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Credit card processing for small businesses

Want to start accepting credit cards at your small business? Learn about your credit processing options.

In this day and age, if your business isn’t capable of accepting credit cards, you’re certainly going to be missing out on sales. If you can give the customer an option besides a cash payment, allowing them to swipe a credit card for a purchase is certainly the way to go — and it can be easier than you think to integrate into your business. Customers want convenience, and credit cards are the ultimate form of convenience when it comes to spending.

What is credit card processing?

When a customer presents their credit card, their payment info needs to be verified. That’s when your credit card processor goes to work to verify it and clear the transaction. This happens behind the scenes with your processor, your customer’s bank and the credit card networks.

Different types of credit card processing

These are probably the most familiar options. Credit card readers are secure and simple to use, allowing customers to swipe, insert or tap their cards against a reader for payments. A credit card machine accepts most cards, and there are different types of machines for different kinds of businesses.

  • Countertop machines. These machines are attached to your Point of Sale (POS) computer system and allow you to process card payments from a fixed location in your store.
  • Mobile readers. These allow you to process payments wherever you go, and offer a lot of flexibility. They’re ideal for cafes and restaurants because you can process card payments where your customers are seated. They can also be convenient for delivery services or outdoor markets.
  • Integrated machines. This option is integrated with your POS system to help simplify sales reporting and the balancing of accounts. They are best suited for businesses with higher transaction volumes, such as supermarkets.

What are the costs of getting a credit card reader for my small business?

Depending on the vendor, you could potentially face the following fees:

  • Setup fee. Some vendors may charge this to cover initial support costs in getting your processing system off the ground.
  • Rental fee. What you pay to rent a credit card terminal.
  • Service fee. Your processor may charge a fee for ongoing support.
  • Printer cost. Most machines have internal printers, which let you print physical receipts.
  • Interchange fee. Fees that issuing banks charge to merchants for credit card processing.
  • Monthly minimum fee. The minimum amount of processing fees you must pay to the vendor. If you don’t reach this amount, you’ll need to pay the difference. Some vendors will charge a fixed fee, while others may base it on usage.
  • Early termination fee. A penalty fee you pay if you end your contract before it expires.

Fees and prices can vary significantly between companies. For example, one vendor may charge a fixed monthly contract with no setup fees, while another may charge a setup fee plus monthly usage-based charges. It’s important to factor in these costs when making the decision to get a credit card reader for your business.

How long does it take to set up?

Setting up your credit card processing account can take anywhere from a day to two weeks. It may take less or more time depending on the type of business you have, the volume of purchases you intend to process, your financial records and more.

Smartphone and tablet credit card payment processing options

It’s becoming more simple to take a payment from mobile devices thanks to card readers that can plug directly into any phone or tablet and mobile apps that allow payments between users. Some popular smartphone and tablet payment processing choices include:

  • Square
  • PAYD and PAYD Pro (by Moneris)
  • Intuit QuickBooks GoPayment
  • First Data Mobile Pay Plus
  • PayPal Here

These products are compatible with iOS and Android devices and are convenient options that can suit sole proprietors and smaller businesses on the go, such as vendors at a market, food trucks, plumbers and electricians.

What are the costs for smart device credit card processing services?

Potential costs include the following:

  • Card reader cost
  • Swiped transaction fee — usually a percentage of the transaction, e.g., 2.75%
  • Keyed transaction fee — usually a percentage of the transaction, e.g., 3.5% and 15 cents for manual input of card information

Generally, you pay the fee for the card reader and then the processing service charges per transaction. However, some providers offer the card-reading device for free when you sign up for a monthly plan.

When considering this option for your business, it’s important to decide if a smart device payment system can meet all of your needs.

Online credit card processing for small businesses

E-commerce is incredibly convenient, since everything is online and available for purchase with just a few clicks. Online credit card processing works safely and efficiently via a secured Internet connection and allows shoppers to browse and buy from virtually wherever they are. It’s ideal for any business operating on the Internet.

What are the costs of setting up online credit card processing for a small business?

A big advantage of online payment processing is that you can do away with monthly and annual fees, set-up fees and contracts. Each online transaction usually attracts a fixed-percentage of the transaction amount.

  • Some providers charge an extra fixed fee on top of the percentage fee, for example 2.5% plus 25 cents per transaction.
  • Some companies may charge a higher rate for processing international payments that need to be converted into another currency.

Depending on the type of business as well as the number of transactions, you may find that online credit processing is an affordable and flexible choice.

What credit card machine features should I look for?

