These days, there are a lot of good options available for merchant services, which is the processing that takes place when a customer purchases goods or services from a merchant, or provider. Typically, this involves credit or debit card processing through a terminal at the merchant’s location, or via an online transaction. Once all relevant information has been gathered, the merchant service will be in contact with the customer’s bank, and will facilitate a payment to the merchant for whatever goods or services were purchased.
This service is highly advantageous to merchants, since it is generally protected against fraud, and includes the most current security protocols. From the merchant perspective, the key is to find a really good service without overspending, because that can quickly eat away at profit margins. Below is a summary of some of the most prominent merchant services, and a pricing comparison that may be helpful for staying within your budget.
How Pricing Works for Merchant Services
Merchant services can be complicated, since they have to move transactions through secure merchant connections, on to credit card sites, to the customer’s bank account, and finally to the merchant’s account. Obviously, this involves multiple sites and parties, and as a result, pricing can get out of hand pretty quickly. The three primary pricing models used by merchant service companies are as follows:
Flat-rate pricing – the simplest scheme, this calls for a single, fixed rate imposed on every transaction, and is very popular among small businesses where smaller transactions are the norm
Tiered pricing – this is probably the most popular pricing scheme, but it’s also the one with the least transparency, because it lumps together card fees, markups, and interchange rates, then segregates them into set levels of pricing
Interchange-plus pricing – this scheme consists of the card brand fee, the processor’s markup, and the interchange rate, and of these three components, only the first and third are fixed charges
Comparison of Major Players
As a guide to comparison pricing among today’s most popular merchant services, the following information is provided:
- Square – for all swiped transactions, Square charges 2.75%, and for all transactions that are keyed in, it charges 3.5% plus an additional $.15
- Stripe – payment plan is based on a fixed rate that costs 2.9% plus $.30 per transaction, for online or mobile business transactions. It does not process retail merchant transactions.
- Payline – has interchange-plus pricing, with a $15 monthly fee, annual $99 PCI Compliance fee, $25 monthly minimum, and it offers both a Retail Plan and an Online Plan to clients
- Helcim – This company offers interchange-plus pricing, and is considered to have one of the most transparent pricing schemes on the market. It has an .18% interchange markup, with a $.08 charge per transaction. Non-profit companies are eligible for discounts and lower rates may be available if your company processes more than $50,000 monthly.
- Payment Depot – their fee is a combination of interchange rate and card brand fee, and four different membership plans are offered, with fees ranging from $.05 to $.25 per transaction. Although the majority of their clientele are small businesses, they also service major companies like Sprint and Subway.
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