If you plan to accept payments (and I really hope you do since the whole point of business is to generate revenue), you will need a way to process them. Unless you’re a cash-only company, you undoubtedly need a solution to help you get the money you’re owed into your bank.
And, as of a couple of years ago, 43% of Americans said they never walk around with cash. Cash-only businesses could inconvenience and deter a large portion of their potential customer base.
This is where a payment processor becomes an invaluable resource…but, there are so many options. So, how are you supposed to know which one to go with? You should be able to answer that question by the time you finish reading this.
Here’s what’s in store:
- What is a Payment Processor?
- The Benefits of a Local Payment Company
- 7 Best Online Payment Processors for Small Business
- Frequently Asked Questions
- Conclusion: Which Processor is Best for Small Business?
Now, let’s roll!
What is a Payment Processor?
A payment processor is a service provider that facilitates electronic transactions – this enables you to accept payments from customers. Smooth and secure credit card processing is crucial in small business.
When a customer makes a purchase, the payment processor handles the payment:
- Authorization
- Processing
- Settlement
Payment processors offer a range of services tailored to small businesses, including accepting various payment methods like credit cards, debit cards, and mobile payments…Some also provide tools to manage transactions, generate reports, monitor sales activity, and even get business funding.
They help you maintain a professional approach to collect payments and simplify the process. Bonus points if they give you insights into your business’ financial transactions (most modern payment processors do).
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What is the Difference Between Payment Gateway and Payment Processor?
A payment gateway facilitates the secure transfer of payment data between the merchant’s website and the payment processor. Examples include PayPal, Stripe, and Authorize.Net.
The payment processor handles the actual authorization, settlement, and movement of funds between the customer’s bank and the merchant’s bank. Examples include First Data, Worldpay, and Adyen.
In short, the payment gateway is the interface between the merchant and the payment processor, ensuring secure transmission of payment data, while the payment processor technically manages the transaction’s financial aspects.
However, for the sake of relevance, I want to focus on gateways, which is what most small businesses refer to as “payment processors.” Gateways tend to refer to themselves as payment processors because they use technology to connect you to the processor.
Let’s dive into the best solutions to accept payments as a small business.
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The Benefits of a Local Payment Company
You might want to opt for a local payment company to take advantage of several perks, especially when you might need personalized service and hands-on support – Local payment companies often provide individualized assistance tailored to your needs.
Local companies are more likely to offer:
- Face-to-face meetings
- On-site support
- Customized solutions
- Flexible pricing, terms, or services
With a local payment company, you’re apt to receive prompt and attentive customer service (though it’s not guaranteed). Typically, a local payment company will understand relevant market dynamics and can address your concerns quickly.
Working with a local company can also provide more ease in communication due to shared time zones, language, and cultural understanding…you can get smoother collaboration and problem-solving.
They might even tailor solutions to suit your specific requirements. For example, a local provider might create a custom integration to work with your existing systems – which isn’t typical of enterprise solutions.
Moreover, supporting a local business fosters a sense of community and strengthens local economies. It establishes a mutually beneficial relationship where both parties can thrive (this is the same reason I love credit unions and small community banks over big banks).
To find a local payment company, search online for relevant offers in your area. Try searching for POS (which stands for “point of sale”), card readers, merchant services, or merchant processors in your town or region. Most companies who offer POS devices/card readers can also help you process payments.
If you don’t have any luck on that route, just ask for recommendations. Attend networking events and/or inquire at your local Chamber of Commerce. Then, reach out directly to potential candidates and check references from previous clients.
Through a bit of research (and engagement), you can find a local payment company that aligns with your business goals and provides the support and services you need.
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7 Best Online Payment Processors for Small Business
Now, you don’t have to use a local provider. If you’re more interested in convenience and simplicity, there’s no shame in joining the millions of small business owners who use national payment processors.
Unlike most local payment companies, a larger payment processing solution is likely to let you set up an account online in a matter of minutes. They will typically ship you out a card reader that you can have in about a week, and you can hook it up all on your own.
Enterprise payment gateways are known for convenience – the modern technology they employ is ever-evolving to meet the needs of their users. Plus, larger companies tend to have more resources to invest in the latest tech sooner rather than later.
And, most of them offer business funding based on your account transactions. Let’s explore the top enterprise-level small business payment processing solutions.
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1. Stripe
Stripe is a financial infrastructure provider for online and in-person businesses. They offer a suite of products to accept payments, send payouts, automate financial processes, and enhance revenue growth.
As for charges, Stripe’s pricing varies based on the services utilized, such as transaction fees for payments and subscription fees for additional features like Billing and Connect.
Stripe is often favored for its versatility, scalability, and user-friendly interface, making it a viable option for businesses of all sizes. However, the decision to use Stripe should be based on factors such as business needs, budget, and technical capabilities.
While Stripe primarily focuses on payment services, they also offer corporate cards and business capital loans.
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2. Square
Square is a comprehensive software and hardware platform trusted by millions of businesses worldwide to streamline operations, enhance efficiency, and create new revenue opportunities.
With Square, you can easily sell anywhere using their secure payment solutions, including:
- In-store
- Online
- For delivery
- For in-person pickup
Square offers tailored product suites for various industries such as restaurants, retail, and beauty businesses – this would enable you to manage and optimize operations across multiple locations and sales channels.
As for charges, Square’s pricing varies depending on the services utilized, with transaction fees for payments and subscription fees for additional features like Square Loans and Square Checking.
For small businesses, Square can be a valuable tool due to its versatility, user-friendly interface, and scalability.
Square also offers business funding from $300 to $250K.
