that you can choose from an assortment of templates.
The intermediate level includes eCommerce integrations that require a bit more work and technical knowledge to get set up.
Square’s list of integrations includes some of the best shopping cart options, and the list keeps growing. That makes me happy, but if your preferred integration isn’t on the list yet and you do have the technical knowledge (or an eager developer on your payroll), there are more tools at your disposal. You can check out the list of Square integrations in the app marketplace.
Developer Tools: Square’s dev tools make it possible for you to create almost any custom integration you could need. For eCommerce, there are two APIs, Checkout and Transactions.Â Square Checkout is a premade form that can be dropped into a site with minimal fuss. Using Checkout means merchants are eligible for some perks, like next-day deposits and chargeback protection. The Transaction API, combined with Square’s payment form, is more customizable. Square has other APIs to handle other aspects of commerce, but you’ll find that Square doesn’t readily support in-app payments.
Dashboard Reporting: Square’s reporting tools are fairly advanced, especially for a company that started as an mPOS. They’re very popular with merchants who want to know what’s selling and how much they’re processing and need standard business data. The dashboard is actually quite intuitive, as well. However, Square doesn’t allow for a huge amount of customization in reports unless you get into the Reporting API, which allows you to create real-time notifications using webhooks.
Additionally, Square offers the following tools:
Advanced Inventory: Square will reconcile online and in-person sales and give you an up-to-date count on your inventory, including low-stock alerts when you hit a specified threshold. Plus, you can bulk upload products and generate SKUs, create variants, and more.
Fraud Protection Tools: Square uses machine learning to analyze transactions and identify and flag possible fraudulent transactions.
Customer Database: Save customers’ contact information and build a database with records of their purchases so that you can market to them later.
Invoicing:Â Create invoices from within the Square dashboard or from within the mPOS app. Square also allows customers to store their cards to automatically pay invoices (using this Card on File will cost you a bit more). You can also create recurring invoices. However, if you want extensive subscription management tools, you’ll need an integration with a service like Chargify, which will add to your costs.
Free Virtual Terminal: If you want to process payments over the phone or you don’t have access to the mPOS, you can use Square’s virtual terminal. Transactions will be processed at the manual entry rate (3.5% + $0.15) rather than the eCommerce rate, but the solution is PCI compliant and is designed for regular use.
All in all, while it’s worth noting that Square really is an omnichannel solution for merchants who want to sell anywhere without needing to build a complicated system of integrations. But it has some shortcomings, especially for digital merchants. Subscription tools are nearly nonexistent, and fraud protection doesn’t compare to the tools Stripe offers. If you want advanced, custom reports, you’ll be better served by Stripe. However, Square’s tools and overall design are incredibly easy to use, especially for business owners who don’t have a lot of technical expertise or a large budget to hire someone. And it has very strong tools for merchants who sell physical products in particular.
StripeÂ Tools and Services for Online Merchants
Stripe has earned its name as a developer-friendly option, but you can also integrate with a host of third-party apps to accept payments with ease. The company focuses on internet and mobile commerce, but developers have extended Square’s power to include mobile payments and more. Just take note, there’s no free storefront option here. For a more detailed look at different features, check out our complete Stripe review.
eCommerce Integrations & Plug-Ins:Â Stripe outclasses Square in terms of shopping cart integrations by virtue of sheer numbers. In addition to integrations with major eCommerce software providers, developers have created an assortment of plug-ins for businesses operating on WordPress, Magento, and other websites. If you’re not really sure where you start, you might end up doing a lot of research to decide the best course of action, but you can at least take heart in knowing that there’ll be something that will meet your needs. You can check out the full list of eCommerce integrations on Stripe’s “Works With” page.
Developer Tools: Stripe is much loved by developers for its flexibility, its extensive documentation and its support for multiple programming languages. Its APIs allow you to create invoices and subscriptions along with many other features.
