7 Popular Payment Processing Companies for Small Businesses
Posted: Wed Dec 04, 2024 8:27 am
7 Popular Payment Processing Companies for Small Businesses
Wouldn't it be great if a customer could make a credit card payment and have their money instantly appear in your business's checking account , without any effort on your part? Unfortunately, small business owners don't have that option, but they can create something almost as seamless by using a payment processor.
Contents hide
1 What is payment processing?
2 PayPal
3 Square
4 Shopify Payments
5 Amazon Pay
6 Clover
7 Stripes
8 Chase Payment Solutions
9 Things to Consider When Choosing a Processing Company
9.1 Related publications:
What is payment processing?
Payment processing is a business-to-business ( B2B ) service that enables small business merchants to accept payments from a variety of sources, including debit cards, credit cards, mobile wallets, Automated Clearing House (ACH) bank transfers, and buy now, pay later (BNPL) transactions. They provide payment services on both the customer and merchant sides.
The payment processor provides the payment interface for the customer. The payment processor offers a payment gateway , a means by which the customer can use various payment methods to complete a sale . In face-to-face sales, this is typically a physical payment terminal capable of accepting credit cards , debit cards, contactless mobile wallet apps , cash, and sometimes gift cards. For online payments, the payment gateway is a digital application programming oman b2b leads
interface ( API ) that allows the customer to enter payment information during the checkout process. The payment processor must protect the customer's financial information and ensure the security of the checkout process.
A payment provider provides a simple and secure way for a merchant to receive money. For most merchants, a payment provider primarily functions as a credit card processor. It allows a small business owner to accept credit and debit card payments , as well as other payments such as mobile wallets (like Apple Pay), and then transfer the remaining payments to the business owner's checking account. For this service, the payment processor charges a transaction fee. In most cases, this is around 3% of the total purchase amount . Some may also charge a monthly account maintenance fee.
In recent years, a plethora of payment processing companies have entered the market, giving small business owners a variety of options for getting customer payments into their businesses' checking accounts. Here are seven payment processing companies that have gained significant market share in the small business community.
PayPal
PayPal has come a long way from its beginnings as a peer-to-peer payment service that allowed friends to offset shared expenses like restaurant bills and vacation rentals. It now offers an all-in-one payment solution.
Processing Options: Many merchants use PayPal as their credit card processing company , but it also integrates with mobile wallets like Apple Pay and Google Pay. Merchants can use PayPal’s Braintree service to accept direct ACH debit payments from a customer’s bank account. Additionally, PayPal offers BNPL, which is a sign of the growing appeal of this financing option among today’s shoppers.
Fees: PayPal maintains an extensive fee schedule, with different rates for different types of payments. Merchants are especially concerned about credit card processing fees, and for this PayPal charges 3.49% of the purchase price, plus a 49¢ transaction fee.
Square
Square 's launch of mobile payment terminals that sync with merchants' smartphones and computers has allowed merchants to process card payments on the go. Square now also processes online payments and supports peer-to-peer payments through its Cash App .
Processing options: Square is best known for its in-person transaction services. Using a device called the Square Reader, merchants can process credit and debit card transactions by swiping, inserting a chip card, and tapping to pay. The latest Square Readers can also process mobile wallet transactions. On the web, Square offers the Square Checkout API to power the checkout process on its website. The company also dabbles in peer-to-peer payments with its sister product, Cash App. (Both Square and Cash App are owned by Block Inc.)
Fees: Square’s fees are among the lowest among the major payment processors. Most in-person sales are charged a fee of 2.6% of the purchase price, plus a 10¢ transaction fee. Online Square Checkout payments cost the merchant 2.9% of the purchase price, plus a 30¢ transaction fee. A full fee schedule can be found on Square’s website.
Shopify Payments
Shopify Payments processes payments at industry-standard rates, but adds a customer service component and helps with credit card chargebacks. It’s part of the overall Shopify platform, which operates on a subscription model. Monthly fees start at $14.44 for a full year.