3. Shopify POS
Shopify POS was originally created for Shopify’s online sellers to sync inventory and sales through their online and offline channels.
It is a versatile point-of-sale system that empowers businesses to:
- Manage transactions efficiently
- Accept payments from various sources
- Synchronize inventory across different sales channels
With Shopify POS, you can integrate in-store and online sales and offer customers flexible shopping options (i.e. “buy online,” “pick up in-store,” or “ship-to-home”). This payment transaction system offers a range of features to enhance retail operations.
Now, its pricing structure varies depending on the plan selected, with transaction fees and subscription costs.
For small businesses, Shopify POS can be beneficial due to its user-friendly interface, powerful inventory management, and omnichannel selling capabilities. It’s especially powerful for eCommerce merchants with an online store powered by Shopify or Shopify Plus.
And, Shopify does offer business funding to online sellers via Shopify Credit (a corporate card) and Shopify Capital.
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4. PayPal Zettle
PayPal POS, also known as PayPal Zettle, is a point-of-sale system designed to facilitate transactions for businesses both in-store and on-the-go. It offers a flexible card reader that seamlessly integrates with your setup, which enables you to accept various payment methods quickly and efficiently.
With PayPal POS, you can process payments in seconds, including contactless and chip card payments.
The pricing structure for PayPal POS is straightforward, with no long-term commitments or monthly fees. You only pay a transaction fee of 2.29% plus $0.09 per transaction, along with a one-time cost of $29 for the first card reader and $79 for additional ones.
PayPal POS can be beneficial for small businesses due to its simplicity, fast setup, and user-friendly interface.
Plus, PayPal offers small business loans up to $150K, working capital loans up to $250K, and loan builder loans up to $150K.
5. Clover
Clover is a comprehensive point-of-sale (POS) system designed to cater to various types of businesses, including:
- Restaurants
- Retail stores
- Service-based establishments
It offers more than just payment processing, providing an all-in-one solution to update operations and enhance efficiency – Clover’s system is versatile and adaptable, making it suitable for businesses of all sizes, including small businesses.
While specific pricing details may vary depending on the plan and features you choose, Clover typically charges rates starting at 2.3% plus 10 cents per transaction. Overall, Clover can be beneficial for small businesses, offering a robust POS solution with features beyond basic payment processing, such as inventory management, customer engagement tools, and reporting capabilities, helping you manage and grow your business effectively.
Moreover, they offer Clover Capital, an advance of funds based on your future sales.
6. Payment Depot
Payment Depot is a payment processing service that offers tailored Interchange+ pricing to help you save on transaction fees. They seamlessly accept all major credit cards, including Apple Pay, Google Pay, Visa, Mastercard, American Express, and Discover.
While specific pricing may vary depending on your business needs and the plan you choose, Payment Depot aims to provide “transparent” and competitive rates. However, you will need to call and speak with a sales rep to see what pricing they offer you.
As for whether Payment Depot is good for small businesses, it could definitely be beneficial due to its customizable pricing structure and variety of solutions suitable for businesses of all sizes.
Additionally, Payment Depot does offer working capital up to $500K.
7. Authorize.net
I think I started using Authorize.net back in 2008, and I’m still with them (along with others). They aren’t nearly as hyped these days as the newer platforms like Stripe, but this payment processing solution is still worth your consideration.
Authorize.net is a payment gateway service that allows you to accept payments anytime and anywhere.
Whether you’re operating online, over the phone, or in-person, Authorize.net facilitates:
- Credit and debit card payments
- Electronic check payments
- Mobile payments
- Recurring billing for subscription-based models
They provide easy-to-use tools like Virtual Terminal for manual orders and compatibility with many card readers for point-of-sale transactions.
As for pricing, Authorize.net charges various fees depending on your chosen plan and transaction volume, but they tell you what you’ll pay in the beginning, which can help you manage costs effectively.
With reliable support available 24/7 and seamless integration with major payment types like Visa, Mastercard, and PayPal, Authorize.net can be a convenient and efficient solution for small businesses.
While Authorize.net doesn’t offer in-house business funding, they have a partnership with Kabbage®. So, you can connect your Authorize.net merchant account to the loan platform and find out if you qualify for up to $250K through the Kabbage® platform.
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Frequently Asked Questions
Which payment processor is best?
The best payment processor depends on your business’s needs, including transaction volume, industry, budget, and desired features. Popular options include Stripe, PayPal, Square, and Payment Depot, though you don’t want to rule out local payment processing companies. Research each provider’s pricing, features, integrations, and customer support to determine the best fit.
Is Stripe or PayPal better for small business?
Both Stripe and PayPal are suitable for small businesses, offering online payments, invoicing, and subscription billing. Stripe may be preferred for developers due to its customizable API, while PayPal offers broader brand recognition and a user-friendly interface.
What is the No. 1 payment gateway?
The “number one” payment gateway varies based on metrics like market share, customer satisfaction, or features offered. Common top choices include PayPal, Stripe, Square, and Authorize.Net.
How do I take payments as a small business?
To accept payments, set up a merchant account with a payment processor like Stripe, PayPal, Square, or a local provider. Then, you can accept payments online through your website, mobile apps, email invoices, or in-person using card readers or POS systems. Choose a system that suits your customers and integrates smoothly with your business.
Conclusion: Which Processor is Best for Small Business?
Finding the right payment processor for your small business involves considering factors like transaction volume, industry needs, budget, and desired features. While options such as Stripe, PayPal, Square, and Payment Depot offer robust solutions, don’t overlook local providers for personalized service.
Prioritize transparent pricing, reliable support, and seamless integration – By researching and assessing your needs, you can confidently choose a processor that helps your business thrive.
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