Every business wanting to accept credit or debit card payments needs a merchant account provider who can connect the transaction to major banks and credit card companies. Merchant account providers vary greatly in what they offer and how much they cost. Depending on your needs, providers can offer you hardware to collect transactions, software to track your sales, or even inventory management solutions.
There are two types of companies often referred to collectively as merchant account providers: traditional merchant accounts and payment service providers (PSP). Most small businesses will be fine using a PSP, but brick and mortar businesses processing a lot of payments, like a grocery store, will want to use a more traditional merchant account.
We’ve included both types of merchant account providers on our list, combining the best options for most businesses. We evaluated each based on processing fees, hardware offerings, costs, and what additional features they offer. Below is our list of the top seven merchant account providers.
Top 7 Merchant Account Providers of 2021
Square: Best Overall
Square is a great solution for most businesses because of their mid-range processing fees, a free card reader for small businesses, and their ability to help process payments regardless of the structure of your business. They also offer a POS software and some beginner-level sales tracking to get your business off the ground. Square is good at pretty much everything on our list and is hard to match when we take all factors into consideration, which is why they are our best overall.
Here’s a more detailed breakdown of Square’s costs:
- In-Store Payment Processing Fee: 2.6% + $0.10
- Mobile Payment Processing Fee: : 2.6% + $0.10
- Online Payment Fee: 2.9% + $0.30
- Hardware Costs: $299 for a POS terminal and $799 for a register
- Mobile Reader Cost: Free for new accounts, $10 for additional readers
Additional Square features:
- Mobile App: Free app is available that can process payments and provide limited sales details.
- Additional Software Features: Limited sales software is a good starter for new businesses.
- Integrations: Works with most major e-commerce and POS systems.
- Customer Management: Software can collect customer feedback. Also has the ability to offer customers loyalty rewards.
PayPal: Runner-Up, Best Overall
PayPal is similar to Square in their product offering but they’re slightly more expensive and customers seem to like Square’s ease of use just a bit more. Additionally, PayPal isn’t the best solution for traditional, non-mobile, in-person payments. PayPal is a brand name that people know, however, and their ability to easily accept payments directly from a customer's PayPal wallet is a huge benefit. Their strong overall offering that is close to Square’s makes them our runner-up since you can’t go wrong with using their payment solution.
Here’s a more detailed breakdown of PayPal’s costs:
- In-Store Payment Processing Fee: 2.7% + $0.30
- Mobile Payment Processing Fee: 2.7% + $0.30
- Online Payment Fee: 2.9% + $0.30
- Hardware Costs: Not Available
- Mobile Reader Cost: $24.99 (first one free)
Additional PayPal features:
- Mobile App: PayPal offers a free mobile app that makes it easy to send money and process payments.
- Additional Software Features: They offer some basic features but aren’t as sophisticated as Square's “early business” solution.
- Integrations: Works with most major e-commerce solutions.
- Customer Management: Customers can use their PayPal account to pay. PayPal also offers financing for customers of purchases greater than $99. PayPal also offers QR code touchless payments.
Payment Depot: Best for Established Businesses
Because of its more affordable monthly fee structure, Payment Depot is a traditional merchant account that is best for established businesses that process a large number of transactions every month. There are no separate payment costs based on the type of transaction (online vs. in-person), so it’s a good solution for businesses with multiple sales channels.
Payment Depot has a great reputation with its customers and integrates with most major systems both online and off. The best part of Payment Depot is that the more you process, the more affordable their offer becomes.
Here’s a more detailed breakdown of Payment Depot’s costs:
- All Payment Processing Fees: $49 to $199 per month + $0.05 to $0.15 per transaction. The monthly plan you choose dictates the cost per transaction and how many transactions per month you can process (between 25,000 and unlimited).
- Hardware Costs: They don’t sell their own but work with most major providers.
- Mobile Reader Cost: Provided via third-party providers, starting at $99.
Additional Payment Depot features:
- Mobile App: Payment Depot is a traditional merchant account, so you’ll use the mobile app of whatever mobile reader you choose.
- Additional Software Features: Not available.
- Integrations: Most major e-commerce and POS solutions.
- Customer Management: Not available.
Fattmerchant: Best for Recurring Billing Businesses
Fattmerchant, like Payment Depot, has a monthly membership model for their card processing, so the more transactions you process with Fattmerchant, the more affordable your overall cost per transaction will become. They offer a software solution called Omni that has a solid reporting and invoicing tool. Additionally, Omni includes recurring payment tools, which is why we chose Fattmerchant as the best for recurring billing business models.
Here’s a more detailed breakdown of Fattmerchant’s costs:
- All Payment Processing Fees: $99 or $199 per month (for less than $5 million in transactions) plus either $0.08 or $0.06 per transaction.
- Hardware Costs: Costs vary by needs and what third party you use.
- Mobile Reader Cost: Varies by provider, app works with most mobile readers.
Additional Fattmerchant features:
- Mobile App: Free app lets you accept, track, and manage your customer payments.
- Additional Software Features: Omni software offers one of the most robust inventory, invoicing, and reporting tools on our list. You can perform a lot of financial reporting and analysis of your business when using Fattmerchant.
- Integrations: Syncs with most major platforms plus has a developer API to create solutions to providers they don’t integrate with currently.
- Customer Management: Contactless payments.
