If you run a retail business, there’s a good chance you accept some form of non-cash payment. According to the Pew Research Center: 41% of adults don’t pay with cash In a typical week, business owners have an obligation to understand and address the role of their payment processor.
Read on to learn more about how payment processors work, what to consider when choosing a payment processor, and the top 5 payment companies.
What is a payment processor?
A payment processor is a vendor that manages the logistics of accepting credit and debit card payments. They handle all the points at which customers enter their credit card details (card readers, Checkout Pageas well as special hardware installed on smartphones, and the various financial institutions that participate in the transactions.
Payment processors also play a key role in ensuring security. Online PaymentYou ensure that your customers have sufficient funds in their bank accounts and sufficient credit limits on their credit cards, and you protect your customers’ sensitive financial information so that malicious third parties cannot access it.
How do payment processors work?
Payment processors are the invisible players when businesses accept card payments, moving funds from a customer’s account to complete the transaction. Merchant Account— often in the blink of an eye. The process goes like this:
1. The buyer provides their card details
The customer provides their card details to the merchant, which may happen via a card reader in a brick-and-mortar store, a payment page on a website, mobile hardware, or some other payment method.
2. The payment infrastructure processes the request
Customer card details are Payment Gateway It is then sent to the payment processor, who then sends it to the bank network (in the case of debit cards) or the card network, such as Mastercard, Visa or American Express, for authorization to officially initiate the transaction.
The bank or card network then notifies the payment processor whether the payment was approved or declined. If the payment is approved, the merchant completes the transaction with the customer. If the payment is declined, the merchant notifies the customer, who can try a different payment method.
3. Money moves
Once the transaction is authorized and completed, the payment processor notifies the bank or credit card company (called the “issuing bank”) that the funds need to be transferred to the merchant’s bank (called the “acquiring bank”).
The funds are deposited in the merchant’s account ( Merchant Service Providers). This may happen instantly or within a few business days depending on your payment provider and participating bank account type.
Merchants are then free to move those funds to their own bank accounts.
Top 5 Payment Processing Companies
There are many payment processors on the market for any business owner to choose from. Here are the top five services:
1. Square
Square is one of the most popular payment processors on the market, and you’ve probably seen its distinctive white card terminal on the counter at your favorite coffee shop or a thumb-sized version plugged into someone’s smartphone.
People like the interface because it’s clean, simple, and easy to understand. Square charges a fee of 2.6% for every in-person purchase and 2.9% plus 30 cents for every online transaction. Prices may vary slightly between the free and subscription models of the Square software.
The company will provide one free card reader when you sign up for a plan, after which the hardware will cost anywhere from $10 to $149.
2. Payment Depot
Payment Depot clients pay a monthly membership fee of $79. When a purchase is made, Payment Depot charges an additional flat fee, without marking up on the exchange rate. The flat fee ranges from 15 cents per transaction for the cheapest monthly plan with the fewest features to 7 cents for the most expensive plan. Payment Depot is also available for a variety of hardware. Payment terminal or point of sale system or point of sale system.
3. Stripes
Stripe is one of the most customizable payment processors on the market. It is specifically designed for web developers, allowing them to tailor the product’s API to fit the requirements of their business. With Stripe, you can accept credit cards, debit cards, and even some cryptocurrencies in over 130 currencies. They charge a fee of 2.9% plus 30 cents for each successful card transaction. With Stripe, Integrate Add it to your Shopify store.
4. PayPal
PayPal is a popular choice for business owners looking for a low-volume payment processor — one that doesn’t process a huge amount of transactions every day. It has low up-front costs (no monthly fees, no minimum balance) and is used in over 200 countries and 26 currencies worldwide.
PayPal offers integration It can be integrated directly with e-commerce sites. PayPal charges 2.9% plus 49 cents per transaction for standard credit and debit card payments in the US, 2.29% plus 9 cents per transaction for payments made via QR code, and 3.49% plus 49 cents per transaction for all other commerce transactions, including Paypal Checkout.
5. Payline Data
Payline Data offers merchants the ability to accept payments online, in-store, and through a mobile app. The company also offers merchants the opportunity for cash advances, access to customer insights, and convenient QuickBooks integration. The company’s customer service is also highly rated. Contracts are month-to-month, and the company charges an interchange fee of 0.4% plus 10 cents for every card swipe transaction and 0.75% plus 20 cents for every online transaction.
What to consider when choosing a payment processor
When choosing a payment processor, consider fee structures and whether you need to process payments in international currencies. When reviewing payment processors, consider the following:
- Are there any registration fees or initial costs? Are there any annual fees after that?
- Do you charge a fee for each transaction? Is there a monthly subscription?
- Do I need to purchase or lease credit card processing equipment, such as in-store terminals?
- Are there any gateway fees to connect to a merchant account?
- In case of an emergency, will you be responsible for the cost? Credit card chargebacks?
- Do I have to pay a fee to validate a customer address or billing zip code?
- Do I have to pay a termination fee if I stop using my processor?
- Do you need to accept payments from overseas?
Find the best payment processor for your business
If your business accepts card payments, you need a payment processor. But there’s no one-size-fits-all service. As we’ve proven above, there are many models and products to choose from, each tailored to the needs of a variety of businesses, from mom-and-pop shops to large e-commerce retailers.