Stripe Sigma: Stripe offers your standard user dashboard with some general sales reports at no charge. But if your business is heavily data-driven, Sigma’s customizable reporting is the perfect solution for you: you can generate reports based on SQL queries. This is pretty cool, and it’s a great way to make sure that anyone on your team can get the reports they need without creating an information bottleneck. Pricing is based on a sliding scale rather than a set additional monthly see.
Stripe’s additional tools include:
Stripe Billing: Stripe’s subscription tools are industry-leading, with the ability to charge clients based on a recurring quantity or metered usage, to set free trial periods, and much more. You can also create invoices or set up recurring billing tools. However, new businesses will pay a small additional charge per transaction to use these tools.
Stripe Radar: Stripe makes a big deal of its fraud monitoring tools, bundled under the very-apt name Radar. The system uses machine learning and a host of criteria to analyze every transaction and decide whether it is legitimate or possibly fraudulent. Radar also lets merchants set custom criteria for rejecting transactions and review flagged transactions to decide whether to accept or reject them.
Marketplace Tools: Merchants who want to operate a marketplace can use Stripe to build the platform. Stripe’s marketplace tools are grouped under the moniker “Stripe Connect.”
Multiple Currency Displays & Dynamic Currency Conversion: These tools are a major reason why Stripe is such a powerful tool for global businesses. Whereas Stripe will automatically convert transactions to USD (usually at the cost of a fee toÂ the cardholder), Stripe will allow you to display prices in local currencies based on where the customer is located. Stripe then automatically converts them for the merchant, charging a small markup over the exchange rate. This makes a business more appealing to international customers.
There’s no doubt that Stripe is very powerful. It can handle all sorts of payments, from digital subscriptions to retail goods. It’s one of the best solutions for global businesses with its currency tools. But it does have some limitations. If you plan to sell across multiple channels, there’s no option for in-person payments unless you have an integration like Flint Mobile (read our review), but it’s still more costly than other mPOS options. There’s no virtual terminal, either. While Stripe does allow you to manually enter a transaction if all else fails, it’s a last resort rather than a tool to be used on the regular because of PCI compliance issues.
Stripe’s inventory tools aren’t on the level of Square. They’re powerful, but if you want advanced inventory management, you’ll need to tack on an integration. I also don’t think that Stripe’s inventory tools are even half as intuitive as Square’s. But I think part of that is Stripe’s focus on online payments and tools for digital merchants, compared to Square’s omnichannel approach.
All in all, it’s really hard to say one of these companies is inherently better than the other. Both have a good assortment of integrations for shopping carts and other tools, though Stripe has a greater number of supported integrations. If you want ease of use, especially if you sell physical goods,Â Square is the standout option. But if you need flexibility, robust tools, and advanced data, Stripe is the better choice. So it ultimately comes down to your business’ needs.
Fees & Rates
I am happy to say that pricing for both Square and Stripe is mostly straightforward:
2.9% + $0.30 per online card transaction
There are no monthly fees, no monthly minimums, no statement fees. That’s very nice to see.
I do want to point out thatÂ Square charges different rates for its card-present and keyed transactions (2.7% and 3.5% + $0.15, respectively).Â However, invoices process at the same rate as eCommerce transactions unless you’re using Card on File, which process at the keyed transaction rate.
Square also has no chargeback fees, which is very unusual. Not only that, but the company has rolled out Chargeback Protection, which will cover the actual chargeback costs on qualifying disputes up to $250 per month. This doesn’t apply to merchants who use the Transactions API, but it is available for those who use Stripe Checkout.
You can getÂ volume discounts if you process above $250k per year AND have an average ticket size exceeding $15. That’s a mark in Square’s favor for large businesses. However, nonprofits don’t get any sort of special discount, which you can often find with other processors.
Stripe’s pricing has become a tiny bit more complicated. In addition to card transactions processed at 2.9% + $0.30, you can also accept ACH transactions for 0.8%, capped at $5 maximum.
The base fee per transaction is simple. And for each chargeback, Stripe will assess a $15 fee, unless the chargeback is decided in your favor. In that case, you’ll pay absolutely nothing.