Processing options: Shopify Payments handles all the standard payments a merchant needs, including credit cards, debit cards, mobile wallets like Apple Pay and Google Pay, BNPL, and even cryptocurrency. Notably, Shopify merchants don’t have to use Shopify Payments for their online checkout provider. They can use the Shopify platform to run their entire online store, but then use a third-party provider like PayPal or Apple Pay for checkout.
Service Fees: Shopify Payments offers tiered processing fees, depending on your Shopify subscription type. Credit card fees range from 2.4% to 2.9% of the purchase amount, and all card purchases incur a 30¢ transaction fee.
Amazon Pay
With Amazon Pay, Amazon customers can use websites that are not owned by Amazon. The Amazon Pay API allows customers to use their stored Amazon payment information to complete transactions, offering a combination of security and convenience.
Processing options. Amazon Pay appeals to Amazon customers who want to move their payment and address information to other sites. It speeds up the checkout process and reassures customers that their information will be safe. Amazon Pay can also process credit and debit card transactions for people who don’t have Amazon accounts. It doesn’t accept other payment options.
Fees: Amazon Pay's standard fee is 2.9% plus a 30-cent processing fee for each transaction.
Clover
Clover focuses its offerings on in-person transactions. It shares many similarities with Square, including using its own card readers to facilitate point-of-sale purchases using cards and mobile wallets. It has gained particular popularity in the restaurant industry. Like Shopify, Clover offers comprehensive merchant services that come with a monthly subscription. These services include Clover’s payment processing capabilities.
Processing Options: Clover allows you to accept payments from credit cards, debit cards, Venmo, PayPal, and mobile wallets like Google Pay and Apple Pay. Most merchants focus on the point-of-sale (POS) capabilities, but Clover's software can handle online purchases, too.
Pricing: Clover offers a variety of pricing options depending on your industry, the hardware you purchase, and the software you need to support your business. When it comes to payment processing, most plans charge a 2.3% fee plus 10 cents per transaction.
Stripe
Stripe's business model is based on accepting a huge number of payment options. You can run the Stripe API on an existing site and allow your customers to use as many payment methods as they want.
Processing options. Stripe processes a wide range of payments. It can process credit cards, debit cards, all major digital wallets (including Google Pay, Apple Pay, and Alipay), BNPL, and ACH direct debits from bank accounts. It also allows you to accept international credit cards.
Fees. Stripe charges merchants a 2.9% fee plus 30¢ per transaction for online purchases (add another 1% fee for international transactions). In-person payments are charged 2.7% plus 5¢ per transaction.
Chase Payment Solutions
As one of the largest American banks, JPMorgan Chase has used its considerable power to enter the payment processing space. Every payment processor needs a bank to hold funds that are ultimately distributed to merchants. Chase acts as both a payment processor and an acquiring bank, making Chase Payment Solutions a one-stop direct processor.
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Processing Options: Chase payment solutions can work with e-commerce checkouts and can also process POS payments using a physical card, thanks to a variety of hardware products. The platform specializes in credit and debit card payments. Because Chase acts as its own acquiring bank, it can theoretically distribute payments to merchants faster than other payment processors.
Fees. Chase charges 2.9% plus 25¢ per transaction on every e-commerce purchase. In-person purchases cost a little less, at 2.6% plus 10¢ per transaction.
What to consider when choosing a processing company
Small business owners typically consider two things when choosing a payment processing company:
Finance. Accepting any form of payment other than cash is expensive for businesses. So small business owners must decide how much of their sales revenue can go toward payment processing fees . Those who can stomach higher fees in exchange for user habits may choose PayPal, while those who want minimal fees may choose Square. Merchants can also pay extra for support services offered by companies like Clover and Shopify. These subscription-based models offer much more than just payment processing, but they should fit within a business owner’s monthly budget.
Customer needs : To avoid the biggest headache of an online retailer — cart abandonment — merchants need to make the checkout process as easy as possible. This means accepting multiple forms of payment, especially credit and debit cards. A merchant can attract younger shoppers by accepting “buy now, pay later” payments, which can be processed by platforms like Shopify, Stripe, and PayPal. The more payment types you accept, the more shoppers you can attract.