Dharma Merchant Services: Best for Brick & Mortar Stores
Dharma is a traditional provider that is best for brick and mortar stores because they offer special pricing for storefront operations that is possibly the most affordable on our list for those types of businesses. Plus, the more your process, the more affordable your rates get, which is a nice perk to restaurants and brick and mortar retail stores.
Here’s a more detailed breakdown of Dharma’s costs:
- In-Store Payment Processing Fee: $20 per month and 0.15% + $0.07 per transaction. If you process over $100,000 in a month your fee decreases to 0.1% + $0.05 per transaction.
- Online Payment Fee: $20 per month and 0.2% + $0.10 per transaction.
- Hardware Costs: $95 to $750+ depending on needs.
Additional Dharma features:
- Mobile App: Free app gives you access to settings, transaction receipts, and sales reports.
- Additional Software Features: Great inventory tracking and sales reporting.
- Integrations: Integrates with many hardware options.
- Customer Management: Can provide loyalty rewards to frequent in-store shoppers.
Stripe: Best for Online Only Businesses
Many online businesses want to create their own custom checkout for their customers. Stripe allows you to do this with their sophisticated APIs and software offering, which is why we chose it as the best option for online only businesses. If you’re looking to process payments in-person, then this likely isn’t the option for you since much of their work is focused on online payments, even marketing themselves as the “payments infrastructure for the internet.”
Here’s a more detailed breakdown of Stripe’s costs:
- Online Payment Fee: 2.9% + $0.30
- In-Person Payment Processing Fee: 2.7% + $0.05
- Hardware Costs: Works with pre-certified card readers such as the Verifone systems. Prices vary.
Additional Stripe features:
- Mobile App: Allows you to manage all of your transactions and accept payments.
- Additional Software Features: Accepts recurring payments and can automatically update card information for payment methods saved on file.
- Integrations: Works with all the major software and website builders or content management systems online.
- Customer Management: Offers installment and pay later options for customers via Klarna.
Fiserv: Best for Flat Rate Pricing
Fiserv appears to be a solid processing option but they don’t publish their rates to non-customers. They could help you save money if you’re processing a lot of payments. Fiserv works directly with Clover for all their processing equipment and they offer one of the largest payment networks in the world.
Here’s a more detailed breakdown of Fiserv’s costs:
- All Payment Processing Fees: Unknown
- Hardware Costs: Varies, sold by Clover.
- Mobile Reader Cost: Not available.
Additional Fiserv features:
- Mobile App: Offers mobile solutions, including app, through Mobiliti.
- Additional Software Features: Offers an array of banking and logistics solutions for more established businesses.
- Integrations: Clover hardware and many online software options.
- Customer Management: Loyalty rewards, works with ATMs.
What Are Merchant Account Providers?
Merchant account providers allow businesses to accept credit and debit card payments as well as offer other services such as inventory tracking as a part of their software. Some merchant account providers just serve as a gateway between your point of sale system (POS) and the banks or credit card companies, while others will offer an entire software solution that can help you run your business more effectively.
Most businesses use a merchant account provider out of necessity so that they can accept card payments, but many utilize the full array of tools available via their provider which helps them reduce staffing costs or increase sales. All businesses should use a merchant account provider these days unless you’re a cash-only business, but the right provider for you will vary by what your business’s needs are.
How Do Merchant Account Providers Work?
Having a merchant account isn’t the only requirement to accept credit card payments because you’ll also need the appropriate hardware if you’re accepting payments in-person. You might need a point of sale system or a mobile payment system (mPOS). Some merchant account providers will give or sell you certain pieces of hardware and others will require you to partner with a third party to obtain it. If you’re accepting payments online, you’ll need a virtual terminal and possibly the right software to create an online shopping cart.
Who Needs a Merchant Account Provider?
If you’re going to accept credit or debit cards, then you have to have a merchant account provider. Based on your industry, your needs for what you look for in a provider might be very different. For example, a retailer will need a reliable merchant account provider with a strong POS system with a built-in card terminal for their customers to use. A food truck might just need a mobile payment card reader, while an online business will only need a virtual terminal.
One important feature of any merchant account system is the ability for you to receive your payments as early as the next day in your bank account.
How Much Do Merchant Account Providers Cost?
The costs of using a merchant account provider are going to vary quite broadly based on what you need from them. Just the processing fees have a range depending on whether you’re using a provider with a monthly cost or one that requires you to pay as you go. Providers with a monthly fee will charge anywhere from $20 to $200 (typically around $50 for small businesses) per month plus an additional charge per transaction of $0.05 to $0.15. Pay-as-you-go providers take a percentage of the transaction (2.5% to 3%) plus the same $0.05 to $0.15 per swipe. Costs typically decrease slightly as the volume of transactions goes up.
Additionally, you may incur hardware costs that also vary. Most mobile readers are affordable ($10 to $50), but large POS terminals and registers could be thousands of dollars upfront. Most small businesses can expect to pay anywhere from $10 to $500 for their initial hardware setup.
Something that is different in the merchant account space compared to financing is that banks aren’t always the cheapest option
How We Chose the Best Merchant Account Providers
After looking at over two dozen merchant account providers, we selected the top seven that you see reviewed here. We measured each based on their experience, transaction costs, hardware costs, and additional features. The best providers typically offer an easy setup that allows you to start accepting payments quickly with fees most small businesses can afford when the sales start coming in.