Stripe’s subscription tools, lumped under the name “Stripe Billing” along with invoicing, will cost you a small percentage fee (between 0.04% and 0.07%) on top of your transaction.
Existing Stripe merchants are grandfathered out of this new pricing. Large businesses will actually pay the higher 0.7% markup, but it seems Stripe has compromised by offering lower transaction fees.
You’ll also pay a monthly fee for access to Stripe Sigma. The cost is a sliding scale based on the number of transactions you process each month, which is a great way for very small businesses to still get crucial data. But for a company that built its reputation on not charging any fees beyond transaction processing, it’s a little bit disappointing to see that model disappearing. You can estimate your cost with Stripe’s tool.
Stripe does offer enterprise pricing for very large businesses, andÂ some nonprofits may be eligible for a special rate. Stripe doesn’t make any promises about nonprofit pricing apart from “let us know and we’ll see what we can do.” So you shouldn’t assume it’s guaranteed.
With Stripe, you may also be able to negotiate for micro-transaction rates.Â Whereas per-transaction fees like the $0.30 Stripe and Square charge can eat up fees from small transactions (less than $10 in particular), micro-transaction rates typically include a higher percentage and a lower per-transaction fee that can save merchants money. This is ideal for anyone who sells digital goods and other low-cost items.
Because it’s something offered as part of a custom package, Stripe may not offer this deal to everyone. If you’re unable to get a micro-transaction plan from Stripe, it might be worth looking at a third option — PayPal (read our review) — instead. The 5% + $0.05 fee could save you quite a bit of money in the long run.
All in all, Stripe and Square are fairly evenly matched in pricing. Some merchants might enjoy the lack of chargeback fees and included chargeback protection that Square offers. But Stripe might be a bigger draw for other companies, despite the additional charges for using its subscription tools or Sigma reporting.
Contract Length & Cancellation
Both Stripe and Square offerÂ pay-as-you-go processing with no locked-in contracts or early termination fees. It really is that simple. Stripe will even help you transfer your customer data to another processor in a PCI compliant way.
If you’re using any of Square’s monthly services in addition to eCommerce processing, you can get a free 30-day trial, and then if you choose to continue with the service, you can cancel at any time. Square doesn’t bill annually for those services the way many SaaS providers do. (Conversely, you also don’t get any discounts for paying annually, either.)
Sales & Advertising Transparency
One of the reasons I like pay-as-you-go processors is that they are, on the whole, very upfront and transparent. They tend to not have extensive sales teams, and if they do have a sales team, they’re all in-house. They’re very clear about their pricing and terms, and they’re applied fairly to all merchants.
Square and Stripe both fit this pattern to a T. You won’t see reports of misleading sales pitches or rates not as promised here, which is always nice to see. You can find Stripe’s terms of service on the site, both the general user agreement and the Stripe Payments agreement. Like Stripe, Square has separate agreementsÂ applying to general use, payments, and other services. I do recommend you be cautious and check that your business doesn’t fall on either list of “prohibited businesses,” because that’s an easy path to account termination.
Overall, I’m really happy with both companies in this category, and you shouldn’t have any worries about whether you’re being told the truth or whether you’ll pay what you were quoted.
Customer Service & Technical Support
I think it’s fairly clear that Square outshines Stripe in terms of its customer support — both in quality and in the number of channels available.
Square offers merchantsÂ phone and email support, as well as an extensive knowledgebase. That’s pretty typical of any processor, but on top of that, Square operates the Seller Community, a community forum about all-things Square.
You can get answers from other Square merchants as well as from Square support reps. It’s a pretty powerful tool. But on top of that, Square’s team monitors Stack Overflow for questions about Square products and responds to them.
And that’s not even talking about Square’s dedicated Twitter support handle (@SqSupport), or the developer portal and documentation.