How much do payment processors typically make on each transaction? Each payment processor has its own formula for how muc
Wouldn't it be great if a customer could make a credit card payment and have their money instantly appear in your business's checking account , without any effort on your part? Unfortunately, small business owners don't have that option, but they can create something almost as seamless by using a payment processor.
Contents hide
1 What is payment processing?
2 PayPal
3 Square
4 Shopify Payments
5 Amazon Pay
6 Clover
7 Stripes
8 Chase Payment Solutions
9 Things to Consider When Choosing a Processing Company
9.1 Related publications:
What is payment processing?
Payment processing is a business-to-business ( B2B ) service that enables small business merchants to accept payments from a variety of sources, including debit cards, credit cards, mobile wallets, Automated Clearing House (ACH) bank transfers, and buy now, pay later (BNPL) transactions. They provide payment services on both the customer and merchant sides.
The payment processor provides the payment interface for the customer. The payment processor offers a payment gateway , a means by which the customer can use various payment methods to complete a sale . In face-to-face sales, this is typically a physical payment terminal capable of accepting credit cards , debit cards, contactless mobile wallet apps , cash, and sometimes gift cards. For online payments, the payment gateway is a digital application programming oman b2b leads
interface ( API ) that allows the customer to enter payment information during the checkout process. The payment processor must protect the customer's financial information and ensure the security of the checkout process.
A payment provider provides a simple and secure way for a merchant to receive money. For most merchants, a payment provider primarily functions as a credit card processor. It allows a small business owner to accept credit and debit card payments , as well as other payments such as mobile wallets (like Apple Pay), and then transfer the remaining payments to the business owner's checking account. For this service, the payment processor charges a transaction fee. In most cases, this is around 3% of the total purchase amount . Some may also charge a monthly account maintenance fee.
In recent years, a plethora of payment processing companies have entered the market, giving small business owners a variety of options for getting customer payments into their businesses' checking accounts. Here are seven payment processing companies that have gained significant market share in the small business community.
PayPal
PayPal has come a long way from its beginnings as a peer-to-peer payment service that allowed friends to offset shared expenses like restaurant bills and vacation rentals. It now offers an all-in-one payment solution.
Processing Options: Many merchants use PayPal as their credit card processing company , but it also integrates with mobile wallets like Apple Pay and Google Pay. Merchants can use PayPal’s Braintree service to accept direct ACH debit payments from a customer’s bank account. Additionally, PayPal offers BNPL, which is a sign of the growing appeal of this financing option among today’s shoppers.
Fees: PayPal maintains an extensive fee schedule, with different rates for different types of payments. Merchants are especially concerned about credit card processing fees, and for this PayPal charges 3.49% of the purchase price, plus a 49¢ transaction fee.
Square
Square 's launch of mobile payment terminals that sync with merchants' smartphones and computers has allowed merchants to process card payments on the go. Square now also processes online payments and supports peer-to-peer payments through its Cash App .
Processing options: Square is best known for its in-person transaction services. Using a device called the Square Reader, merchants can process credit and debit card transactions by swiping, inserting a chip card, and tapping to pay. The latest Square Readers can also process mobile wallet transactions. On the web, Square offers the Square Checkout API to power the checkout process on its website. The company also dabbles in peer-to-peer payments with its sister product, Cash App. (Both Square and Cash App are owned by Block Inc.)
Fees: Square’s fees are among the lowest among the major payment processors. Most in-person sales are charged a fee of 2.6% of the purchase price, plus a 10¢ transaction fee. Online Square Checkout payments cost the merchant 2.9% of the purchase price, plus a 30¢ transaction fee. A full fee schedule can be found on Square’s website.
Shopify Payments
Shopify Payments processes payments at industry-standard rates, but adds a customer service component and helps with credit card chargebacks. It’s part of the overall Shopify platform, which operates on a subscription model. Monthly fees start at $14.44 for a full year.
