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Guide to Credit Credit Card Processing for Small Businesses

Credit card processing for small business can be costly and affect profit margins. Your business must choose the best credit card processor.

Chris Chambers
2 years, 7 months ago

Since the introduction of the first form of credit card transaction in 1950, customers all over the world have grown rather fond of this mode of payment. However, credit card processing for small business can be costly and affect profit margins. Your business must choose the best credit card processor for its transactions. 

Whether you're a land-based small business or a freelancer branching out into a new hustle, finding a solution to accept credit card payments is vital for your bottom line. It's undeniable that credit cards are, in many ways, a more comfortable and efficient way of receiving payments. It is considerably faster and far less riskier than accepting checks.

Not so long ago, things were quite different. You had to choose a payment processing company and complete a lengthy application over the phone. Then you would receive a bulky "brick" to swipe credit cards with, and the charges were insanely high. However, things are way simpler now. Using the best services, credit card processing for small businesses has become a breeze. All you need is a smartphone and plugged-in to a small device. In this article, we'll look at some of the best small business credit card processing companies.

How to Find Good Credit Card Processing for Small Business

Every small business is unique in many ways. The needs and challenges differ depending on your customers or products. Hence, it only makes sense that you will need a tailored approach to find the best credit card processing company for your business. Because of this, we don't offer a step by step procedure for selecting your ideal service provider. Instead, we prefer to help you get the right framework for choosing the perfect credit card processors. 

Therefore, we've put together a mini-guide below to help you approach the search and evaluation of credit card processors the right way. 

Single Out Your Payment Processing Needs

First, you need to understand you have multitudes of credit card processing apps and options out there. You simply cannot begin your search by solely listening to the options. You have to narrow down the requirements your point of sale system must meet in terms of payment processing. Usually, you can break down the majority of credit card processing services into three major groups. These are namely: POS/storefront, virtual and mobile. Below, we discuss what you can expect from each category. 

Mobile Credit Card Processing for Small Business

mobile processing

If you are a small business with a small volume, or need on-the-go credit card services, then mobile credit card processing solutions will work best for you. Typically, such processors like Square that work effectively through your smartphone offer you a portable and lightweight solution. 

However, don't let the compact nature of these solutions deceive you into thinking you're compromising for mobility. They are usually packed with sophisticated features like order management, and reporting among many others. At the software level, you can expect other functionalities like employee management, and some level of inventory tracking abilities. 


They are the most traditional types of solutions. As such, they usually serve fast check out processing. This means, you want to use POS or storefront solutions if your main objective is to fast-track experience at the checkout counter. It comes with a caveat; you may have to pay more for a reader than you would in the case of a mobile solution.

Typically, you will be at figures around the $1000 per terminal mark. Nevertheless, your price will ultimately depend on the kinds of features you want for your POS. Whether you wish to support wireless connectivity or remote access, the package your POS vendor will offer might differ, so will the pricing of the entire solution. 

Virtual/Online Credit Card Processing

From the name, it's easy to tell that these types of solutions are mainly for online payment processing associated with credit card transactions. Usually, you will have eCommerce businesses and other businesses that accept payment through their website using these virtual solutions. If you happen to be interested in these options, you'll have to choose between two categories. I

In the first option, you'll get an API form your processing company. You'll use this API to develop a custom shopping or payment experience for your customers. Remember, this option is very technical and involves some developer resources and skills. On the other hand, you can integrate into your eCommerce services the majority of virtual card processors for a smooth shopping experience. 

You can get some free services. However, if you want to enjoy some premium features, you have to be ready to pay some monthly fees. Remember, the charges for virtual credit card processing for small business may be slightly higher than mobile/POS processing options. We can explain this with the fact that online transactions are more vulnerable to fraud. Hence, they pose a higher risk for the processing companies; as such, the added risk is baked into your total cost. 

Remember to Ask For Interchange Plus Pricing

credit card processing for small business

As you research the various credit card processors, it's easy to come across different pricing structures and models. Formerly, the majority of the companies used the tiered pricing model. Swiped were categorized into three classes, namely: non-qualified, mid-qualified, and qualified. 

The amount of money each of these costs is different, though the client would have been provided the criteria beforehand. However, many have abandoned this pricing model because small businesses found it very challenging to control their costs. 

Hence, instead of the tiered pricing, interchange plus is more popular today. Therefore, you want to remember and ask credit card processors about this plan. The goal is to get them to make the entire plan as transparent to you as possible. In interchange pricing, you agree to pay the interchange fee. Companies like Mastercard and Visa determine this amount. Also, the credit card processors add a small markup, which makes the overall interchange-plus charges. 

Hence, your interchange fee per transaction will depend on the type of credit card used by your customers. However, you can determine the amount of interchange plus you'll pay based on the markup processors charge.

Gather As Many Quotes As Possible

It is essential to use review sites like ours to compare payment processor charges. But there are certain details, you have to collect directly from the companies. As such, it's in the best interest of your business that you shop around for quotes like you do if you were looking for auto insurance. Gather different quotes from as many providers as you can. 

If you are a non-profit or transaction purchases of a certain amount every month, you can receive discounts from some credit card processors. 

Final Thoughts

As a final bit of advice, we would like to state that credit card processing for small business has to be of high quality. Hence, you should not doubt the features your processor will be giving you. Take note of differences like detailed reporting interface for your small business loans, with login feature, and excel exporting features for small businesses. The ones most relevant to your business should influence your final decision. After all, small business credit card processing isn't only about convenience for customers but for owners and employees alike.