I can’t say that Square customer support is all sunshine and rainbows, because I do see customer complaints about the quality. However, without a doubt the biggest complaint about the quality of customer support comes from merchants whose accounts have been terminated. In that case, Square cuts off access to phone support and will only communicate via email. This is unfortunate and I don’t know if it’s actually a good solution. But I am sure part of the reason to reduce the odds of a customer support rep saying something they shouldn’t, and to prevent support resources from being tied up dealing with complaints from terminated merchants whose accounts won’t be reinstated.
Stripe is more limited in its support options. Its primary support channel is email. However, Stripe also operates an IRC Freenode chat (#Stripe) that developers may find useful.Â There’s no dedicated social media support with Stripe, but you can follow the general @Stripe twitter feed.
Stripe also maintains a self-service knowledgebase, though I don’t think it’s as extensive or detailed as Square’s.Â But I will say that Stripe’s documentation is pretty legendary, and so it’s going to be one of the best resources you can get.Â You can also find questions about Stripe on Stack Overflow, but I am not able to ascertain whether Stripe’s team is active on the forum at all the way that Square is.
I do see comments from merchants that the support is pretty good. But I also see a lot of complaints from frustrated merchants about the lack of phone support. That complaint has actually become one of the biggest marks against Stripe. I’ve seen one mention that Stripe might be rolling out phone support to “select merchants” (presumably high-value clients). However, take this with a grain of salt. I wasn’t able to verify it through any sort of authoritative source.
Negative Reviews & Complaints
As far as complaints go, the single biggest issue for both Square and Stripe is a common one:
Account Holds And Terminations: This is unsurprising (understatement of the year, right there) because it’s a common issue with any third-party processor. Because these payment systems are usually open to almost anyone right away and they are all lumped into one large merchant account, there’s a greater risk that some of those accounts will be terminated for risky behavior. There’s very little scrutiny done before a sub-account with one of these processors is approved, which stands in contrast to merchant accounts, where the processing company will do a lot of underwriting and investigation before approving your application. Both Square and Stripe use a lot of machine learning to analyze transactions and flag suspicious behaviors. This potential for account holds or terminations is universal — you will encounter it with any third-party processor. If you want to avoid it, your only alternative is to seek out a traditional merchant account.
The other big complaint that I see with both is also a pretty common one:
Poor Customer Support: If I’m honest, reports about the quality of customer service conflict. But because of how common the complaints are, I’m listing it here. With Stripe, the most common issues are the lack of phone support and slow response times for email. With Square, a lot of the complaints about poor customer service come from terminated merchants, but I’ve seen a few complaints about slow or unhelpful email responses.
Additional frequent complaints about Stripe include:
Lack Of Fraud Protection: I want to be clear: Stripe does have fraud management tools and a system to help merchants fight chargebacks. But I have seen complaints from merchants who don’t think these are adequate. Chargebacks are not settled by Stripe, so there’s not much the company can do beyond pass the requested documents on. But for fraud prevention, merchants need to make sure they have the appropriate tools enabled.
Not User-Friendly: There’s a lot of testimonials from users (especially developers) who really like Stripe and find it simple to set up. There are plenty of others who disagree with that idea. I’m inclined to think most people with a decent technical backing will get along fine with Stripe, but for some people, especially those with less technical knowledge, it’s not going to be a good choice.
For Square, there is one other common complaint:
Lack of advanced features: It’s not that Square doesn’t have enough features, or that it’s missing anything important. The complaints about Square often focus on the lack of very particular advanced features that you typically find in full-scale POS systems. In this case, I think Square’s lack of extensive subscription tools would fit the bill. Some merchants have been upset for quite a while over the lack of Cost of Goods Sold (COGS) reporting. Square added this feature with its Square for Retail app, but not for online sales or its free POS. Square has some very powerful reporting tools, but in the end, they won’t hold a candle to Stripe’s Sigma offering.
I think, yet again, that the two companies are pretty evenly matched in this category. The largest complaints are identical, and that’s because they’re the same complaints we see with third-party processors. To be entirely honest, poor customer service is a common complaint across the entire payments industry. It’s frustrating, for sure. But you can take steps to better inform yourself — read our article on how to prevent holds, freezes, and account terminations. And please take reports of poor customer service with a grain of salt, because I see conflicting accounts there.