Processing options: Shopify Payments handles all the standard payments a merchant needs, including credit cards, debit cards, mobile wallets like Apple Pay and Google Pay, BNPL, and even cryptocurrency. Notably, Shopify merchants don’t have to use Shopify Payments for their online checkout provider. They can use the Shopify platform to run their entire online store, but then use a third-party provider like PayPal or Apple Pay for checkout.
Service Fees: Shopify Payments offers tiered processing fees, depending on your Shopify subscription type. Credit card fees range from 2.4% to 2.9% of the purchase amount, and all card purchases incur a 30¢ transaction fee.
Amazon Pay
With Amazon Pay, Amazon customers can use websites that are not owned by Amazon. The Amazon Pay API allows customers to use their stored Amazon payment information to complete transactions, offering a combination of security and convenience.
Processing options. Amazon Pay appeals to Amazon customers who want to move their payment and address information to other sites. It speeds up the checkout process and reassures customers that their information will be safe. Amazon Pay can also process credit and debit card transactions for people who don’t have Amazon accounts. It doesn’t accept other payment options.
Fees: Amazon Pay's standard fee is 2.9% plus a 30-cent processing fee for each transaction.
Clover
Clover focuses its offerings on in-person transactions. It shares many similarities with Square, including using its own card readers to facilitate point-of-sale purchases using cards and mobile wallets. It has gained particular popularity in the restaurant industry. Like Shopify, Clover offers comprehensive merchant services that come with a monthly subscription. These services include Clover’s payment processing capabilities.
Processing Options: Clover allows you to accept payments from credit cards, debit cards, Venmo, PayPal, and mobile wallets like Google Pay and Apple Pay. Most merchants focus on the point-of-sale (POS) capabilities, but Clover's software can handle online purchases, too.
Pricing: Clover offers a variety of pricing options depending on your industry, the hardware you purchase, and the software you need to support your business. When it comes to payment processing, most plans charge a 2.3% fee plus 10 cents per transaction.
Stripe
Stripe's business model is based on accepting a huge number of payment options. You can run the Stripe API on an existing site and allow your customers to use as many payment methods as they want.
Processing options. Stripe processes a wide range of payments. It can process credit cards, debit cards, all major digital wallets (including Google Pay, Apple Pay, and Alipay), BNPL, and ACH direct debits from bank accounts. It also allows you to accept international credit cards.
Fees. Stripe charges merchants a 2.9% fee plus 30¢ per transaction for online purchases (add another 1% fee for international transactions). In-person payments are charged 2.7% plus 5¢ per transaction.
Chase Payment Solutions
As one of the largest American banks, JPMorgan Chase has used its considerable power to enter the payment processing space. Every payment processor needs a bank to hold funds that are ultimately distributed to merchants. Chase acts as both a payment processor and an acquiring bank, making Chase Payment Solutions a one-stop direct processor.
]
Processing Options: Chase payment solutions can work with e-commerce checkouts and can also process POS payments using a physical card, thanks to a variety of hardware products. The platform specializes in credit and debit card payments. Because Chase acts as its own acquiring bank, it can theoretically distribute payments to merchants faster than other payment processors.
Fees. Chase charges 2.9% plus 25¢ per transaction on every e-commerce purchase. In-person purchases cost a little less, at 2.6% plus 10¢ per transaction.
What to consider when choosing a processing company
Small business owners typically consider two things when choosing a payment processing company:
Finance. Accepting any form of payment other than cash is expensive for businesses. So small business owners must decide how much of their sales revenue can go toward payment processing fees . Those who can stomach higher fees in exchange for user habits may choose PayPal, while those who want minimal fees may choose Square. Merchants can also pay extra for support services offered by companies like Clover and Shopify. These subscription-based models offer much more than just payment processing, but they should fit within a business owner’s monthly budget.
Customer needs : To avoid the biggest headache of an online retailer — cart abandonment — merchants need to make the checkout process as easy as possible. This means accepting multiple forms of payment, especially credit and debit cards. A merchant can attract younger shoppers by accepting “buy now, pay later” payments, which can be processed by platforms like Shopify, Stripe, and PayPal. The more payment types you accept, the more shoppers you can attract.
How much do payment processors typically make on each transaction? Each payment processor has its own formula for how muc