  • Works without an app. Some machines can process transactions alone, while others need to be paired with an app. For example, the Square reader needs to be used with the Square app.
  • Magstripe swipe reader. This reads the magnetic stripe on the back of a card.
  • EMV reader. This allows a customer to use a chip card by inserting the card into the machine.
  • NFC payments. NFC (Near Field Communication) lets customers pay with services like Apple Pay, Android Pay and Samsung Pay.
  • Built-in receipt printer. You can print receipts straight from the machine. If the machine doesn’t have the capability, you’ll print a receipt from another terminal.

What to consider when selecting a credit card processing option

Start by considering the needs of your business, then do the math to weigh up the extra costs to decide if it’s worth the investment. Also, check with the processing company that you’ll be able to accept major credit cards.

The type of business

  • Businesses involving face-to-face customer service or high volumes may find conventional credit card readers are still best suited to their environment.
  • Mobile or seasonal businesses may prefer smartphone and tablet processing to give them the mobility and freedom they need.
  • Online businesses are most likely to appreciate the convenience of online credit card processing.

Software integration

  • Find out whether the processing service will integrate with your current software.
  • Look for devices that offer the most comprehensive solutions, such as accounting or sales reporting features.

Revenue and surcharges

  • Revenue should offset the cost of setting up a card payment service and any ongoing processing fees.
  • Consider whether you can realistically expect an increase in sales by offering credit cards as a form of payment.
  • Have clear signage to inform customers of any surcharges if they pay with a card.

How to save on credit card processing fees

  • Shop around. You don’t have to settle on the first credit card processor you find. Compare rates between different vendors – the extra research can pay off in savings.
  • Negotiate with your processor. It never hurts to ask your processor to lower your rates. Your request is more likely to succeed if you have a high volume of sales being processed.
  • Switch your bank. You may be able to cut down on processing fees by using a bank that takes care of processing in-house. This means big banks such as RBC and TD. If you process your payments with a specific provider, the bank may also give you a discount. For example, RBC waive deposit fees if you process your payments with Moneris.
  • Avoid manual transactions. Processors tend to charge higher fees for keyed-in transactions, because these come with a higher risk of fraud. Instead, swipe cards and pay the lower transaction fees.
  • Set a minimum on credit card sales. You could require customers to rack up a certain amount of purchases to use a credit card. This will incentivize them to use cash or check out with higher purchase amounts.

Compare business credit cards for 2021

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Welcome Offer
American Express Business Edge Card
Earn up to 57,000 Membership Rewards points in your first year. Earn 45,000 Welcome Bonus points when you charge $5,000 in purchases to your Card in your first three months, and earn 1,000 Membership Rewards points each month (a total of 12,000 annually) when you spend a minimum of $3,000 on eligible purchases.
American Express Aeroplan Business Reserve Card
Earn up to 90,000 Aeroplan points and a bonus Buddy Pass.
BMO Rewards Business Mastercard
$0 annual fee for the first year ($120 thereafter)
Get 50,000 points and the $120 annual fee waived in the first year.
BMO Air Miles Business Mastercard
Get up to 3,000 AIR MILES Bonus Miles ($310 towards your purchases with AIR MILES Cash).
BMO Cashback Business Mastercard
Get 10% cash back on gas, office supplies, cell phone bills and internet bills for 3 months.
BMO Air Miles No-Fee Business Mastercard
Get 1,000 AIR MILES Bonus Miles (over $100 towards your purchases with AIR MILES Cash).
American Express AIR MILES for Business Card
Earn a Welcome Bonus of 2,000 AIR MILES when you spend at least $5,000 on eligible purchases within the first three months
Business Platinum Card from American Express
Earn a Welcome Bonus of up to 100,000 Membership Rewards points ($1,000 in statement credits that you can reinvest into your business).
Marriott Bonvoy Business American Express Card
Earn a Welcome Bonus of up to 85,000 Marriott Bonvoy points. Plus, earn 5 points for every $1 spent on eligible gas, dining & travel (excluding lodging) for the first 3 months.
American Express Business Gold Rewards Card
Earn a Welcome Bonus of up to 110,000 Membership Rewards points. If redeemed for statement credit, this is $1,100 that you can reinvest in your business.
American Express AIR MILES Gold Business Card
Earn a Welcome Bonus of 150 AIR MILES when you spend at least $1,000 in eligible purchases within the first three months

Compare up to 4 providers

Bottom line

The use of cash is slowly declining, while credit and debit card usage is on the rise. Your business’s revenue will likely grow once you start collecting credit card payments. Before choosing a provider and method, compare card processors and examine them based on cost and convenience. In no time at all, you’ll have a smooth-running card terminal that streamlines your payments.

Frequently asked questions

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