Positive Reviews & Testimonials
As media darlings, both Stripe and Square have gotten lots of press. They’re both lauded for the way they’ve transformed payments.
I usually feel a little bit silly comparing two businesses in this category because it almost feels like a bit of a popularity contest. But in this case, we’re dealing with two companies who have both gotten a LOT of positive press over the years, not to mention high-profile clients. And the bits of each service that merchants love most are pretty similar, too.
Square merchants love how easy the service is to use. And I tend to agree — Square is one of the most intuitive options out there as far as payments and using the dashboard. Merchants also really like the predictable pricing and lack of fees. Other than that, the integrated invoicing feature and the seamless omnichannel commerce experience are big draws.
Stripe also wins merchants over with its pricing, and its tools are very much loved by developers. While if you don’t have a lot of technical knowledge, Stripe may feel foreign to you, developers say it’s incredibly easy to use. Also on the dev side of things, it seems like the quality ofÂ customer service is great, even if business owners don’t always like the lack of phone support. And unsurprisingly, merchants really seem to love Stripe’s robust subscription tools. The predictable pricing and lack of monthly fees are also appealing.
Stripe and Square have some very important core similarities: they’re both third-party processors with an assortment of tools that allow merchants to sell online. Neither one is suited to high-risk industries, and there’s a lengthy list of businesses neither company can work with. But despite that, both Stripe and Square offer tools that cater to a huge assortment of industries. They’ll both grow with your business, making it easy to scale up.
But despite their similarities in terms of business model, it’s also pretty clear that what each company does best is completely different.
Square is a spectacular all-in-one processor. You can sell in a store, on the go, and online and get all of your information and payments and orders collected in one simply, intuitive dashboard. There’s a huge array of add-on products that allow you consolidate a host of business functions under one name, and they’re guaranteed to work together perfect. eCommerce support is really the newest branch of Square’s offerings, and it’s a work in progress as the company establishes more partnerships and integrations with other major players.
If you have limited technical knowledge, Square is going to be much easier to get started with and to navigate through the different features. It’s free advanced inventory tools are also very well suited to retailers and other businesses that sell primarily physical goods.
Stripe focuses only on Internet payments (both on the web and in-app), but its tools make it possible for businesses to cater to customers all over the globe. The international appeal — from the local currency displays to the sheer breadth of payment methods accepted — make it clear that Stripe is already a global player.Not only that, but with Stripe’s APIs and documentation, a savvy developer could create all kinds of payments platforms for a business. Business owners who don’t have a developer on staff, and who don’t have a lot of technical knowledge themselves, might struggle with understanding how to use Stripe, especially if you want to do anything more than integrate it with some sort of shopping cart software.
You also get a far more limited scope of features. There’s no native support for omnichannel commerce. No mPOS app, no POS integration to support card-present pricing, no invoicing. If you need more than online payments on a regular basis, Stripe isn’t a suitable choice. But if that’s all you need, Stripe isn’t just a good option — it’s one of the best out there, period. If your business has a global reach, again you’ll find that Stripe once again tops the lists of best solutions.
I’m not comfortable saying that one of these solutions is better than the other because it really comes down to what your priorities are. Do you need something easy to use? Do you want to embrace multiple sales channels? Or are you limited to online sales and want best-in-class tools to reach a global audience, manage subscriptions, and even drive mobile commerce? Square can get the job done, and it’ll be the easier solution, but Stripe offers far more tools.
Sit down, think about what features are absolutely mandatory for you to have — and then look at which ones you’d like to have, but aren’t necessarily required. From there, it should be fairly clear which solution is right for you! Don’t forget to check out our complete reviews of Stripe and Square for more insights into how they function.
Have questions? Leave us a comment and we’ll help! Have experience using either of these tools? We’d love to hear from you.
As always, thanks for reading!
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